Exhaustion beats panic. Phew! It’s quiet out there for the moment.Also, if you happen to be in a pickle as bad as the Fed’s, it is miraculous to have this unusual crowd of Presidential candidates occupying each other and the media.Markets have paused in never-never land. The S&P500 has decoupled from the economy, its ugly January not confirmed by U.S. economic data. It traded Friday at 1915. If it rises above 1940, then there's a good chance that January was an aberration and stocks will rise from there.On the other hand, fall below 1860, then 1830 ... a lot of air below. The 10-year Treasury and mortgages have held the bottoms of their free-fall, 10s at 1.75 percent, mortgages a hair under 3.75 percent.The U.S. stock market drop had clear origin: sympathy with global stocks in fears of global economic slowdown and reduced earnings. The drop in bond yields is the source of argument in and out of the Fed. Pulled down by frantic easing at foreign central ba...
- If the S&P500 rises above 1940, then there's a good chance that January was an aberration and stocks will rise from there.
- A lot of people think the central banks are the cause of all of this upset, and if they would just step aside, then markets would fix themselves, rates rising in a healthy way.
- The contrary view: Central banks have been holding open economic breathing room against contractionary pressure. If they stopped assistance, economies would be exposed at crush-depth, rates falling far lower.