(By Rich Bieglmeier) The Dow and S&P put it on pause Monday, while the NASDAQ played catch up. The NASDAQ has 25 points remaining to make contact with its 50-day average. The S&P is than three points away from its 50-day benchmark, and the Dow is already home.
Wall Street is rife with hope, hype of further easing from the Federal Reserve on Wednesday. Goldman Sachs advised clients that two of the three criteria that the FED laid out for more free digital money have been met.
- Little or no improvement in the labor market
- Downside risks to the [economic] outlook had become sufficiently great
Anybody paying attention knows that the job market sucks and threats from Europe are "sufficiently great." If Goldman has it right, then the equity markets are likely to get a massive dose of 5-hour energy, gold, silver and other commodities, too.
However, the third of the Fed's checklist to pump, inflation is probably going well beyond the 2% target. It may well be past the mark by historical standards, but that's not how they "officially" measure any longer.
While iStock isn't wired in like the big broker, we think the Chairman will have a difficult time walking his congressional testimony back in just a few weeks. At the time, Mr. Bernanke said the economy grew modestly in April and May and that an assist was unneeded. What's changed? Not much, right?
As a result, iStock believes the odds are 50/50 at best that the Fed changes course without loosening their language first. Lack of action from Bennie and the InkJets could be a major disappointment which puts a ton of pressure on the stock market.
That's what Citibank and Deutsche Bank think it will take for the world's central banks to inject the "necessary" liquidity. Both firms have written that minus major, global, equity market meltdowns, the bankers will stand pat. In other words, institutional investors will have to throw selling, temper tantrum like a two-year-old to get the free money they desire.
Honestly, given the alternative scenarios, iStock hopes Goldman has got the inside track on Wednesday's FOMC announcement. After all, to paraphrase Pink Floyd's Money, Goldman is the root of all evil today.
BULLISH SECTORS WORTH WATCHING:
Industrial Transport Stocks
- Railroad Stocks