Conspiracy Theory

Chairman Ben Bernanke and the Fed rate cuts +

Charlie Gasparino and the Ambac news headlines

vs

Housing Crisis

Credit/Mortgage Mess

Economic Slowdown

&

Rising Inflation

It's not hard to identify which of those market moving catalysts are superficial from those that are not.

In a perfect world, or perhaps in a non-election year, the market would be well on its way to completing the inevitable downtrend. Instead, what we have today is a government that is slowing down the spread of the problem instead of fixing the problem.

The market rallied late in the day, again, on the speculative news that the deal to save Ambac is progressing and could be finalized as soon as this afternoon if not tomorrow morning. Not to blame Gasparino for being chosen to cover this issue, but the timing of his appearances today and two fridays ago could not be just a coincidence. On both days, market was getting beaten down by bad economic news, and heading into the close you'd think that it'd just fall 100-200 more pts on top of 200 pt loss already registered. Then with the flashing sign of Breaking News Alert on CNBC, Ambac news propels the market higher into the close, wiping out much of the day's decline.

This single report that's created two artificial supports thus far, is serving the Fed as an alternative measure to stop the bleeding without having to actually cut rates. Because, let's face it, the Fed can only cut so many points off the funds rate. Investors are already projecting a .75pt basis cut on March 18 which would bring it down to 2.25%. With rising inflation, it's hard to imagine the rate being under 2%. So the Fed doesn't have much to work with here. You've got the stimulus package plan due out in May, putting $300 in most Americans' pockets. But the effects of that won't be seen until companies report their 3rd quarter earnings at the earliest. Until then, there's not much for the Fed to do.

However, they can use the optimism created by the possibility of a mortgage insurer bailout plan, constantly using it without ever leading it into completion. The market will be stuck in a range leaving traders confused and uninformed. Nonethless, there's no need for the deal to finalize in a hurry. The credit rating agencies have nothing to gain from taking away their AAA rating. So they'll most likely just reject one proposal after another buying them time and buying the government time. Meanwhile, Buffet is probably taking away a huge chunk of their business away. So even after this deal is done, I wonder how big of an effect it'll have on the overall economy.

As a holder of several short positions, I am not happy with government interventions. Market trends get broken into nasty consolidation patterns which bring more pain than gain. Even aside from looking out for my personal welfare, it's sad to see the economy heading deeper into a hole being aggrevated by the ones that are being paid to prevent such an event from occurring.

Numerous "GREEN" campaigns inspired people to address the necessity for alternative energy, but are failing to address the victims of famine and poverty caused by the use of biofuel as an energy source. The Fed is emphasizing the need to revive the slowing economic growth, while neglecting to recognize rising inflation and the destruction of our national currency.

It is just a matter of time. The longer the delay, the harder the fall.

Rino Choi

Senior Market Columnist

Titans of Wallstreet