The bear returned to Wall Street on Monday and Tuesday and roared. This morning, the bear is taking a nap. Futures indicate the Dow should open up about 80-90 points. What happened?
The week began with renewed and heightened anxieties about the European contagion from Greece to Italy, a much larger and more worrisome problem. In addition, uncertainty over the budget negotiations creating a national default was rising, and the stock market hates uncertainty, as you know.
However, late Tuesday, the Fed released the secret minutes from its recent meeting, which gave strong hints that they would readily begin QE3 if necessary. The bull woke up.
Then, the Senate Minority Leader suggested ready agreement on raising the debt ceiling, which reduced uncertainty.
This morning, the ratings agency, Moody's, released a report that Italy was stable for now and was not in the same distress as Greece, further reducing uncertainty.
Remember the good, old days when we talked about company earnings, sector dynamics, and PE ratios? Now, we ask if the news flow is positive or negative . . . if uncertainty is going up or down?
Maybe, all those years spent studying economics and investment analysis would have been better spent studying journalism and political science?
