Friday, July 07, 2006

Prolific

Matt's been posting prolifically. A quick blurb about the market before I deliver a larger post that I've been thinking about.

The stock market is a weird animal. Earlier I wrote a post about how the market is so concentrated on what the Fed is doing, that it's taking its cues from them. Well, I think I was right in that post, we haven't seen an extended stock market rally, because the market is still worried about what the Fed is going to do in August.

Well, today we may have a little bit of hope. It was just reported that we had a non-farm payroll increase in jobs of only 121,000. Now, a rational person would say "Oh man, we didn't expand the economy enough, so the market will go down." But the markets are a strange animal, because from that number I think they will infer a business slowdown, which means a slowdown in inflation, which means that the Fed will probably not increase rates at their August meeting, which will cause the market to pick up steam.

Suffice to say, I expect the market to get a bounce today, and given that other economic data agree, to continue through to the meeting in August.

I'll actually put up a post that matters later. I doubt anyone but a trader cares about this, but I like having my predictions on record.

-B. Hammond

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