After the close yesterday, FedEx preannounced that this quarter's results were going to be negatively impacted by the weather and fuel costs. However, the stock was not badly affected after hours, nor were the futures. And, lo and behold today, FDX was higher on that news. It's not like FDX was necessarily a sale on that announcement, but I don't see why folks would be racing into it, either. Then again, we are in a crazy environment.
Maybe the Damage Is Not Done After All
The early going this morning saw the indices slightly red. The speculation that I have been talking about has even managed to catch the attention of the "Heard on the Street" column in the Wall Street Journal, but they seem to think it is kind of cute, rather than dangerous. In an article headlined, "For Bubble 2.0, Security Analysis 1.0," the author basically tells people to do their homework. Of course, one must remember that, back in the original stock bubble, the WSJ got sucked in enough to deem it appropriate to capitalize the words "New Economy," as they were among those who didn't understand what was really going on (i.e., mass delusion and speculation). I don't think that we can get to a full-blown stock bubble again -- I certainly hope that we can't -- but if the WSJ had any inclination that was the case, it should be yelling at the top of its lungs that we need to prevent it.
As I noted throughout the equity and real estate manias, bubbles cannot be cured, they can only be prevented. Obviously, this is something Ben Bernanke has refused to learn, as he still thinks that the Depression was caused by the Fed not easing enough in the 1930s, rather than the preconditions resulting from the Fed's goosing the money supply in the late 1920s. Although I think Alan Greenspan was, from a financial perspective, evil incarnate, it is quite likely that Bernanke will do even more damage with all of his quantitative easing. The train wreck is only going to get bigger the higher stock prices race before sanity ultimately breaks out somewhere down the road.
Turning back to the action, the market tried to hold "unchanged-ish," despite a couple of sinking spells. But in the end, gravity won, and the indices lost about 0.5%, plus or minus.
Numbers Don't Lie, But People Do
Away from stocks, the dollar was mixed (with the yen weak), bonds were flattish, oil was quiet (both WTI and Brent), and the metals were higher, with gold gaining 1% and silver a bit less. The U.K. and China reported their inflation numbers last night, and China's were deemed to be a relief, but now they are changing the calculations. (I don't know anyone who believes China's data is all that accurate in the first place.) As for the U.K., inflation was, of course, higher than expected (and it seemed to give gold a boost), which it is going to be virtually everywhere. The only relevant question is, does the government entity that reports the statistics in any given country come close to being accurate? I suspect most won't.
Positions in stocks mentioned: none.
