But against this is the calculation I did last week that showed the downside per stock if the life support gets taken away -- the actual point declines from companies that may or may not be seriously impacted by the end of quantitative easing.
So take the banks. We know that this sector is upset by currency turmoil. That's supposed to be the end of anything good that can happen to them. In fact, on Tuesday we had reports from Charles Peabody, a known analyst, saying the currency losses will be horrendous for the international banks -- $7 billion, to be precise, by Citigroup (C). Despite Citigroup's attempts to deny this, it became common parlance within 15 minutes of a story on Bloomberg, spelling out the banks-as-deathtrap theory, even as the notion was refuted intra-article by an analyst with a better record than what Peabody has. But who cares about records when you are in the grips of Fed tightening? Yes, let's call it what it is: Fed tightening.
Meanwhile, what's happening in the real world? Certificates of deposit -- which I monitor through Rate Watch, the keeper of the numbers -- has shown that the five-year CD has gone down in yield, with the differential now at 20 basis points in favor of the banks. That's huge. That should be the talked-about number. But disaster is in the air, and if you are an analyst who is prone to thinking disaster, you have the ball. So don't go all LeBron on me. Go to the hoop.
So nobody cares what's relevant. Instead we care about the unintended ramifications of the Fed seeking to stop the economy in its tracks. That's another "truth" that's been impacting the housing stocks, which benefited in an outsized way from the Fed giveaway.Of course, that's flagging just one group that's big in the S&P and giving you the reality of the net interest margins with the Fed walking away. A second group? The industrials. These stocks have shown signs of doing better, courtesy a nascent return to growth, as represented by eurozone production numbers Tuesday night. I know, let's just dismiss that out of hand as impossible. Third group? The techs. They, too, are impacted by a turn in Europe and a turn in Japan, even despite endless attempts to say Abenomics isn't working. Fourth beneficiary? The drugs. Why? Because the dollar's been weakening against Europe, a major spur to earnings.