Now, we may want to say that we are having one giant do-over in our markets. But that would be false. Interest rates have not come down. Mortgage rates have gone up by a third. We will soon see a dramatic decline in refinancings. The bond funds have produced hideous losses -- that is, if you sell them. The 10-year is not back under 2%, it's up at 2.5%.

And even within the stock market, we don't have the same stocks going higher. Sure, there's been a bit of recovery in the so-called bond-equivalent stocks that were being crushed by the increase in yields. But we are seeing a headlong rush into the cyclicals and into the regionals and into any technology. We can only imagine what could happen if we actually had an up day in China after seven straight down sessions.

So, while it may look like we averted a crisis, a crisis that did have people panicked last year, two things have happened. One, we saw what occurs if we really have the end of bond buying, and it is plenty ugly. You have to scale out of what has been hurt right into this rally: anything emerging markets, as well as stocks in the housing-related cohort, which will be slowed by the dramatic increase in mortgage rates and the higher-yielding stocks that will not be competitive with bonds as they go higher. And two, it's time to get more industrial, more cyclical, because those, not the bond-yield equivalents, are where the values are.

Crazy Like the Fed

Posted at 10:36 a.m. EDT on Tuesday, June 25

Did Ben Bernanke get it right again?

We all think that he handled the signals about QE3 tapering with a level of ham-handedness that was out of synch with his masterful ways. But how about if he saw a raft of better-than-expected news coming out -- news about home sales being strong, news about consumer confidence being high, news about home prices advancing rapidly, news about durable goods being better than expected -- and he knew he had to get ahead of all of these positives to avoid being run over by the market itself.

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