Being in the market for as many years a I or any of us have, it's hard to believe in coincidence, that's why it's somewhat amazing to have 6 F_E_D speakers in 4 days come out and play the dovish card to give us the best 3-day move of all of 2013, to only have 2, 1 of which was one of the 6 from earlier in the week, Lacker, but it was Stein who got the ball rolling with this gem....
Highlighted portion of the speech that sent futures down...
"Both in an effort to make reliable judgments about the state of the economy, as well as to reduce the possibility of an undesirable feedback loop, the best approach is for the Committee to be clear that in making a decision in, say, September, it will give primary weight to the large stock of news that has accumulated since the inception of the program and will not be unduly influenced by whatever data releases arrive in the few weeks before the meeting--as salient as these releases may appear to be to market participants. I should emphasize that this would not mean abandoning the premise that the program as a whole should be both data-dependent and forward looking."
In case you were wondering, it was the seemingly arbitrary "September" date for being "clear" with the market, so was that hypothetical or was that the F_E_D's clear guidance to the markets? Participants took it this way....
Then comes Lacker...
"Bond and stock markets fell sharply in response, but that should not be too surprising.The Chairman’s statement forced financial market participants to re-evaluate the likely total amount of securities the Fed would buy under this open-ended purchase plan — in other words, how much liquor would ultimately be poured into the punch bowl....
As market participants gain additional insight from the words of Federal Reserve officials or by policy actions in coming quarters, further asset price volatility seems likely."
And the EXACT reason I have been giving for the end of QE since September....
I seriously doubt additional monetary stimulus can provide much impetus to real growth right now. But further stimulus does increase the size of our balance sheet and correspondingly increases the risks associated with the “exit process” when it becomes time to withdraw stimulus. That is why I have not supported the current asset purchase program..
Remember the statement by former F_E_D member Kevin Warsh,
"Getting in to accommodative policy is easy, it has always been withdrawing it that is the hard part"
So is this "Pullback" that was discussed yesterday in so much detail F_E_D controlled also?
The SPX was not only at resistance yesterday after the slight breakout from the H&S Inverse bottom with heavy overhead resistance, but at one of the clearest Technical signals over the last 100 years, resistance at the 50-day moving average.
I'm not saying either of these matter 1 bit anymore in the real world or market as it is now, but these are what Technicians have been taught for well over a century, this technical set up is one of the most common in Technical analysis, again the VERY simple concept that any 1 month old Technical Trader knows by heart...
So as to the question, "Is the F_E_D actually moving this market as I suggested they would Saturday, but to a degree unimagined or coincidence?"
If this was only meant to be a small pullback, we could have our answer at 3:30 when an additional F_E_D member speaks, John Williams...
I'd be shocked if the F_E_D were this blatantly manipulating asset prices for the banks, but not surprised.
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