Folks, Dallas Fed President Richard Fisher spoke to CNBC this morning. When asked about whether the FOMC will continue to experiment with monetary policy, he responded, “Whatever we do has to have a complementary side, a fiscal policy that channels it properly.”
That’s right: without the help of legislators and the Obama administration, there simply isn’t much more the Fed can do.
Fisher added that growth for the rest of the year would likely be “positive but anemic,” but added the caveat that “we could slip.”
As you’ll recall, I started to believe that the Fed might be out of bullets back in August. This, to me, is further evidence that no matter what twists and turns Uncle Ben has left up his sleeves, it is no longer a question of monetary policy.
Until we stop putting band-aids on the problem and start seeing fiscal policy out of Washington that will foster real job creation and get this economy growing, we’ll just continue spinning our wheels.
Yesterday was the first day of the month and the first day of the quarter. Typically, what happens will set the tone for the rest of the year. Keep an eye on beginning-of-month cash flows, especially after Europe closes.
On the show today, Adam Wesphalen, our resident RIA and futures expert, told us about some research he did over the weekend.
According to his work, of the nine sectors that comprise the S&P 500, only one is healthy: utilities. Strength in the utilities is indicative of a flight to safety and yield. Adam thinks that although we’re still near the top of the S&P’s range, there’s about a 75% chance that we see the index break down, possibly into a triple-digit print.
Be prepared: not every market acts the way it’s supposed to on paper, but an S&P in the 900s could catch a lot of people. It could also create a nice value zone.
I’d like to thank WIND for inviting me to be a part of TeaCon 2011 over the weekend.
The event was wonderful, and the people there were an excellent example of a real American grassroots movement that makes sense—as opposed to all the idiots protesting against Wall Street who have now found their way to Chicago.
Hussman's Open Letter to the Fed; The Problem with Bubbles; Textbook Pre-Crash Bubble; Reflections on Not Chasing Bubbles; Integrity vs. Respect | Mike Shedlock