If The Economy Rolls Over, QE Won't Save The Stock Market

It’s too early to start declaring the recovery toast, merely because of Friday’s bad jobs report (though there are other warning signs), but if the economy does begin to roll over, it would be a mistake to assume that the “Bernanke Put” or QE will save you, at least from an equity market perspective.

Remember, the rally from September-November wasn’t based on QE — it was based on a series of improving economic numbers — and if those numbers weaken, the market won’t hold up.

Japan went through this, and fell hard not long after QE was initially unveiled, as this chart from PragCap indicates.

chart

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