This is the picture of our economic “reality” in this day and age. In an era where markets are ruled by perception and gossip reigns supreme, those with the most entertaining tales end up being king.
Have you heard the latest? Barry has nominated Janet to replace Ben, but now Rand is threatening to filibuster unless the audit bill is passed! But this week, we will find out the sure-to-be exciting answer to the question that's on everyone's lips: will the FOMC taper, or won't they? Will their forward guidance present reason for hope? Will Apple's strong sales figures help to boost sagging markets, or will the fact that their cash stockpile seems to have plateaued make investors flee? Will gold hold its new support levels, or break out to the upside? Stay tuned to find out!
No, this is not a description of a soap opera, but it might as well be. The markets have always been about news, rumor and gossip, just like a good soap opera, so perhaps the comparison is inevitable, but at least in times past there were actual economic factors still driving the economy. These days it's the news, rumor and gossip that's in the driver's seat, and we're all along for the ride whether we like it or not.
This week's FOMC meeting is a good case in point. Later this afternoon Chairman Ben Bernanke will hold his after-FOMC press conference and with almost 100% certainty will announce that the Federal Reserve sees signs of cautious optimism on the path ahead for the American economy, but now is not the right time to begin the quantitative easing taper. There is virtually no room for him to announce anything else, and anything else is almost totally inconceivable. And yet there are no shortage of articles posing the phoney question of whether or not the Fed is going to announce tapering after this meeting. Why? Because it's a story that's being told to us, and all good stories require drama, tension and suspense...even when there is none.
This is the picture of our economic “reality” in this day and age. In an era where markets are ruled by perception and gossip reigns supreme, those with the most entertaining tales end up being king. And the tale that is being told about our economy these days is nothing if not entertaining. What's that, you say? Jobless recovery? Debt ceiling standoff? QE infinity? What a great program! I wonder what they'll come up with for next week?
In the meantime, for those of us who prefer to remain grounded in something resembling reality, gold and real estate continue to retain the value that they have always had, and people in the real world continue to struggle to make ends meet regardless of whatever the talking heads are saying about the state of the economy. Many people lose themselves in the day-to-day ins and outs of the market soap opera, and the speculation about what's going to happen from one day to the next can be addictive...but in the long run economic reality like what you'll find in the pages of the Forecaster are better than any fiction that the Wall Street Wizards can conjure up.
So if this is all just a soap opera anyway, isn't it about time we figured out how to change the channel?