Weak Jobs and Inflation Fears Muddle WSJ Headlines
I opened up my online WSJ today and was amused to see the following two headlines seperated by about two inches and two hours:
"Weak Jobs Data May Spur Rate Cut"
and
"Inflation Fears May Trump Rate Cuts"
It's a pretty good summary of the bipolar approach that financial journalists and the Fed take to the economy. I'll admit that "choosing" between growth and inflation is quite a problem, especially since growth and inflation turn out to be synonyms for the same thing, ie, more dollars changing hands.
But I don't believe that either the Fed or the WSJ are really interested in jobs or inflation, unless you're talking about a few thousand bond traders who will likely lose their Wall Street jobs following the CDO fiasco. What the Fed and the WSJ are really focused on is confidence, consumer and business confidence, that undefinable financial feedstock that keeps people pouring money into dreams.
And in a year that nothing has gone right to keep the confidence men afloat, the only props for the market have been belief that the Fed will continue to cut and foreign governments will continue buying American companies with convertible bonds at double digit interest rates. The market, with its artificial flow of 401K money inflating the bubble over it's wall of worry, only has one thing left to worry about. That's the Fed not handing out cheap and easy money for companies to buy back their own stock and pay their CEO's bonuses. My own opinion is that the Fed will cave in and cut and cut and cut. They've been ignoring and hiding inflation for years, so why get excited now. But confidence in the Fed is falling, and if retiring Baby Boomers may just play it smart with their portfolios, America is in for 20 years of pain.
"Weak Jobs Data May Spur Rate Cut"
and
"Inflation Fears May Trump Rate Cuts"
It's a pretty good summary of the bipolar approach that financial journalists and the Fed take to the economy. I'll admit that "choosing" between growth and inflation is quite a problem, especially since growth and inflation turn out to be synonyms for the same thing, ie, more dollars changing hands.
But I don't believe that either the Fed or the WSJ are really interested in jobs or inflation, unless you're talking about a few thousand bond traders who will likely lose their Wall Street jobs following the CDO fiasco. What the Fed and the WSJ are really focused on is confidence, consumer and business confidence, that undefinable financial feedstock that keeps people pouring money into dreams.
And in a year that nothing has gone right to keep the confidence men afloat, the only props for the market have been belief that the Fed will continue to cut and foreign governments will continue buying American companies with convertible bonds at double digit interest rates. The market, with its artificial flow of 401K money inflating the bubble over it's wall of worry, only has one thing left to worry about. That's the Fed not handing out cheap and easy money for companies to buy back their own stock and pay their CEO's bonuses. My own opinion is that the Fed will cave in and cut and cut and cut. They've been ignoring and hiding inflation for years, so why get excited now. But confidence in the Fed is falling, and if retiring Baby Boomers may just play it smart with their portfolios, America is in for 20 years of pain.
posted by Morris Rosenthal | 6:59 AM
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