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Stock Market took a beating today...


JoJoTheWebToedBoy
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Yikes....

Don't worry, the Fed will take care of it all :wacko:

 

Interesting that after today we are at (below) the same price level in the DJIA as we were when QE2 began last November. QE2 just ended in June. Bottom line: QE does not help improve the economy, it only props up the stock market. I hope everyone who has flamed me for my hate of the Fed and it's QE program, now realizes that QE only delays the inevitable.

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Don't worry, the Fed will take care of it all :wacko:

 

Interesting that after today we are at (below) the same price level in the DJIA as we were when QE2 began last November. QE2 just ended in June. Bottom line: QE does not help improve the economy, it only props up the stock market. I hope everyone who has flamed me for my hate of the Fed and it's QE program, now realizes that QE only delays the inevitable.

 

how dare you speak ill of quantitative easing? :tup:

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Interesting that after today we are at (below) the same price level in the DJIA as we were when QE2 began last November. QE2 just ended in June. Bottom line: QE does not help improve the economy, it only props up the stock market. I hope everyone who has flamed me for my hate of the Fed and it's QE program, now realizes that QE only delays the inevitable.

 

that's a rather ridiculous non sequitur.

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a lot of bad things all happened at once it seemed....I still think things will pick up for the holidays before we get the real thing early next year....

 

there has been a hugh sell-off in commodities right now as well as in stocks so things are getting a bit overblown but where there's smoke there's fire....however like I said, I expect the markets to rally for the holidays which will be one of the factors to encourage spending for the holidays before we get hit hard around the end of winter/early spring imo of course...

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that's a rather ridiculous non sequitur.

 

Actually, it's not. Or, at least it's not to me right now...

 

Or, maybe you could explain why you think so, and I may hold your view when I understand your thinking...

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that's a rather ridiculous non sequitur.

Please explain.

 

The QE program floods banks and investment firms with, in the case of QE2, $600BB. These firms simply put this money back into the stock market and various funds. Same thing happened after QE1 (which ended in Mar 2010) when the market peaked on April 23, 2010 and tanked throughout the summer. QE2 kicked in during November. Look at a chart from November until June and tell me what you see.

 

Maybe it's coincidence but I don't think it's absurd logic.

Edited by Brentastic
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Actually, it's not. Or, at least it's not to me right now...

 

Or, maybe you could explain why you think so, and I may hold your view when I understand your thinking...

 

the argument was that since the stock market is at the same level as when QE began, that the only thing QE did was prop up stock prices. it's a matter of correlatation ≠ causation. the logical linkage between those two facts is incredibly weak. the stock market is down primarily due to concern over a possible debt crisis percolating in europe.

 

now if you wanted to argue that QE hasn't been particularly effective in raising nominal GDP without pointing to the recent stock market slide as "proof", then you can probably put together a pretty strong argument. the fact that GDP sucks is an argument against QE. the fact that the stock market tanked today is not.

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the argument was that since the stock market is at the same level as when QE began, that the only thing QE did was prop up stock prices. it's a matter of correlatation ≠ causation. the logical linkage between those two facts is incredibly weak. the stock market is down primarily due to concern over a possible debt crisis percolating in europe. now if you wanted to argue that QE hasn't been particularly effective in raising nominal GDP without pointing to the recent stock market slide as "proof", then you can probably put together a pretty strong argument. the fact that GDP sucks is an argument against QE. the fact that the stock market tanked today is not.

Here's a little clue - google news has a justification for the stock market's price action everyday but that doesn't mean it's correct. The European debt crisis has been evident since the spring of 2010 - it's not like it just became a crisis today. Even if you don't recognize that this euro crisis has been looming for well over a year (which it has), we've been hearing about it all summer (since May). Hell, I first posted about it last year.

 

E2A: Also, I wasn't trying to imply that only today's action is proof. The market has been declining for 10 straight days, dropping 10.7% during that span. QE2 ended in June. And I only said it's 'interesting', not that there's a definitive correlation (although I do believe there is a correlation).

Edited by Brentastic
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Here's a little clue - google news has a justification for the stock market's price action everyday but that doesn't mean it's correct. The European debt crisis has been evident since the spring of 2010 - it's not like it just became a crisis today. Even if you don't recognize that this euro crisis has been looming for well over a year (which it has), we've been hearing about it all summer (since May). Hell, I first posted about it last year.

 

1) the probability of it really getting ugly shifts with events every day. lately that probability has been increasing.

2) QE has been in the news even longer. if it truly only has the effects you posit, wouldn't that have also been apparent to people with skin in the game before this past week?

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1) the probability of it really getting ugly shifts with events every day. lately that probability has been increasing.

2) QE has been in the news even longer. if it truly only has the effects you posit, wouldn't that have also been apparent to people with skin in the game before this past week?

1) this crisis has been a dog and pony show for over a year. It's as bad today as it was last year

2) the big boys were getting out of this market during the rally, selling into it - that's what they do because they're always ahead of the curve. When you see selling like today, that's a bunch of sheep dumping their money. Any investor of importance and power was out in March.

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I may be mistaken in this, but I'm recalling that the first quarter saw record insider selling (and by record, I mean since records have been kept of this sort of thing back in the early 1970s).

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I may be mistaken in this, but I'm recalling that the first quarter saw record insider selling (and by record, I mean since records have been kept of this sort of thing back in the early 1970s).

It's been like that since last fall. There are tons of articles/blogs like this:

 

http://www.zerohedge.com/article/ratio-ins...g-buying-3700-1

 

http://www.zerohedge.com/article/insider-s...ting-out-market

 

http://argo.zerohedge.org/article/insider-...ng-ratio-2842-1

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DJIA gapped up 172 points at the open today after the 'good' jobs number. As of this writing, DJIA is down 150 points.

 

The volatility index, known as the VIX was up 35% yesterday. Today it's up another 17% sitting at $38. The VIX shares a negative correlation with the S&P 500 and is also known as the 'fear' index - meaning when it goes up dramatically it shows growing fear in the markets and usually a major decline. At the height of the 2008 meltdown, the VIX reached $89 and it was as low as $15 just last month (July). The lowest it's ever been in the last decade is $9.39.

 

The VIX reached $48 a week after the flash crash and got as high as $42 a few days before the flash crash. Again, today it's at $38. An indicator of things to come? That's quite possible.

 

Be safe, huddlers.

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WOW, recap of today's price action in the DJIA as of noon central time.

 

DJIA gaps +172 at the open.

DJIA then tanks 400 points from that high and ends up -250 points by 11:00 am central time.

DJIA then rises 400+ points from that low and gets to +165 points on the day by 11:55AM ( CT).

 

Can you say volatility?? Holy Christ!

Edited by Brentastic
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despite all the debt we (the US) are issuing and people talking about downgrades, the 2-year treasury yield dropped to an all-time low yesterday. which means investors are fleeing like hell from europe (and from stocks because they see the situation there sparking a double-dip). here's another article blaming the strong dollar. these are also strong indicators that, if anything, the fed's monetary policy is too tight right now.

 

one last bit of reading. read the whole thing, but a key quote:

In my December 2008 column, I argued that the only practical way to shorten the coming period of painful deleveraging and slow growth would be a sustained burst of moderate inflation, say, 4-6% for several years. Of course, inflation is an unfair and arbitrary transfer of income from savers to debtors. But, at the end of the day, such a transfer is the most direct approach to faster recovery. Eventually, it will take place one way or another, anyway, as Europe is painfully learning.
Edited by Azazello1313
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There is an argument that with the vote by congress that the US is on a tight monetary policy (vis-a-vis other countries, which is the only mechanism for currency valuation).

 

a slightly tighter fiscal policy, and yeah that affects the dollar and t-bill rates, absolutely. which some would argue is all the more reason for the fed to inject more liquidity.

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