Wednesday 9 October 2019

We shall call it...

US equity indexes closed broadly higher, sp +26pts (0.9%) at 2919. Nasdaq comp' +1.0%. Dow +0.7%. The Transports settled +1.2%. Near term outlook offers another swing lower ahead of the weekend.




US equities opened broadly higher on yet another China trade related headline. Whilst the gains were a little shaky, the market did manage to claw to 2929 in the closing hour... only to see yet another trade headline knock the market to settle at 2919.

It wouldn't be a normal trading day without...

Volatility was in melt mode, with the VIX settling -8.1% at 18.64. S/t outlook offers another significant wave lower in equities to challenge last week's spike floor of sp'2855. If the VIX settles the week above the key 20 threshold, I would look for the 2810/2790 zone with VIX printing >30 next Mon/Tuesday.

We shall call it...

As the fed are set to spin up the printers again, what do we call it?

Powell is repeatedly saying "This is not QE". By definition, that merits as outright crazy talk. An increase in the balance sheet - literally printing money out of nothing, and then buying something (whether T-bonds or whatever) is QE.

The FOMC of Oct'30th will provide rate cut'3, but also renewed QE of around $15bn a month. It appears that will be used to buy US Govt' bonds.

After some thought... I will call it... QE4 Phase'1

We know where this is headed, right?

Phase'1 $15bn
Phase'2 $40/50bn (by end 2020)
Phase'3 $90/100bn (2021/22)

QE4 will be without end, and in addition to US Govt' T-bonds, we can expect eventual purchases of anything and everything, including corp' bonds, stock/bond ETFs, student debt, property (both business and residential), and infrastructure bonds. The only thing that isn't currently on the menu is the direct purchase of people. 

To quote Dr Strange... "... we're in the Endgame now", although perhaps the following is more appropriate...

Yours, tempted to call it... 'mini QE'

A chilly autumn day in the capital of geo-political chaos

Full moon is Sunday Oct'13th
Extra charts in AH (usually around 5pm EDT) @

Goodnight from London
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