Folks, there is no “Fed Put.”Just because the Fed announced QE-Open Ended, it doesn’t mean that markets can’t decline.
As we’ve stressed for years, what matters is data.
And today the data was bad.
Personal income missed estimates, growing just 0.1 per cent vs. expectations of 0.2 per cent. And last month’s 0.3 per cent growth number was revised down to 0.1 per cent.
Chicago PMI was ugly, falling below 50 for the first time since September 2009.
And UMich Consumer Confidence missed by a tad.
As we wrote last weekend, when arguing that it was the data, not the Fed causing markets to rally at the time …
If you think that this market is fundamentals driven, then it means that if the data turns sour (certainly possible) the market could easily tumble in spite of the loose Fed policy. Not only that, it’s easy to imagine a downturn in the data accompanied by a feeling that the Fed had already fired bazooka, leading to the conclusion that there was no ammo left anywhere to address the economy, thus causing market panic. We’re not saying this will happen, but it would not be a total surprise.
So watch out. A combo of weak data plus a sense that there’s no more for the Fed to do is … worrisome.
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