If there were any doubts left, this morning's trifecta of weak economic data hammered the point home: the recovery has stalled and the time has come for the Fed to step up and provide ''a shot in the arm" as Andrew Wilkinson, Chief Economic Strategist at Miller Tabak & Company calls it.
From his purview, the weakness that began with the soft payroll data in April, has clearly spilled over into the broader economy now, and the Fed - by its own standards - is compelled to act when the huddle-up next Tuesday and Wednesday.
"The Fed has pretty much laid down the preconditions for easing policy; the labor market has slowed, consumption has slowed" Wilkinson says in the attached video. "Everything he (Bernanke) warned about in the 1st quarter is being borne out, is coming to fruition."
Traders are already pushing up stocks on hopes that central bank intervention - at home and abroad - is coming. While I have repeatedly railed on so-called ''ease addicts", who seem to think the only way higher for stocks is via the hand of the Fed (and thus, appear addicted to the practice of serial easing, or stimulus), Wilkinson, and many other investors, think a delay next week would be a costly mistake. Instead of extending the current Operation Twist he thinks the Fed should deliver "a whole hog" solution or risk markets "stumbling quite hard".
"What I think is needed is another $500 billion worth of a mix of Treasury purchases and mortgage-backed securities purchases" he suggests, adding that "it would build on what they've done, and it expands on the opportunity to extend into that (housing) market.
Investors are looking for stimulus, he says, and to wait for even more economic evidence, at this point, does not seem like good bet.
"If we're going through this discussion on the 1st of August ahead of the next Fed meeting and the economy has shown further signs of slowing, additional stimulus will be very overdue at that point."