While the bears picked up the pace of selling on Tuesday, the market has been basically asleep since April 1 with tight trading ranges and low volatility. Periods of low volatility are often followed by periods of higher volatility.
Things are about to change. Moves are being made to stiff investors who are not paying attention and actions are being taken that will have great consequences in the market place. Be aware...
To suggest that the theoretical end of QE2 has been and continues to be widely anticipated by investors is an incredible understatement. Opinions on the financial market as well as real world economic outcomes diverge widely. The two QEs have been an unprecedented journey in the annals of Fed and US economic history.
Assets compete. If you create a huge volume of non-interest bearing money, somebody somewhere has to hold it. So long as close substitutes such as Treasury bills offer any competition at all, investors try to shift out of the non-interest bearing stuff into the interest-bearing stuff.
With the civil war in Libya now entering its third week, Egypt moving haltingly towards free elections, and hundreds dead in Syria, Yemen and Bahrain after a month of anti-government protests in each country, the Middle East is rife with instability.
In case you missed it, economists have slowly ratcheted down GDP estimates for the first quarter. Morgan Stanley's 1st quarter GDP estimate is 1.5% down from 1.9%. Barclays also lowered GDP estimates by a half-point to a range of 1.5% to 2%. 4% GDP estimates went out the window long ago.
Last week, Congress and the administration refused to seriously consider the problem of government spending. Despite the fear-mongering, a government shutdown would not have been as bad as claimed.
Last week was enough to give anyone attempting to squint through the media haze a headache. Operation whack-a-mole, the desert dictator's edition... scalpel versus axe budget bickering... ballot box bungling in a state Supreme Court election... we-didn't-until-we-did need a bailout plea from our port-sipping friends... the truth was scuttled by a violent torpedo... and on and on.
Students and parents, wake up: your only salvation lies in political engagement and action. Of all the exploitative systems in the U.S., none is more rapacious than the Education Cartel.
