Is THIS What the End of QE Brings?

[JimBowie1958]

Stocks unravel after factory report; Dow sinks 300-plus points

U.S. stocks were hammered on Monday, with benchmark indexes falling through key support levels after a gauge of factory activity disappointed, heightening concern about the economy before Friday's monthly jobs report.

(Read more: The VIX is surging on market fear, but not loathing.)

Stocks had wavered ahead of the report that had U.S. manufacturing expanding at a substantially slower pace in January, driving overall factory activity to an eight-month low.


"A report like this scares people ahead of the payroll number on Friday," said Andres Garcia-Amaya, global market strategist at J.P. Morgan Funds, who added the report's soft new orders component was of particular concern.

"We had such a strong year last year there was complacency among investors," who questioned whether they should take some profits or see if there were further reasons to invest in the U.S., with the trouble in emerging markets proving to be the initial catalyst for the steep selling in recent sessions, he added.

Monday's selling accelerated once stocks broke through support levels, which in the case of the S&P 500, was 1,770, wrote Bruce Bittles, chief investment strategist at RW Baird. The S&P's next support is 1,708, said Bittles, who believes the final hour of trade will be telling.

"The significance of the ISM report is not lost on the markets that are unsure how the new Fed Chair will respond. Janet Yellen comes before Congress on Feb. 11," he added.

It really sux when the performance of the stock market is dominated by government bureaucrats.

 

[Mr. H.]

QE is a smokescreen for reality.

Just like Obama's entire two (count 'em, 2) terms.

 

[JimBowie1958]

QE is a smokescreen for reality.

Just like Obama's entire two (count 'em, 2) terms.

Agreed.

Market is down another 300+ today, thought the end day boat-tail is hard to predict.

That is more than 1000 points down in the last two weeks. Guess the taper isn't all that great an idea after all. But what choice do they have? Are the Saudis balking at QE to eternity?

And yes, QE is a smokescreen for reality, and that reality is twofold; 1) they are pumping the markets for a dump (classic con move), 2) a smokescreen for the big banks looting the US currency of its value.

Edit:
Lol, read the wrong chart. Todays theater is still yet to be played.

 

[SteadyMercury]

Long overdue, we haven't had a correction of at least 10% in years and people have been talking about this coming since middle of last year.

 

[Avorysuds]

If it really falls apart it will simply add to the undeniable prof that progressive economics destroy all life. But that won;t stop people from blaming "free markets" and pushing for more Government stimulus/control.

 

[SteadyMercury]

Okay, so if it doesn't "really fall apart" does that mean the opposite is true?

We can't even agree on whether the stock market is an indicator of economic health. When it is roaring I see so many people dismissing it, but as soon as a solid downturn hits people come out of the woodwork saying hah told you so the economy sucks afterall.

From above post I'm assuming AvorySuds believes the stock market is a good indicator of whether progressive economics destroys all life, so I'd be curious what the opinion was when stock market spent the last 4.5 with nice gains.

 

[william the wie]

Long overdue, we haven't had a correction of at least 10% in years and people have been talking about this coming since middle of last year.

A true bear which is also overdue and that is -20%. I am currently in a zero plus hedge of my own construction in anticipation of a 10-20% drop only my low beta covered puts and calls are both turning profits so I have to close them and open new positions while my purchased puts and calls in higher Beta positions have yet to reach their 10% triggers either way. Then again XSP is the stock market, LQD is the bond market and GLD is a proxy for the commodities market at least as far as I am concerned and they ain't moving much at all.

 

[JimBowie1958]

Long overdue, we haven't had a correction of at least 10% in years and people have been talking about this coming since middle of last year.

A true bear which is also overdue and that is -20%. I am currently in a zero plus hedge of my own construction in anticipation of a 10-20% drop only my low beta covered puts and calls are both turning profits so I have to close them and open new positions while my purchased puts and calls in higher Beta positions have yet to reach their 10% triggers either way. Then again XSP is the stock market, LQD is the bond market and GLD is a proxy for the commodities market at least as far as I am concerned and they ain't moving much at all.

More like a 35% - 45% retrace/correction as it has been building for so long.

 

[Sallow]

Long overdue, we haven't had a correction of at least 10% in years and people have been talking about this coming since middle of last year.

A true bear which is also overdue and that is -20%. I am currently in a zero plus hedge of my own construction in anticipation of a 10-20% drop only my low beta covered puts and calls are both turning profits so I have to close them and open new positions while my purchased puts and calls in higher Beta positions have yet to reach their 10% triggers either way. Then again XSP is the stock market, LQD is the bond market and GLD is a proxy for the commodities market at least as far as I am concerned and they ain't moving much at all.

Add in that typically the Market sees a lot of Profit taking in November/December before the year closes out. That didn't happen this go around. And the market went way up.

This really isn't much of a big deal. Market was up yesterday. Probably going to be going up and down through out February.

 

[Politico]

You think QE has ended. Bless your heart.

 

[JimBowie1958]

You think QE has ended. Bless your heart.

In theory the fed says it will 'taper' the QE to an end.

No one is saying it is entirely over and done with.

 

[iamwhatiseem]

No.
The duration of QE had a tremendous effect. If you are wealthy.
The result of QE was three record Wall Street earning years.
Record bonus payouts by Wall Street firms.
Increased corporate profits.
The top 7% wage earners realized a magnificent 28% earnings increase.
The rest of us average a wage DECREASE of 5%.

QE did exactly what it was intended to do.
It made $billions for the elite welathy class and super-corporations.
And we gave it to them.

Hope and Change.

 

[SteadyMercury]

More like a 35% - 45% retrace/correction as it has been building for so long.

When?

Markets go up, and markets go down. Anyone can sit on a message board saying a huge correction is coming, and if they say it for long enough they'll eventually be right. Meanwhile they are usually people with no money in the stock market so they miss out on any gains that happen until they are finally correct.

 

[william the wie]

More like a 35% - 45% retrace/correction as it has been building for so long.

When?

Markets go up, and markets go down. Anyone can sit on a message board saying a huge correction is coming, and if they say it for long enough they'll eventually be right. Meanwhile they are usually people with no money in the stock market so they miss out on any gains that happen until they are finally correct.

Not to mention right too soon = wrong. Also causality may be wrong. The US as a safe haven may be responsible for attracting flight capital that dwarfs QE. The Reserve Bank of India has accused the Fed of sucking capital out of the BRICS with the taper.

 

[Kimura]

A far more aggressive version of tapering was done by the Japanese central bank back in 2006. If I recall, and I was living overseas at the time, they not only slowed down purchases as the FED is currently doing, but they actually decreased the size of their balance sheet. I can't source any data which demonstrates serious effects.

There isn't any correlation between QE/inflation or the f/x rate or GDP growth. The decrease in the JCB's balance sheet at the time had zero effect on the Nikkei which rallied until the crash around the tail end of 2007/beginning of 2008.

Food for thought...