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Morning Market Briefing – 08/22/2013

The highlight of yesterday was the Bernanke free Fed meeting.  Unfortunately, the minutes did not provide to the market a clear-cut signal regarding the Fed’s tapering schedule.  It did to me however.  I am shocked that investors aren’t expecting tapering.  Or actually, they do expect it, they just don’t want it.  So every time the Fed mentions it, they will through a little temper tantrums like a 3 year old.  As long as the Fed creates US debt at near zero percent and buy the same debt back at 2%, why would the bankers wants to end the 2% flip gravy train?

There was a mixed reaction across markets suggesting a certain level of uncertainty.  But there was one group who reacted with certainty, and that was Steve Hommecouché (that’s Liesman in French!) and Jim Cramer.  Liesman was quick to point out that the market is over reacting to the Fed minutes.  About five minutes later, the market starts to head higher.  Then 30 minutes after that, the hilarious happens! Jim “Creamer” complements all over Steve.  He spent a good 5 minutes on air congratulating Steve’s call about the market over reacting.  Not a minute after Jim stopped talking; the market tanked over 100 points to end in red.  Ah, it was one of those classic moments!

To wrap up the minutes from the July meeting, there were little changes from prior statements.  The members indicate broad support for Chairman Bernanke’s timeline, which hinted for tapering as early as September.  However, this was seasoned with cautious comments regarding the labor market, “The June employment report showed continued solid gains in payrolls. Nonetheless, the unemployment rate remained elevated, and the continuing low readings on the participation rate and the employment-to-population ratio, together with a high incidence of workers being employed part time for economic reasons, were generally seen as indicating that overall labor market conditions remained weak.”

Personally, I am not worried about the Fed ending QE, Obamacare, and everything else everyone is always complaining about.  I travel/converse with people all over the world, and we in the US have the best bankers and the best politicians.  What is going to happen is simple…at some point in the next year, the Fed will start to reduce QE purchases, rates will go up, the stock market will correct (but the dollar will strengthen), and we in America will still be able to buy cheap crap relative to the les misserables in third world countries.  Those unfortunate souls are going to see foreign dollars flood out of their countries, back into the US, resulting in their market crashing, currency devaluing and bad nasty dirty inflation!

So the game play today is simple.  The market is all hinting at a positive open.  Hopefully, stocks will head higher in the morning and create a good opportunity to get out (specially if you got in at the end of the day yesterday).  At around 11:00 eastern, I’ll be looking for a reversal.  This is probably a good time to sell high.

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