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My letter to the Fed

By Gary Kaltbaum | TradingMarkets.com
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Gary Kaltbaum is an investment advisor with over 18 years experience, and a Fox News Channel Business Contributor. Gary is the author of The Investors Edge. Mr. Kaltbaum is also the host of the nationally syndicated radio show "Investors Edge" on over 50 radio stations. Gary is also editor and publisher of "Gary Kaltbaum's Trendwatch"...a weekly and monthly technical analysis research report for the institutional investor. If you would like a free trial to Gary's Daily Market Alerts click here. 888-484-8220 ext. 1. 

In one of my recent reports to you, I ranted about the FED and how they just don't shut up. This is what I wrote:

"Our problem...and there is no doubt in our mind...is that one day one of them is going to say something the market does NOT like...and this could potentially cause a severe dislocation. We do not believe the FED was invented to open their mouth on a daily basis...and that is what they are doing. There is not a day that goes by that Yellen, Poole, Bernanke and the rest do not yap away. We hope we are wrong about the outcome."  

The market cratered in the last half hour because of one solitary occurrence.  CNBC's Maria Bartiromo said that Ben Bernanke had told her at the White House Correspondents' dinner in Washington on Saturday that he had not intended the markets to infer that the Fed was nearly done raising interest rates and that the media and markets basically got it wrong last week in speculating that the Fed is done raising interest rates. He said it is worrisome to him that anyone would think of him as dovish. He said that he and FOMC members were trying to create some flexibility for the Fed , and that the Fed may pause but the data will dictate whether more rate hikes will take place.

It was bad enough that two more FEDHEADS yapped earlier in the day but are you kidding? The head honcho...the top dog.,..the big cheese...the man that trillions of dollars around the world react to...is now talking to journalists? Big Al was at least smart enough to know when and when not to open his mouth. Do we have to worry about Big Ben's next cocktail party? Maybe he should have put his name in for co-host of "The View."

Tonight, I am writing a letter to the FED. It is bad enough they decided to not announce M3 anymore...but the endless chatter is now becoming ridiculous. I am simply going to ask them to keep it down. I am simply going to explain to them that the markets are fragile and words will one day hurt. I hope they listen. It is absolutely insane what they are doing and I repeat...if they keep this up, one day the market is not going to like what they say...and look out. 
My real problem is that the Fed may be trapped now. They want to ease but see soaring commodity prices, a housing bubble, a cracking currency and an uncooperative bond market. This is going to get interesting.
 
As I suggested in the weekend report, the BROKERS were getting in some trouble. On Monday, they cratered...and this was before the market was hit. We now add another market proxy as being in trouble, the INVESTMENT MANAGERS. Names like BEN, AMG and CLMS are now joining the ugly party. This is very important as these groups are market proxies. We would not ignore that these areas are breaking down. Add in the recent tops in BIOTECHS, SEMIS, UTILITIES, REITS and a few others...and you have a market that needs to be watched closely. With all the internal damage being done, we believe the next time down is not just going to be a normal correction. We believe there is a chance of something of consequence. We advise you to watch the support levels we have outlined for you.

Gary Kaltbaum


 

 


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