Fed Does Nothing, Stocks, Oil Skyrocket

The Federal Open Markets Committee, the arm of the Federal Reserve that regulates interest rates, decided to do nothing today, keeping the federal funds rate steady at 5.25%. Upon the release of the non-news announcement, every trader on Wall Street apparently began buying everything they could in the 1 1/2 hours remaining in the session.

The Dow shot up 175 points in the 45 minutes after the Fed non-movement. Never has there been so much ado about nothing. Shakespeare would have been proud!

If this is the reaction that the markets are going to display towards what is essentially a non-event (and they do it time and again), one wonders what some real news might produce.

Dow 12,447.52 +159.42; NASDAQ 2,455.92 +47.71; S&P 500 1,435.04 +24.10; NYSE Composite 9,317.73 +159.46

It was as though somebody (Ben Bernanke) waved a magic wand over Wall Street and all the problems of the past 6 months were magically wiped away. Maybe it's the nation's penchant for selective short term memory loss, but it was just four weeks ago that the Dow lost more than 400 points, and less than 2 weeks ago that the sub-prime mortgage lending blowup began (and hasn't ended). Why, it was less than a week ago that the Producer Price Index (PPI) rose by more than double what the experts had been predicting.

Maybe there are a lot of suckers out there. Maybe the correction is really over after just a 6-8% decline on the major indices. Maybe after 52 months of a steadily rising bull market, a one month respite is all this market can handle.

Maybe I'm wrong, but there certainly seems to be a great deal of really, really, stupid money out there. Stupid isn't even the right word to describe today's trade. Insane, criminally insane, might be closer to the truth.

Advancers trounced declining issues by nearly a 5-1 margin. New highs outpaced new lows 380 to 71. That's a pair of numbers which would normally have me shouting "turnaround" but the drama of today's metoric rise is lost on me. I'll call the end of the correction when it actually ends, not when some monstrosity of market mockery says it's over.

Amid all the late afternoon hoopla over the Fed's indecision, nobody noticed (or cared) that oil was up sharply, as the April contract expired yesterday at $56.60. Today's new May futures contract has oil at $59.61, only a $3/barrel increase in one day. Yes, sir, there certainly is a load of stupid, ignorant, moronic money out there, and most of it is in the form of Mr. and Mrs. Average Joe American's retirement plans.

Good luck with that!