As much as the Fed would have you think otherwise ( as the current chatter of “QE tapering” leads headlines) markets are “selling off” for exactly the reasons that a market “should” sell off. We’ve been over this on several occasions as the SP 500 looks set to reverse at more or less the exact spot we’d looked at some weeks ago.
What I find particularly amusing about this – is how the media and Fed are doing all they can to suggest the reason for this weakness is the Fed’s recent “whisper” that it may taper it’s QE programs, when in reality nothing could be further from the truth!
The market moves lower on poor guidance and “so so” earnings, weak global growth projections – and all the other “normal reasons” that markets move.
The Fed wants you to believe this “downturn” is due to the potential withdraw of stimulus – so you will applaud more stimulus! The Fed/media is “aligning itself” with the current weakness as to look like ” the hero” when time comes for the announcement of FURTHER STIMULUS.
As the summer correction runs its course – markets will be “begging” for answers, begging for understanding as to “why it can’t go up forever! “why! why Ben why!?”
It can’t go up forever because at some point….some point – the fundamentals will indeed catch up with the QE freight train.
I remain short USD and long JPY against nearly everthing under then sun – as a “currency salad” I look to enjoy this summer. I may however put the bowl down at a moments notice as Central Bankers have been known to spoil the odd picnic.