The Dow  Jones ended another down week on a down note, dropping 390 points

The NASDAQ was down 126 points

 This is the worst January in the history of the stock market the Dow is off about 13% from its highs, the NASDAQ about 15%, firmly in correction territory

We are probably in a bear market right now, because ultimately these indexes will be down 20%

Some indexes are already firmly in the bear camp; the transportation average is down about 27.5%; the Russel 2000 is down aboutr 23%

Many sectors are in a bear market - the auto market, retailers, financials

Home builders not quite in bear market territory yet but they are at 4-year lows

Beneath the sectors there are many individual stocks that are down 30 - 80% - GoPro now down 82% from last year as a highly touted IPO

Yesterday we had about a 200 point rally because the Fed's Dudley, who saved the market in October of 2014 by hinting of QE4 causing the market to take off

This time, Bullard came out and did say something dovish, but not dovish enough, and did not want to say  there was something wrong with the economy, so he simply stated that oil prices were too low and inflation might not rise quickly enough, so the Fed should hike more slowly

Today, another Fed governor came out, William Dudley and contradicted Bullard, strongly optimistic, saying the market is going to grow above trend in 2016 and he said that some of the negative economic data that has come out recently (which may qualify as the understatement of the decade) should be ignored, in the context of a strong labor market

In other words, no matter what other negative data is out there, in the markets or in the economy, as long as we're still creating 200,000-300,000 mostly low-paying, part time jobs monthly, everything is fine

If everything is fine, and there are so many people with jobs, why are retail sales plunging?  Why are corporate earnings plunging?

Assuming all these jobs really exist, they won't for long because if sales and earnings are collapsing, what are companies going to do with their work force?

Walmart announced today they are closing about 150 stores in the U.S., laying off about 10,000 people

I have saying for a while I expected retailers to announce significant layoffs, but I think it is going to be across the board

Everything that was built on the Fed's bubble is imploding; all the phony wealth that was the result of QE is disappearing rapidly

It's amazing that the Federal Reserve believes in the wealth effect on the way up, but somehow it is oblivious to it on the way down

I think it is going to work even stronger in reverse; the amount of spending from cut backs will produce a reverse effect even larger than the one they tried to create with QE and zero percent interest rates

How could Bullard, in the face of all this negative economic data say that since the Fed raised rates, his outlook on the economy has not diminished at all?

It's so ridiculous that he must not believe it - he is trying to pretend that everything is good

The whole rate hike was about instilling confidence

Based on the data, they should not have hiked rates

Now, as the markets are imploding and the data is getting worse, Dudley is out there saying everything is great

How much longer can he get away with saying that?

Pretty soon, he is not going to have that much credibility

That's what is going on with the Fed, in fact JP Morgan today pushed back their estimate for the first rate hike in 2016 from March to June

That's how is started last year; everybody was looking for a rate hike, in March, then June then September, then they finally got it in December and now people are already dialing back estimates of the next rate hike

The next one ain't happening because we are already in a recession

I am talking about a statistical recession that the government will have to acknowledge

I think we have been in a recession throughout the entire recovery