The fine folks on CNBC raised the bar again! Actually, I cannot blame CNBC for cooking up this bit of lunacy. I can only blame them for giving it air time. The new best reason (most absurd thing that I have ever heard of), the reason that the market caught fire the past two days is …
Yup, you heard me right, QE IV.
The QEs were taken as emergency measures. Please explain the emergency.
I mean unemployment is trending lower at 5.1%. Inflation is running at about 1.5% with GDP growth at around 3%. Yes, wage and productivity growth are both tepid and we had less-than-predicted employment growth last month. Nonetheless, it was growth in a succession of good employment numbers. WHAT IS THE EMERGENCY?
I am really having trouble getting my arms around this. It is one thing for the Fed to drag its feet on the first increase in the Fed Funds rate in nine years, ostensibly waiting for the perfect moment, maybe signaling the economy, here and abroad, was less robust than they would like. It is entirely another to lay on another round of quantitative easing. There is no emergency.
Why are we talking about more QE?
It is being proffered as a reason for two very strong days in the market. This totally ignores the fact that the market was terribly oversold, ostensibly because the Fed did not move to raise rates at its September meeting. This lack of action, plus less-than-lucid messaging on the whys? caused tremendous and unwarranted speculation about unforeseen bad things (China imploding, developing countries imploding due to commodity prices collapsing, feeble Europe) being close at hand. Fold in some volatility and the media and punditry piling on and you have the recipe for a really scary correction (which people have been calling for for over two years). But that’s it folks. Things are simply not that bad out there.
Ya can’t fight the Fed!
At least that is the conclusion that Prudential Securities strategist, Quincy Krosby, comes to based on rumors that circulated earlier about anther round of QE. In this clip from CNBC (“Still can’t fight the Fed:Pro”), Ms. Krosby is giddy about the prospect of more QE. Trust me, if this turns out to be the case, we really are in trouble. Fortunately, this is just another absurd reason given by the media attempting to explain the minute-to-minute, day-to-day action of a market that, in the short-term is really unfathomable.
It is dumb and I heard it given as a reason for the rally two or three times later in the day.
Oh well, I guess this should not be a surprise.
What do you think?
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