Ten years since the launch of quantitative easing by the Federal Reserve and investors are still pining for yet another interest rate cut. Just let that one roll around in your mind for a moment. A few years back in one of my pertinent posts I mused that we would probably never again see a meaningful interest rate hike during our lifetime. And sure enough, here we are a decade later, still sitting in the same hole we dug for ourselves. Just that it’s a lot deeper now.
It has now become clear that we are not just traversing a minor market correction we should expect to blow over quickly and painlessly. With Mexico now added to a growing list of nations facing import tariffs into the United States, a growing sense of economic uncertainty and portfolio risk is beginning to take hold among investors. After a morning stroll through my collection of market momentum (mamo) charts I am unfortunately unable to find much reason for optimism, at least over a short to medium term perspective.
Once again the market gapped down at the open but bearish exultations were short lived as price quickly turned and proceeded to squeeze higher throughout the rest of the session. And unless futures turn on a dime in the next hour or so we are looking at yet another gap lower at the open this morning. Are we having fun yet?
Bankwalker posted a pretty insightful comment yesterday, which summarized the morbid game that’s currently being played in equities: “Some people with very deep pockets used the very high leverage of index futures contracts during overnight hours when stocks weren’t trading to push down the market by manufacturing a false crisis based on an insignificant non-newsworthy event so they could buy cheaper from weak people that had unwarranted fear.” Well said and I couldn’t have put it any better.