Markets are pumped up for Fed’s benefit – justified killing of QE

Thursday, October 30, 2014 -

The Fed’s dealer banks kept the buying up today pushing stock prices up again, helping to justify the Federal Reserve’s decision to kill all QE – be patient, here.

For the first time, a QE death appears to be a good reason for stocks to rally hard. All previous QE deaths spawned strong market pull backs and a quick shift into the next QE program. But now it is different – or is it?

After dropping modestly on the FOMC announcement yesterday, stocks steadily moved higher over the course of the trading day on Thursday, easily offsetting losses and lifting the indexes to their best closing levels in a month.

All the indexes closed in positive territory, with the large cap Dow outperformed all other indexes. The Dow surged up 221 points (+1.3%) to 17,195, the Nasdaq rose 17 points (+0.4%) to 4,566 and the S&P 500 climbed 12 points (+0.6%) to 1,995 – just shy of the magic 2000 goal. The NYSE finished at +0.6% and the small cap Russell 2000 at +0.8%.

Apparently even the European markets want to rally over an end to the Fed QE stimulus as all their markets also moved higher over the course of the session. While the French CAC 40 Index climbed by 0.7 percent, the German DAX Index rose by 0.4 percent and the U.K.’s FTSE 100 Index edged up by 0.2 percent.

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US GDP Beats Expectations

We are told that the reason the markets around the world and particularly in the US are shrugging off the end of the QE stimulus programs is because the economy is in such an amazing growth condition as the Commerce Department released an estimate for Q3 GDP, showing stronger than expected GDP growth.

The Commerce Department said GDP increased by 3.5 percent in the third quarter compared to the 4.6 percent growth seen in the second quarter. Economists had expected GDP to climb by 3.0 percent.

The stronger than expected growth reflected overweight contributions from trade and defense spending as well as a continued increase in consumer spending. What is not made clear is that consumers are spending much more for . . .

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