Tuesday, November 23, 2010

Blame North Korea or the Fed?

The low-hanging fruit "reason du Jour" for the stock market action is North Korea shelling South Korea.

But look a little further up the tree, and see what the Fed said.

Yes, a sluggish economy though 2011. So for those looking for inflation, they may have to wait a bit longer should the Fed's prediction come true. This means interest rates will remain low. This means tax hikes have to be off the table. This means home prices won't be going up and could continue to fall. This means unemployment will remain stubbornly high and there will be no pressure to raise wages, fighting for labor resources.

But it does mean slow and moderate growth. It could mean continued profit growth on Wall Street. It could mean a stock market that inches upwards.

Meanwhile, rogue nations do what rogue nations do. And every day we should thank our lucky stars that we live in the USA.

What is going on in the Korean peninsula will settle down and those selling because of the shelling will buy back in at higher prices.

But it does seem to have wrecked the Thanksgiving week stock pattern. Unless there is a huge rebound tomorrow and Friday.

blog comments powered by Disqus