Traders Don't Sweat Selloff; Taiwan Blackout Is Another Matter

Greenspan wouldn't mess with success, would he? And what lights out in Taipei could mean for all those chipmakers.
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San Francisco -- A stronger-than-expected

Employment Costs Index

overshadowed weaker-than-expected

GDP

figures, leaving traders fearful more rate hikes are forthcoming. Stocks and bonds tumbled although closed above morning lows. (For more, see today's

Market Roundup).

Alfred E. Neuman In Da' House!

"I'm not worried about this," said Scott Bleier, chief investment strategist at

Prime Charter

, of today's selloff. "I think this is good. Let everybody get scared out of their pants."

"Everyone is scared of

ECI

," he continued. "Meanwhile, we've had tight labor markets for four years and it's not made

Greenspan

raise rates once. Isn't this economic nirvana for the consumer? Everyone is working, earning and spending. That's what made this country great. Does Greenspan want to hurt that?"

(Cue humming of "God Bless America.")

In a similar, if less patriotic, vein, Brian Gilmartin, portfolio manager at

Trinity Asset Management

, emailed to say today's action was "a definite overreaction," noting the 30-year Treasury never threatened to approach its June high (in yield) of 6.22%.

"If you look at the economic data it actually wasn't that bad -- year-over-year, ECI is still just plus 3.2%," he added. "And GDP was a little weaker in the key components."

Gilmartin said an "interesting tell" today was

Fannie Mae

(FNM)

, ending up (by 1.4%). "This is an interest rate proxy if there ever was one."

The fund manager said he bought some "small quantities" of Fannie Mae today as well as

Procter & Gamble

(PG) - Get Report

, which gained 2.3%.

Despite the sanguinity (

sanguiocity

?) of the aforementioned (and others), the similarities between this year and last are getting a little eerie. Aren't they?

Lights Out, Lights Out in Taipei

Of course, last year's swoon was largely ignited by nasty developments overseas. Wednesday, we couldn't help notice, the

IMF

approved a $4.5 billion loan to Russia (though were smart enough this time to not actually send the money).

Meanwhile, a power outage that hit Taiwan around midday on Wall Street is still affecting much of the island nation,

Reuters

reported. At press time, it was unclear whether Friday's workday will be canceled.

Taiwanese officials ruled out any "foul play" by the Chinese, reducing fears of the worst. Still, market players expressed concern the outage will impact the island's chip and electronics productions and the U.S. tech giants that rely on them as noted in today's "Heard on the Street" article.

"We've been making calls," said one San Francisco-based PC analyst who was in meetings all day and hadn't heard much.

"I wouldn't think," the analyst said when asked if the outage would result in earnings estimate reductions for firms such as

Cisco

(CSCO) - Get Report

and

Dell

(DELL) - Get Report

, which have major outsourcing operations in Taiwan.

"I've asked plant managers in the U.S. about facilities for power outages and there's usually enough slack in the system they can make it up," he said. "It's when it goes down for the better part of a day and they lose a couple of shifts it can be hard to catch up. But if it's the result of a well-placed Chinese nuke, that's a different story. That would cause some estimate cuts."

Rogues' Humor

Some might think that last quip is low at best, disgusting at worst. But it aptly represents the often crass humor that prevails on Wall Street. I heard plenty of

JFK Jr.

jokes almost at the instant his plane disappeared. Similarly, the yuck-yucks were out in force this afternoon when word of the shooting at

All-Tech

in Atlanta hit the tape. Out of respect for the casualties and because my mother reads this column, I'll refrain from repeating any of their quips.

But I will say this: After another multivictim shooting, I'm agog that any

reasonable, thinking

person would argue we don't need serious gun control. I'm not antigun. I'm antideath. And before the

NRA

members in the audience fire off (err ... send) hate emails, I urge you to read

The Economist

article "Arms and the Man" (July 3 issue), which puts a serious crimp in this idea guns were an integral part of early Americana.

The Lighter Side

Enjoyed a (much-needed) quiet evening at home last night, largely in front of the idiot box.

TBS

was showing

Kelly's Heroes

(Clint!) and

TNT

had

Carrie

(makes you wonder how Jane could have left Ted).

Before the movies, I caught a bit of

CNN's

"Moneyline" with our

old pals Stuart Varney and Willow Bay.

The highlight (for me) was Preston Martin, former vice chairman of the

Federal Reserve

, whose

Web site (of course) declares he's a regular guest on financial TV. I confess I hadn't seen him before and the interview left me wanting more.

Old Preston is a hoot (and makes you feel like calling him by his surname). He's sort of a cheerier version of Lyle Gramley. "Press" joked playfully with the hosts and seemed a bit bemused when Varney asked, incredulously: "Wait a minute. The Fed is prepared to act very soon on a signal which will not come for another year?"

"The Fed policies do not take effect

voila

," Martin responded, snapping his fingers for effect. "Yes, the markets react instantly, but in terms of another ... 25 basis-point increase in the federal funds rate, that takes a while to affect the economy."

Martin expects the Fed to tighten in August (and this was before ECI, you'll recall) but said he would not vote for a rate hike now if he were still at the

FOMC

.

P.S.

I may be crazy (or self-obsessed) but I swear it seems Rick Santelli heeded my

warning? Today he actually explained what goings on in the bond market mean for equity investors. That's good because pandering to the masses will keep him around so (ahem) the rest of us can benefit from his expertise.

I'm sure to be getting a consultants' fee from

CNBC

any day now.

TSC Special

J.C. Penney Opens the Door on Its Unused Warehouse Space gets the nod today, moving senior writer

Suzanne Kapner

back into a tie for the lead in the "Specialist of the Year" competition. If it's good enough to get

Jim Cramer

to

buy JCP, it's good enough for the Special.

However, I wonder how Ameritrade's

(AMTD) - Get Report

Stuart is reacting, being he's such a big fan of Kmart

(KM)

.

Aaron L. Task writes daily for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback at

taskmaster@thestreet.com.