Turmoil Inside The US Fed Causing Volatile Stock Market

Turmoil Inside The US Fed Causing Volatile Stock Market

$DIA, $SPY, $QQQ, $VXX, $WTM

During this long Fed sponsored Bull Market stocks that failed to meet earnings expectations were punished severely, as Wal-Mart (NYSE:WMT) was when CEO Doug McMillon made a lengthy morning appearance without saying anything about what investors would later learn about forward guidance that growth would be uneven because investments would need to continue, to remodel stores, improve inventory management, and catch up with competitors for online business.

Recriminations then flew as Mr. McMillon shot back at critical market analysts that if they had done their homework, they would have understood the impact higher wages and other expenses would have on earnings. Perhaps the company, which lost $20-B in market cap in one day, might consider a refresher course in Investor Relations 101.

The big picture: participants could expect seasonal strength at the beginning of October, and this happened.

The tone of earnings season will influence how a possible Santa Claus rally may unfold and the likelihood that the Fed officials would intervene in order to foster the rally to help Wall Street pay bonuses and save some jobs.

Debate continues over the Fed raising rates by a small amount to begin and then another token amount later in order to establish that it can get past the Zero Interest Rate Policy (ZIRP) that has prevailed for almost 10 years.

Instead, the Fed is doing just the opposite, and the emergency policies put in place during the Y’s 2007-2009 financial crisis will remain indefinitely, and another crisis is in store.

CNBC’s Steve Liesman gives us an update on the discontent at the Fed that has been percolating  at least since the Y 2008 crisis.

For many years there have been 1 or 2 malcontents who would criticize Fed policy internally, and occasionally 1 would dissent, but over the past 5 years the number has grown, and not all the unrest is coming from the right.

It is not confined to current FOMC members, either, as former presidents like Bill Poole (St. Louis), Richard Fisher (Dallas), and Charles Plosser (Philadelphia) continue to question policy and how it is made.

Mr. Liesman reported that, “Mutiny at the Fed” is the term that has been used by a newspaper “to describe what’s going on right now — 2 Fed governors, including Dan Tarullo Wednesday, in an interview said they do not think the Fed should hike this year, after Chairwoman Janet Yellen said in a speech in September she sees the Fed hiking in 2015.”

Mr. Liesman added, “It’s pretty unusual for the governors, as opposed to the presidents, to differ with the Chairman,” and he mentioned Governor Brainard as the other dissenter.

Ms. Yellen values the collegiality of the board, and let us hope she can manage to keep the Governors in line with her vision.

Meantime, stock market volatility is with us for a long time to come, DJIA was down 150 Wednesday, and up 200 Thursday.

DJIA +217.00 at 17141.75, NAS 100 +87.25 at 4870.10, S&P 500 +29.62 at 2023.86

Volume: trade was moderate with about 950-M/shares exchanging hands on the NYSE

• NAS 100 +2.8% YTD
• S&P 500 -1.7% YTD
• DJIA-3.8% YTD
• Russell 2000 -3.4% YTD

Stay tuned..,

HeffX-LTN

Paul Ebeling

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