I think what you have is a manic market. The market reacts differently to the news each day. One day it's sure of a strong economy and controlled inflation; the next day, it reads higher rates from the Fed.
I think it's the same old story: The economy certainly surprises us by how resilient it is. It's also a question of how the market interprets those numbers. I think it'd rather see a stronger economy with higher interest rates.
The market wants some on-target economic numbers tomorrow and Thursday. We want an equilibrium in the economy. If the numbers are too strong or weak, the interest rate debate would rage on. The numbers need to show moderation.
The market is concerned with the housing numbers. There seems to be a trend setting in. Housing and the consumer have been the engines of the economy and if that's slowing or fading quickly, there are going to be ramifications for the market.
There was a sense that a year-end rally would take us higher, but there's some concern from the bond market flattening. The inverting of the yield curve would bring us more problems in 2006. We also have light volume, exaggerating moves to both sides.
It certainly has been an up week overall. The market is stepping back and looking at the fact that inflation is in check, we are near the end of the rates-tightening cycle and the economy is growing.
Those were three lousy numbers from an economic perspective. There is the intimation of a slowdown led by the housing market and if the consumer rolls over, then we have a problem.
If this storm wasn't out there, the market would probably be behaving much better.
You're seeing a little bit of buying come in today, which you'd expect after a sell off. The market is looking at what happened Friday rationally, and now it's just a wait-and-see on how other bellwether companies do on their earnings.
We all know it's going to be a quarter point hike. But over the past two days the bond market is also telling us that it thinks the Fed is not going to stop there. The bond market will be driving stocks today.