charttrader

QE Ends in the US… And Won't Begin in the EU…

AMEX:SPY   SPDR S&P 500 ETF
311 6 11
The markets continue to operate based on complete delusions.

The single biggest driver of stock prices has been the Fed’s QE programs. QE has accomplished nothing other than a higher stock market . EVERY-time that the Fed was not engaged in QE , the markets have fallen as the below chart shows.

QE is over. It just ended. And the Fed will not be launching it anytime soon. The media is finally catching on that QE increases wealth concentration (note the slew of stories recently pointing this out in mainstream media outlets).

Between this and the statements on income inequality from various Fed officials, it is clear that the political climate has changed regarding QE as a monetary policy . Barring an absolute stock collapse, QE is off the table for now.

Beyond this, the market is rallying based on hopes of… QE… from the ECB. This is impossible. The ECB cannot and will not engage in QE based on the current legal framework of the EU. It can corporate bonds and other securities, but NOT EU sovereign bonds.

The reason is simple: Germany will not stand for it. Germans still remember the hyperinflation that buying sovereign bonds induced in the past. Any attempt by the ECB to buy sovereign bonds will be political fuel for the anti-Euro party in Germany… which could give Angela Merkel real trouble.

Politics drives everything in Europe. Without Germany’s approval that suggestion is dead in the water. So the market is misguided there too.

Be warned…
Wes
2 years ago
too many shorts on one side of the boat
+1 Reply
ricabron
2 years ago
Agree so therefore JUST TAKE ADVANTAGE WHILE YOU CAN..... free money.. enter on retracemnnts and look up on higher time frames for future flow possibility
+1 Reply
Indeed. There is only one thing worse than politics driving everything and that's freshly printed money.
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SS96 PRO
2 years ago
bla bla bla markets are not delusional. people are. markets are as efficient as they have ever been.
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charttrader PRO SS96
2 years ago
Efficient? Good theory but not true:)
Reply
pezq PRO
2 years ago
Well said ! - but if QE is really over....and I hope you are right, I can imagine a big rush for the exit, even though there is not much return anywhere else. Whats your view on how to trade this scenario?
+1 Reply
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