Saturday, November 1, 2014

QE無限大は今の日本である

The Market Trend Model (http://bitly.com/M_Trend_Model) now shows a positive bias after the Nasdaq rose from 4,116 to 4,630 ~ an astonishing 500 point or 12% rally in just twelve days!

This spectacular gain occurred even after lackluster earnings reports from the likes of former leaders Amazon, Chipotle, Facebook, Netflix, and Twitter (just to name a few).  Even more astonishing is the fact the market closed the month of October at 52-week highs after Janet Yellen and the Federal Reserve supposedly ended Quantitative Easing.

As I stated in my brief post last Wednesday, "I continue to look at interest rates as the tail that wags the dog as government manipulation of rates and markets will surely continue far into the future."

And sure enough, on Friday the latest in QE Infinity is turning Japanese.

"The Bank of Japan on Friday unexpectedly announced that it would buy larger quantities of government debt. By injecting more money into the economy, the central bank is trying keep borrowing costs low, encourage spending and, ultimately, stoke inflation and growth." ~ The New York Times.

According to Mohamed El-Erian, Chief Economic Adviser of Allianz, "QE may be over in the U.S., but there's going to be more QE in Europe and Japan.  So, I don't think the QE trade is over.  I think the QE trade is evolving.  So, the old trade was all about the Fed's ability to repress volatility across the board and boost up asset prices, and it worked very well.  The new QE trade is about the multitrack world of central banking, so it's more on the currency."

For now, all's well that ends well...until it doesn't.