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Archive for the ‘quantitative easing’ Category

What’s Going On: Market Pullback, Pump ‘n Dump?

Posted by Larry Doyle on January 30th, 2014 7:02 AM |

The consensus opinion by most market strategists coming into the year was that our equity markets would follow up the 25-30% gains of 2013 with another 8-10% gain this year.

The markets will have to experience a hellacious rally in the next two trading days or make an exception to an age old rule that January’s price action sets the direction for the year as a whole.

So what is going on with the markets? Are they simply experiencing a long overdue pullback? No doubt about that. Aside from a mild pullback last August and September of approximately 3-4%, the S&P 500 Index went straight up for the next 3 months to the tune of 12% to end the year with a 30% gain.

The 4% loss year to date certainly qualifies as a pullback but comes nowhere close to qualifying as a correction which market technicians define as a 10% decline.  The S&P 500 would have to retrace another 110 points on top of the ~75 points it has lost year to date to meet that definition.  (more…)

MarketWatch: Don’t Fall Victim to QE Trap

Posted by Larry Doyle on January 13th, 2014 9:08 AM |

I have a commentary running today on MarketWatch that addresses some perils and potential pitfalls stemming from the tapering of the Fed’s quantitative easing.

4 Ways The Fed Taper Puts Your Money at Risk: Don’t Fall Victim to The Fed’s QE Trap

“I don’t know what they are, but I know where they are!”

I had to chuckle when a fellow trader with whom I worked uttered that remark about the markets in which he trafficked. In so many words, he was admitting that he focused almost entirely on daily flows and technical developments within his market sector, while paying little attention to the underlying fundamentals of the securities themselves.

Ignoring fundamentals is dangerous.  (more…)

“Greatest Wall Street Backdoor Bailout of All Time”: Sense on Cents Instant Classic

Posted by Larry Doyle on November 12th, 2013 10:01 AM |

It is not often that, in the midst of my daily morning reads, my jaw drops and I am left aghast by a writer’s hard hitting delivery. While many an editorial and commentary dive into topics that I appreciate and find riveting, I do not often find a writer from inside the arena who freely and openly speaks his/her mind.

This morning I had just such a pleasure.

While America and the world have been force-fed the notion that the Federal Reserve’s quantitative easing programs have been the magic elixir nursing our economy back to health, Andrew Huszar has a decidedly different take.

Who is Huszar? Only a former Fed official responsible for executing a large part of the Fed’s bond buying. Currently a senior fellow at Rutgers Business School, Huszar gains immediate induction into the Sense on Cents Hall of Fame as he pulls no punches in delivering a knockout in this morning’s WSJ. He begins with an apology. It only gets better from there.

I can only say: I’m sorry, America.  (more…)

Goldman’s Call As to Future Federal Reserve Policy

Posted by Larry Doyle on November 7th, 2013 9:06 AM |

What might be the next move by the all powerful Federal Reserve as it goes about trying to nurse our economy back to health?

Mike O’ Rourke, chief market strategist at Jones Trading recently highlighted that the folks at Goldman Sachs believe Fed policy may be set to shift. I mean, who on Wall Street might have the ear of the Fed more than the folks at Goldman, right? Ok, ok, enough of the sarcasm.

Let’s navigate as O’ Rourke interprets Goldman’s reading of the Fed’s tarot cards regarding future monetary policy.  (more…)

Gartman: Investment Capital Will Leave US Market

Posted by Larry Doyle on October 18th, 2013 8:36 AM |

After the dysfunctional debacle displayed in Washington over the last few weeks — and potentially repeated in early 2014 — what is that strong symbolic wind now blowing offshore?

Oh, that is the sound of investment capital leaving our nation.

Not that those in Washington have a real appreciation for it but private investment capital is the lifeblood which fuels our economy.

While those in Washington are now sufficiently addicted to our central banking shell game, aka quantitative easing, why would they be concerned about protecting and promoting the formation of private investment capital? Great question.  (more…)

Sedating the Quantitative Easing Monster

Posted by Larry Doyle on September 19th, 2013 9:04 AM |

At what point does a patient become addicted to medication so that a subsequent malady is potentially as bad if not worse than the original condition the prescribing doctor was trying to treat?

How disturbing is it to learn of individuals strung out on pain medication or more specifically methadone to treat a debilitating condition or drug habit?

Very disturbing.

In a very similar fashion, our resident medic, that being Fed chair Ben Bernanke, found himself boxed in by our patient, supposedly our economy but really our markets, that had begun to convulse and palpitate when word that its QE medication was going to be lessened.     (more…)

Fed-speak: Ease Air Out of Bonds – Support Equities

Posted by Larry Doyle on May 20th, 2013 9:38 AM |

“Don’t fight the Fed.”

While the fundamentals of our underlying economy bump along with continued structural headwinds and fiscal support from Uncle Sam remaining anemic, the Federal Reserve’s QE-infinity remains the underlying cornerstone supporting our markets.

With equities making new highs and high yield bonds trading at stratospheric levels, recent pronouncements from Fed officials strike me as looking to accomplish two goals: (more…)

Ben Bernanke Pulls a Yogi Berra

Posted by Larry Doyle on May 2nd, 2013 8:04 AM |

When you come to a fork in the road . . . take it.

In the early years of the last decade, I had the pleasant experience of attending a dinner for a major client at which Yogi Berra was a guest speaker. As a lifelong baseball fan — and by the way,  how ’bout those Red Sox? — I looked forward to hearing Yogi regale us with legendary tales about the great Yankee teams.

He started his delivery by unequivocally stating, “I am not good at giving talks, so just go ahead and ask me some questions.” He entertained us with a slew of his famous non-sequiturs in fine fashion.

I thought of Yogi and that dinner when the Federal Reserve released its statement on the economy yesterday afternoon. (Do you notice a facial similarity between Ben and Yogi?) Having read Fed releases for the last thirty years, I am hard pressed to ever remember a statement as ambiguous as this  put out yesterday:

Quantitative Easing: To Infinity and Beyond?

Posted by Larry Doyle on January 29th, 2012 12:02 PM |

What does the Federal Reserve know that we don’t?

I mean, why would the Federal Reserve commit to keeping prevailing interest rates at next to zero through the end of 2014 if they were not aware of just how weak our underlying economy truly is?

Bernanke and team know our domestic economy and the global economy at large remain in need of significant and steady oxygen support. (more…)

Why Might The Fed’s Party Be Over?

Posted by Larry Doyle on June 20th, 2011 8:07 AM |

Over the last few years I have highlighted the fact that the deflationary impact of declining wages and home values gave cover to the Federal Reserve for maintaining an excessively easy monetary policy and pumping up asset prices via quantitative easing. That party would now seem to be over. Why?

There is no doubt that Fed chair Bernanke’s easy money has played an integral role in the inflation we are experiencing at the pump, in the supermarket, and across a number of other commodities.

As we continue to navigate the U.S. economic landscape circa 2011 and beyond, the ongoing decline in home values in many regions of our nation now would seem to be setting the table for an inflationary spike in housing costs. How so? What is going on here?  (more…)

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