So now we have to make the best of it. We have to try to figure out how to make money even though the Fed is going to make it harder -- not by its focus on the dots and the models, but by ignoring critical warning signs that are pretty much everywhere. Of course, in their view they aren't ignoring anything. Fed Chief Powell acknowledges that some are indeed worried -- and because they are concerned he is naturally concerned, concerned enough to think that instead of three hikes he should only hike twice.
The economic hardship what will come about because he will do no more than blithely acknowledge our insights is now pretty palpable to those who care to see it.
I think we can be grateful that he won't be the center of all of our attention for the moment, but we must also acknowledge that every bit of weaker data is going to send this market lower, every falling commodity will ding us and every pronouncement from anyone that we should only be concerned about employment being strong will snuff out any real rally.
I had hoped to play a role in impacting the Fed's thinking before it is too late. But that time has now come and gone. There are bigger forces at work, I presume, forces involving everything from how much Jerome Powell must dislike President Trump -- and vice versa -- to how little faith is placed in the stock market to tell us about what could occur. The academic peons hijacked the banker and the Philistine President only made it worse.
What a shame.
Before I take a break from the Fed obsession for the rest of the year, I want to leave you with a couple of thoughts. Years and years ago, when I first teamed up with Karen Cramer, I always thought about what stocks to buy. We were in a bull market -- and in a bull market, your bias is not just to be long but to be as ultra long as possible.
Her job, though, was to find stocks that she thought were rolling over so we could bet against them. She didn't want to go after the hottest stocks. She always said that kind of shorting was for suckers. You don't bet against momentum stocks, you bet against stocks AFTER they lost momentum.
She would then try to put it into context. You would decide how much you should be short, how many short positions, what your "exposure" should be depending upon shifts in the economy, policies of the White House and views of the Fed.
She hated overthinking things. Does the market want to go up or down? Does the Fed want the market higher or lower.
Simple precepts.
She wasn't heartless. She didn't want people to be thrown out of work and businesses to close. She had a job to do. Yeah, like Belichick, do your job.
When you think of it like that, when you step outside of the realm of caring about people's assets, pensions, retirement accounts, S&P 500 funds, or whatever, it's pretty easy to see what she saw. On any given day it can bounce. Maybe it bounces today. But the market wants to go down.
The Fed is following a policy that will most likely help it go lower -- and the Fed's minions will tell you that you don't know what you are talking about if you argue with them, because they either don't want to question the institution or they don't want to acknowledge that the direction and the velocity of the decline matter. They have a job to do: slow the economy now.
Karen would say, you have a job to do: Find stocks that go down the hardest in that scenario and try your best to find some stocks that might go up a little bit to hedge yourself. These days, my job is to find the latter. It's a lot harder than finding the former. If the Fed heads and the analysts in the media who follow them were ever on a trading desk, they would know how wrong they are going to be. But what the heck do they care? They have no skin in the game.
