Fed Ends Bond Buying Scheme--Dow Up 1.4%

[InTheLight]

I see so now you have just taken on Zaacs debate tactics of just saying the opposite when you have nothing else to contribute.

Irony alert!

I started this thread. I offered data and proof of my claim. You? You just post the opposite of what I said, offering no compelling evidence whatsoever.

Hilarious.

 

[Revmitchell]

I offered data and proof of my claim.

No you didn't. I can find not one outside source in any of your posts that supports you claims of cause and effect. Simply saying "this is the effect" or "this is not the effect" is not proof.

You? You just post the opposite of what I said, offering no compelling evidence whatsoever.

Hilarious.

Compelling to whom? That is a rather arrogant attitude. My claim was just as legitimate as yours is. You not agreeing with it is not a determining factor of what is a legitimate claim.

Having said all of that it has nothing to do with what I posted.

 

[Revmitchell]

If the bond buying program was not meant to prop up the stock market then why did they do it at all?

A big driver in the stock market's multiyear bull run is the market-friendly stimulus provided by the nation's central bank. But Wall Street wonders if the Fed can keep propping the market up forever. NEW YORK — Will the stock market sugar high ever wear off?

Ever since the bull market was born in March 2009, most of the credit for the stock market's spectacular but surprising rise has gone to the Federal Reserve, whose easy-money policies have been equated to performance-enhancing drugs that Wall Street has become addicted to.

The Fed's zero-percent-interest-rate policy, dubbed "ZIRP," and its unprecedented bond-buying program, known as quantitative easing, or QE, is often cited as the major engine behind the market's 136% rise the past four years and its fast-and-furious 12% gain so far in 2013.

The Fed's policy playbook has driven interest rates and borrowing costs to record lows, which has spurred risk-taking, allowed consumers to get their finances back on track and enabled Corporate America to keep churning out profits. Super-low interest rates on cash and bonds have also made the stock market, which now sports a fatter dividend yield than the 10-year U.S. Treasury note, a far more attractive investment alternative relative to fixed income.

http://www.usatoday.com/story/money/markets/2013/05/02/can-fed-keep-propping-up-stocks/2129787/

 

[Crabtownboy]

One of the biggest dangers to the continued upward movement of the stock market is if we enter a period of deflation.

 

[Revmitchell]

Now let's take a look at what really happened when this was announced:

The Dow Jones industrial average .DJI fell 31.44 points, or 0.18 percent, to 16,974.31, the S&P 500 .SPX lost 2.75 points, or 0.14 percent, to 1,982.3 and the Nasdaq Composite .IXIC dropped 15.07 points, or 0.33 percent, to 4,549.23.

Material shares .SPLRCM fell 1.3 percent after DuPont (DD.N) said there were "competitive advantages" to keeping its businesses together. Activist investor Nelson Peltz has urged DuPont to separate its various businesses in a move that has supported the company's shares. Shares of DuPont lost 1.7 percent to $66.80.

Facebook Inc (FB.O) fell 6.1 percent to $75.86 the day after the social network announced an increase in spending in 2015 and projected a slowdown in revenue growth this quarter.

After the market closed, shares of Visa Inc (V.N) rose 3.6 percent to $222.40. Visa reported its fourth-quarter results and announcing a stock buyback program of $5 billion.

Despite the turn lower, equities mostly held onto recent gains, with the S&P 500 up 6.4 percent over the last nine sessions as earnings have mostly been strong. So far this reporting season, 75.3 percent of S&P 500 companies have exceeded profit expectations, according to Thomson Reuters data, above the long-term average of 63 percent.

Declining issues outnumbered advancers on the NYSE by 1,763 to 1,322, for a 1.33-to-1 ratio on the downside; on the Nasdaq, 1,437 issues fell and 1,245 advanced for a 1.15-to-1 ratio favoring decliners.

The benchmark S&P 500 index posted 65 new 52-week highs and 3 new lows; the Nasdaq Composite recorded 114 new highs and 35 new lows.

About 7.08 billion shares traded on all U.S. platforms, according to BATS exchange data, below the month-to-date average of 7.86 billion.

http://www.reuters.com/article/2014/10/29/us-markets-stocks-idUSKBN0II13L20141029


So we see the annoucnement was not all rosey.

 

[InTheLight]

Now let's take a look at what really happened when this was announced:

The Dow Jones industrial average .DJI fell 31.44 points, or 0.18 percent, to 16,974.31, the S&P 500 .SPX lost 2.75 points, or 0.14 percent, to 1,982.3 and the Nasdaq Composite .IXIC dropped 15.07 points, or 0.33 percent, to 4,549.23.

Wow, that's a lot. HA HA.

Announcement was made the afternoon that the market ended up like this. The next day was the first full day it would have affected anything.

It's all moot because the market had known for months that the bond buying program was going to end on that particular day. The fact that the market "fell" 0.18 percent only drives my point home. The bond buying program was not a big factor in the market run up.

 

[Revmitchell]

Wow, that's a lot. HA HA.

Announcement was made the afternoon that the market ended up like this. The next day was the first full day it would have affected anything.

It's all moot because the market had known for months that the bond buying program was going to end on that particular day. The fact that the market "fell" 0.18 percent only drives my point home. The bond buying program was not a big factor in the market run up.

Still nothing to support your claim of cause and effect.

 

[InTheLight]

One of the biggest dangers to the continued upward movement of the stock market is if we enter a period of deflation.

Highly unlikely. But since you brought it up--what happened to the hyper inflation we were supposed to have when the Fed started "printing money" back in 2008? Remember the predictions of Weimar Republic like hyper inflation? Remember the "buy gold" frenzy? Oh, that's right. Some people like to see the world the way they think it is, not the way it really is.

 

[Crabtownboy]

Rev. continues to beat a dead horse. If I were at a stage in my life where I was investing I would consider this a good time to selectively begin buying. The chart has changed direction and is giving a buy signal. If it breaks 17400 it will be a strong buy signal.

I am not at such a stage in life, so I will not begin buying. I am in the protection stage of life now.

 

[InTheLight]

Still nothing to support your claim of cause and effect.

I'm not understanding. The announcement is made that the bond buying program is ending on Wednesday afternoon, and on Thursday the stock market jumps. In fact, the market started declining just after 12 noon on Wednesday.

http://online.wsj.com/mdc/public/page/2_3022-djiahourly.html

 

[Sapper Woody]

Also, leave off the hateful insults. They are not becoming of of someone who says they are a minister.

Your English spelling is rather poor. How about trying to become more intelligent and rational?

Economics isn't my strong suite, so I can't contribute. I did find what I quoted ironic though.

 

[Revmitchell]

An unbylined "Q&A" column at the Associated Press yesterday began with the following false declaration: "The $4 trillion experiment is over." That just isn't so.

Maybe the Federal Reserve is done building up its debt holdings — that is by no means certain — but the "experiment" known as "quantitative easing," or "QE," won't be over until the Fed fully unwinds those balances. In the meantime, it has unwarranted leverage over the stock and bond markets. Fed Chair Janet Yellen has what appears to be a de facto veto over Washington policies she doesn't like should she decide to use her leverage in that manner. The rest of the AP item wasn't much better, particularly how it wormed around the reality that if the Fed wishes to avoid winding down its balances, it's going to have to keep buying Treasury and mortgage-backed securities as current holding mature:

Q: So now the Fed owns $4 trillion in bonds. Does it have to sell them?

A: No, they can sit on them. Some analysts wonder how the Fed will be able to unload its massive collection of bonds without disrupting markets. Very, very slowly, is the Fed's answer, and only if needed. One way is to stop re-investing money from bonds when they mature.

The last part of the answer proves that its first part is wrong.

- See more at: http://newsbusters.org/blogs/tom-bl...er-—-4-trillion-holdings#sthash.yAiEngGa.dpuf

 

[Crabtownboy]

Never a thought of your own. Sad, sad, sad.

An unbylined "Q&A" column at the Associated Press yesterday began with the following false declaration: "The $4 trillion experiment is over." That just isn't so.

Maybe the Federal Reserve is done building up its debt holdings — that is by no means certain — but the "experiment" known as "quantitative easing," or "QE," won't be over until the Fed fully unwinds those balances. In the meantime, it has unwarranted leverage over the stock and bond markets. Fed Chair Janet Yellen has what appears to be a de facto veto over Washington policies she doesn't like should she decide to use her leverage in that manner. The rest of the AP item wasn't much better, particularly how it wormed around the reality that if the Fed wishes to avoid winding down its balances, it's going to have to keep buying Treasury and mortgage-backed securities as current holding mature:

Q: So now the Fed owns $4 trillion in bonds. Does it have to sell them?

A: No, they can sit on them. Some analysts wonder how the Fed will be able to unload its massive collection of bonds without disrupting markets. Very, very slowly, is the Fed's answer, and only if needed. One way is to stop re-investing money from bonds when they mature.

The last part of the answer proves that its first part is wrong.

- See more at: http://newsbusters.org/blogs/tom-bl...er-—-4-trillion-holdings#sthash.yAiEngGa.dpuf

 

[Revmitchell]

Never a thought of your own. Sad, sad, sad.

I see there is more of the insults you accuse me of. Of course when I offer my own thoughts I get told I never have anything to support my claims. When I do offer support I get told I do not have a thought of my own. More dishonesty from several people including crabby.

 

[Crabtownboy]

I see there is more of the insults you accuse me of.

You are a good teach at insults. But that was not an insult, just a statement of fact. You post article after article after article giving the link ... but put nothing of your own thoughts in the thread.

Citing articles is fine, but what about adding your own thoughts. OK?

 

[Revmitchell]

You are a good teach at insults. But that was not an insult, just a statement of fact. You post article after article after article giving the link ... but put nothing of your own thoughts in the thread.

Citing articles is fine, but what about adding your own thoughts. OK?

It was an insult and you know it, I know it and everyone else knows it as is what I quoted above. Apparenlty you have gotten over emotional once again. I will leave you to your anger to cool down.

 

[Crabtownboy]

It was an insult and you know it, I know it and everyone else knows it as is what I quoted above. Apparenlty you have gotten over emotional once again. I will leave you to your anger to cool down.

If laughter is an emotion, and I think it is, then yes I have gotten emotional. You bring so much humor into my life.

I see it as a statement of fact. You as an insult. Like a Bible story, different interpretations.

On the market. It will be most interesting to see if the IDU breaks above the 17400 level.

You know what I think may happen. The economy is getting better, unemployment is down, people are making money. But the public perception has not caught up with reality. That is not surprising. There is always a lag going both ways.

Now I expect the GOP will capture the Senate and will proceed to destroy the good that is now going on. This will create disaster for them in 2016. Will be most interesting to see if this happens.

If the GOP gains power in both houses they will have to come up with some play as there will be nothing for them to obstruct. With power comes responsibility and I do not believe the GOP has gained an understanding of that nasty fact.

Cheers.

 

[poncho]

I see there is more of the insults you accuse me of. Of course when I offer my own thoughts I get told I never have anything to support my claims. When I do offer support I get told I do not have a thought of my own. More dishonesty from several people including crabby.

I'm still waiting for you to back your claim the Russians were firing shells into Ukraine. It might help if you actually make an effort to support your claims instead of doing the disappearing act.

 

[poncho]

http://www.youtube.com/watch?v=Re72di5phM0

 

[poncho]

NEWSFLASH: The Fed Isn't Stopping QE!

What has been expected for quite a while has now officially happened. The Federal Reserve stated that it would stop intervening on the market where it has been buying treasury bonds and mortgage-backed securities like there was no tomorrow anymore. The program started at a rate of $45B per month but was upscaled rather fast to $85B per month before being gradually scaled back since the beginning of this year. The Fed’s balance sheet has expanded considerably as you can see on the next chart.

< snip >

But wait, let’s not get carried away by the so-called ‘End of Quantitative Easing’ and have a closer look at this MBS purchase program. The Fed’s announcement to stop purchasing additional Mortgage-Backed Securities was just talking about NEW investments paid for by freshly printed money. It is the central bank’s intention to continue to reinvest the returns on its $1.7 trillion dollar Mortgage-Backed Securities portfolio back in the market in the foreseeable future.

Read More At: http://www.zerohedge.com/news/2014-11-02/newsflash-fed-isnt-stopping-qe