Fed Stops Stock Slide with Talk of QE Extension
October 20, 2014
The Fix Is In
Fed Stops Stock Slide with Talk of QE Extension
by MIKE WHITNEY
Unbelievable.
On Wednesday, stocks were hammered after economic data showed that the US and global economies were headed for a major slowdown. By mid-day, the Dow was down 460 points before clawing its way back to minus 173 points. It looked like the market was set for another triple-digit flogging on Thursday when the Fed stepped in and started talking-up an extension to QE3. Thats all it took to ease investors jitters, stop the meltdown and send equities rocketing back into space. By the end of Fridays session, all the markets were back in the green with the Dow logging an impressive 263 points on the day. Heres more background from Wolf Street:
But just when some profusely sweating souls on Wall Street thought that the bottom was falling out, a savior appears. St. Louis Fed President James Bullard got on Bloomberg TV and pressed the red panic button (and) handed them what they wanted
.That was enough.
Using declining inflation expectations as a pretext, he proposed to delay the end of QE. The Fed should continue buying $15 billion in securities a month
. it instantly turned around the markets. The spoiled brats on Wall Street were ecstatic to imagine that the Fed might continue to deliver the goodies theyve become addicted to, and without which life seems unbearable. (This Market is Driven by Psychology and Momentum, which Works Really Painfully on the Way Down, Wolf Street)
http://www.counterpunch.org/2014/10/20/fed-stops-stock-slide-with-talk-of-qe-extension/