Catch 22 Market: Heads Investors Lose; Tails Bernanke Wins

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Here's a nice call tied to today's closely-watched Federal Reserve decision: stocks will drop initially no matter what Fed Chair Ben Bernanke says. That's the call of several traders this morning.

The reasoning behind this prediction includes the following:

1) we are up two days in a row (the Dow is only 90 points from a historic closing high), so it's buy on rumor, sell on fact;

2) anything he says could be spun negatively by the markets. If Bernanke implies the Fed will stay the course and keep buying bonds, the market doesn't want to hear that because they are already getting primed for tapering. If he says he is going to begin tapering, the market doesn't want to hear that either. So the Dow drops initially — by say, 150 points. Whether it bounces into the close depends on how the "adults" choose to spin the comments.

Silly, no? But that's the way the market operates these days. Traders are not exactly behaving rationally, and with good reason: the key motivator is the belief that bond prices have reached historic peaks and have nowhere to go but down.

The Vanguard Total Bond Market, the largest bond ETF with nearly $18 billion in assets, is already down 2.5 percent since May, not good considering that is exactly what the yield is.

With yields that low, its a wonder that even 2.5 percent declines have sent off alarm bells.

Fortunately, more rational voices are being heard, which hopefully will mitigate some of the bond losses we have seen. The key message is: tapering is not bad as long as it comes due to an improving economic outlook, and is both consistent and transparent.

Bernanke must also emphasize that rates are likely to remain near zero for years.

Elsewhere:

1) Federal Express reported earnings above expectations ($2.16 vs. $1.96 expected) and revenues in line with expectations (up 4 percent year over year). Guidance for 2014, however, is below expectations: $6.67—$7.04 (midpoint $6.85) versus an estimate of $7.31.

Those who use FDX's international shipments are continuing to look for cheaper ways to ship goods overseas.

International Priority volumes declined 2.4 percent year over year. CFO Alan Graf said, "we continue to see the effects of customers selecting lower- rate international services." Smartly, they are decreasing capacity between the U.S. and Asia.

The good news: lots of cost reductions are taking effect (including voluntary layoffs), which should help improve margins — currently a measly 3 percent. One good sign is that the stock is flat despite the disappointing guidance.

2) hot biotech initial public offering Bluebird (BLUE) priced at 5.9 million shares at $17.00. If "cloud computing" was last year's magic word for IPOs, there is hope in biotech land that "gene therapy" and "genomics" will also be a magic word, especially now that the Supreme Court has said human genes cannot be patented. That opens up testing for many companies.

BLUE is "focused on transforming the lives of patients with severe genetic and orphan diseases using gene therapy." Gene therapy introduces functional copies of defective genes into a patient's own cells. In other words, they treat the underlying genetic defects, which gives the company big upside potential.

An earlier biotech IPO is still a big winner. Epizyme (EPZM) priced its IPO at $15 a share at the end of May, opened at $20, and is currently trading at $24.72. They are developing personalized therapeutics for patients with genetically defined cancers.

—By CNBC's Bob Pisani