It sure looks to me like today's market action is one of the better examples of Zweig’s — “Don’t fight the Fed”. Over 700 point swing on FED action "Stocks rose Monday after the Federal Reserve said it is expanding the scope of its $750 billion emergency corporate debt loan facility to include individual corporate bonds, while also scrapping some earlier restrictions for potential borrowers."
Don't fight the FED
- Thread starter ejman
- Start date
Sunset
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Yep. Next step: buy equities directly.
Of course, I’m sure they’ll start with equity ETFs first, before picking winners.
I have a nice property the Fed can buy, the bonus is really a double:
- Help out a senior who has no pension.
- Give the house to some deserving homeless person to get them off the street.
NYEXPAT
Thinks s/he gets paid by the post
I would respectfully disagree. the Fed released the news at 2pm, when futures had rallied off there bottom at 1:30 in the morning. From what i see SPX futures dropped 16 points after the announcement only to re continue the rally 15 mins later.
As I wrote this, I noticed spx futures are back down to the 2 pm level.
As I wrote this, I noticed spx futures are back down to the 2 pm level.
Last edited:
It will be interesting to see how that pans out if it comes to pass. My understanding is that Japan has been doing that for a while now but results have not been more than middling i.e. Japan's stock market has not cratered but it has not recovered either.Yep. Next step: buy equities directly.
Of course, I’m sure they’ll start with equity ETFs first, before picking winners.
Perhaps. It's really worrisome that the FED has to take this substantial incremental step. Makes one wonder if things are really that turbid under the news surface.
Dtail
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
But then they want the bailouts.
jimbee
Thinks s/he gets paid by the post
- Joined
- Oct 11, 2010
- Messages
- 1,227
Yep, privatized gains and socialized losses have been the norm for a while.
Maybe I should have been clearer. I meant they wouldn't allow capitalism. That's why the supports, bailouts, and disguised supports and bailouts.
jazz4cash
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
All the jokes about helicopter money and it’s actually happening but everybody and every company and the markets are insatiable.
GravitySucks
Thinks s/he gets paid by the post
Feeling stupid for giving up yield for safety now. Wonder if propping up near junk is depressing the price of Govvies? Why buy safety if nothing is going to default?
pb4uski
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
How does "the market".... investors collectively... pick winners and losers if the Fed keeps intervening? Applies to either bonds or stocks.
Seems a long way from the mandate to me.
Seems a long way from the mandate to me.
Well, my guess is that when there is a buyer in "the market" that has unlimited funds then we no longer have a normally operating market. Whatever direction the buyer with unlimited funds wants to take is the direction "the market" takes. Until the music stops and I think its impossible to predict at this time how/when that will happen. And lets not forget the Japan example which has gone on for decades now with no resolution.
mpeirce
Thinks s/he gets paid by the post
If the government shuts down much of the economy (intervenes), albeit for an ostensibly good reason, doesn't it make sense to intervene to some extent to repair the damage?
pb4uski
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Yes, but I don't see how the Fed buying bonds and stocks repairs anything. Because they intervened so early we don't even really know what needed fixing.
USGrant1962
Thinks s/he gets paid by the post
The Fed is not buying stocks, why do people keep saying that?
Dtail
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Not yet. Sometime in the next year, especially if there is another major leg down.
Dtail
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Dtail
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Well there still is a possibility of negative yields, which could give you one last bump on the treasuries.
pb4uski
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I realize that they are not yet buying stocks... yet... but it would not surprise me if they tried to finagle a way to do so despite their not having the legal authority to do so. .
I don’t think anyone said the Fed is buying stocks. Just surmising that it might happen.
They have started buying individual corporate bonds. I don’t necessarily mind the Fed propping up the market to create liquidity, but I do have issues when they start picking winners and losers.
The real question, at least for me, is what’s the outcome of the Fed’s intervention and how do I protect myself?
It could be that buy/hold/rebalance is the right way to go. The market will be propped up regardless and if it drops enough, some stimulus will happen to help it “recover.” And keep enough in cash/FI to withstand any prolonged downturn.
I’m skeptical that the Fed’s intervention is sustainable, but what do I know?
They have started buying individual corporate bonds. I don’t necessarily mind the Fed propping up the market to create liquidity, but I do have issues when they start picking winners and losers.
The real question, at least for me, is what’s the outcome of the Fed’s intervention and how do I protect myself?
It could be that buy/hold/rebalance is the right way to go. The market will be propped up regardless and if it drops enough, some stimulus will happen to help it “recover.” And keep enough in cash/FI to withstand any prolonged downturn.
I’m skeptical that the Fed’s intervention is sustainable, but what do I know?
Similar threads
