With yesterday’s ISM manufacturing reflecting the 3rd month in a row of slight contraction and FDX’s negative preannouncement blamed on “weakness in the global economy” constraining revenue growth at its FedEx Express unit at the same time the S&P 500 is above 1400, near its highest level since May ’08, faith clearly remains high in the Fed and the ECB. With the ECB tomorrow laying out its bond buying plan with implementation dependent on a country request for help and the Fed likely embarking on more action next week, the stock market is approaching the moment when the central bank news is out and market participants must determine if it’s something that hasn’t been discounted yet. As I believe what will come over the next week will be no different than expectations, stocks are at growing risk of a sell on the news as attention shifts back to economic and earnings fundamentals and away from central bank money printing that can’t reverse the economic realities, they can only temporarily cover them up.
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