today's market and the fed

today's tone was overwhelmingly negative; the bears substantially built on yesterday's weakness. the machines flipped and relished the no uptick rule once again. investor anxiety has risen rapidly again, even though the economic news, while quite poor, should not be surprisingly so. the february chicago pmi weakness just should not be a surprise to anyone paying attention to general conditions of late. after all, that is why we are in bear market territory.

i think many investors are forgetting that the fed just didn't start lowering rates soon enough or aggressively enough. the bulk of the cuts came in within the last few weeks, so at the earliest they will start impacting pmi type activity is around late summer. the first 75 bps had only in a couple months under their belt before 2/08, and really all the first 75 bps of cuts did was get us out of an extremely tight fed policy anyway, removing the last three 25 bps hikes that now clearly look like policy mistakes made in bernanke's first few months on the job.

at this point, we may in fact being seeing some cycle lows on certain economic indicators, though pmi-type gauges may take one or two more months to bottom. until then it's a market battle for supremacy -- valuation versus economic activity.