Something Wicked This Way Comes

Hear that sound? As the old song says:
"Stop, hey, what's that sound? Everybody look what's goin' down!"
                                                             -The Buffalo Springfield

Yesterday, Wednesday April 7, 2010, i heard that sound, the same sound i'd heard three years ago with the China Market Meltdown in late March 2007. Like the sound in a suspense movie just before the bad guy jumps out of the shadows and knifes somebody. Yea, that sound. In the video below i talk about that sound and what it was for me this time around. You may have heard it too-- or not-- or maybe soon you'll hear a different sound that means the same thing. But what sound am i talking about? Let me set the stage...
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The FOMC (Federal Open Markets Committee) has 12 members. Nearly all of them recently voted to keep interest rates the same, right? And the market loved that, right? So why the dickens did the market get all rattled yesterday (Dow dropped 100+ pts in two hours) when just one lone member said the Fed needs to raise the rate to 1%, and that's just an "accomodation" (i.e., we really need to raise it even higher)? Why? I mean, considering that this guy is 'way in the minority in that opinion, why did it spook the market so badly? Does the speaker, Kansas City Federal Reserve chief Dr. Thomas Hoenig, have some hidden superpowers that scare big traders and market movers? Probably not-- but he scared them just the same. And of course, he's absolutely right. But, unfortunately for him and a lot of ordinary people, he's being treated like a market Cassandra, ala Mr. Roger W. Babson of 1929 fame. What a shame.
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So the actual sound i heard was the Dow clattering its way down 100+ pts on news of very little practical significance. Just like the non-China markets shook and trembled for months after that China meltdown, on even the tiniest bit of bad news, even though their market fully recovered within 48 hours of the event. It was the sound of BIG people on edge. And we all know what started happening a few months later. And that's what yesterday's sound was- BIG people on edge about something.
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So as you watch this short video, remember that verse: "Stop, hey, what's that sound? Everybody look what's goin' down!"
And keep listening- there will be other sounds.