Dr. Ben Kicks Cyprus In The Nose

Dr. Ben spoke and markets listened today, temporarily erasing any fears regarding the Cyprus/EU standoff and anxiety over what lies ahead. The SPDR S&P 500 ETF (SPY) rose .7%, the SPDR Dow Jones Industrial Average ETF (DIA) rose .35%, the NASDAQ QQQ ETF (QQQ) rose .7%, and the iShares Russell 2000 Index ETF (IWM) added .87%.

Originally we thought that the Cyprus NO vote to the EU regarding the 7% bank levy in exchange for bailout money would send markets into a tailspin. However, we did not know that Dr. Ben and his team of Fedsters would state their intentions to continue to buy $85 billion per month of assets for the foreseeable future. So, here we are again trapped between wanting to fight the Fed because we are in the land of Oz, versus wanting to freak out because the whole European financial system is still very shaky. In short, today was a day of “Dr. Ben speaks, markets listen.”

I guess Federal “easing” does not necessarily translate into “easy” markets, as we are by far stuck in the most interesting financial period of history, ever. So, what to do next: the Fed bonanza today was far less of a bonanza then previous Fed bonanzas, suggesting that the Fed’s magically refilling punchbowl has less of a kick each time. Also, this Cyprus thing (plus Greece thing, Spain thing, Italy thing, entire EU thing) has not gone away and will likely not go away soon. So, I would suggest that if the EU mess is not cleaned up by the time the Fed’s magic punchbowl does not work/refill anymore, we just might be in a world of pain.

Bottom Line: Dr. Ben spoke, markets listened, surprise surprise. Where is all the fear regarding Cyprus? It will likely return soon if not resolved.

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