The New Market « Market Montage

This morning we have bad earning reactions from Amgen, Apple, AT&T, Procter & Gamble (down 2.5-5%+) and a quite poor durable goods orders number……

…..and the S&P is essentially flat.   Remarkable.

While expecting a bounce of some sort coming off that one bout of heavy selling, seeing the "V shaped" move taking us back to early month highs in just 3 days is surprising.  Now that head and shoulders top theory is starting to lose some steam.  Maybe under QE, the 90% down days simply don't mean squat.  Certainly a lot of old rules seem to be on hold during QE.

Reviewing yesterday's economic data after the close I was shocked just how bad it was across the globe (China's PMI slowing again, European PMI horrible) – yet yesterday was one of the strongest days in Europe for the year as "bad is once again good" (i.e. this forces the ECB to cut rates again) and the U.S. ignored it all.   The utter and absolute faith in central bankers is amazing.

On that note, as the economy slows yet again this spring I am going to be the first to put out the "black swan" of expanded QE sometime this fall.  I might be early because if Bernanke leaves in early 2014 he might not want to make yet another move, but if Yellen takes over it's almost a no brainer.  Now that Japan has done a program 3x the size of the Fed (relative to their economy), the equivalent in the U.S. would be about $250B a month.  So a push upward over 100B a month from the current 85B would now have cover.  Of course the consensus is "tapering" down will begin sometime next winter but if this economy remains in stall speed of 1-2% why not expand.

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