Tuesday 8 October 2019

Renewed threats of QE

US equity indexes closed very significantly lower, sp -45pts (1.6%) at 2893. Nasdaq comp' -1.7%.  Dow -1.2%. The Transports settled -1.9%.




US equities opened broadly lower on renewed US/China trade concerns. The SPX spiraled down to 2896, with a bounce into the early afternoon.

Powell appeared....

... and whilst he repeatedly said 'This is not QE", calling it just 'adjusting the balance sheet for reserve management purposes', today was effectively the first outright threat of renewed QE.

At the FOMC of Oct'30th, in addition to rate cut'3, we can now also expect the printers to be spun up, with monthly QE of around $15bn. I guess it should be called QE-lite, rather than QE4.

The Twitter legion responded overnight...

In terms of rates...

A mere 7% believe rates won't be cut any further this year. Yours truly is expecting TWO rate cuts.


A US/China trade deal does indeed appear very unlikely before year end. Even if one is announced, most accept it would be a poor deal of no real consequence.

Volatility picked up, with the VIX settling +13.5% at 20.28. S/t outlook offers a challenge of the sp'2855 low. Alarm bells if the VIX settles the week above the key 20 threshold.

Autumnal sunset

Full moon is Sunday Oct'13th
Extra charts in AH (usually around 5pm EDT) @ https://twitter.com/permabear_uk

Goodnight from London
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