Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Your logic is very flawed. QE not being needed today doesn't mean it wasn't shoring up the market in the past. Perhaps the fed decision to scale back QE is because it's not needed anymore but that does not mean it wasn't in the past. Also, what happens in one day is hardly telling of the future. Your logic is very flawed here. Perhaps people think that the fed decision to scale back QE means the economy is healthier than it is.
They ran out of ink. Probably scrambling to ever Staples to load the printers back up.
Watch what happens to the stock market if interest rise.
Quote:
Originally Posted by Boss
If interest rates go double digit (see 1980's), the market may see an issue. If it continues to stay in current ranges you will see normal average growth in Stocks.
Interest rates are another issue - and DO and WILL affect the stock market. But while there is a relationship between interest rates and QE, all QE has done in regard to interest rates is to give an extra push downward to already very low rates (specifically long-term rates). When QE ends, that extra downward push on long-term rates WILL end - resulting some SLIGHT rise in rates, but the FED's major means for setting interest rates (specificially the short-term rates) will still be in effect and the FED has already stated that they'll use those means to keep those rates low for quite some time after QE ends.
The upshot of all that is that the ending of QE will not have a major impact on interest rates - and even WHEN rates are allowed to rise, they'll likely rise only moderately and very slowly.
Ken
Last edited by LordBalfor; 05-25-2014 at 08:05 AM..
Your logic is very flawed. QE not being needed today doesn't mean it wasn't shoring up the market in the past. Perhaps the fed decision to scale back QE is because it's not needed anymore but that does not mean it wasn't in the past. Also, what happens in one day is hardly telling of the future. Your logic is very flawed here. Perhaps people think that the fed decision to scale back QE means the economy is healthier than it is.
What logic is "flawed"?
The major beneficiary of QE was not the stock market, but the housing market, because QE had a DIRECT impact on mortgage interest rates. With the government swapping Treasuries for Mortgage-backed Securities, the banks had a handy and immediate buyer of mortgages who was willing to accept a low rate of return. This in turn meant that banks didn't need to charge as much interest to the homebuyer - which helped the housing market recover. Any impact to the stock market was purely secondary. Was QE needed? Yeah, I think it was - but NOT for the STOCK MARKET.
Was the stock market helped by QE?
Yeah, probably - but only as indirect byproduct of the fact that as the economy recovered the companies that make up the stock market prospered and thus their stocks rose. QE had NO DIRECT affect on the stock market at all. It's affect was purely secondary. Hence the end of QE is not going to have any real direct impact on the market (as we have seen).
And it's NOT "just a day" that shows that. There's been a direct pattern that with each paring down of QE the adverse impact to the market has been less and less (and now seems to be nothing at all). There's a REASON for that - the only real impact the ending of QE has had on the stock market has been a PSYCHOLOGICAL one - and that has long since worn off. There never was any direct financial impact to the market from QE - EVER.
Housing hasn't benefitted anywhere close to what Wall Street has.
Wall street DIDN'T BENEFIT from QE (at least not in any major, direct, measurable way). The QE purchases went into HOUSING MORTGAGES. There was NO stock purchases AT ALL - NONE, NADA, ZIP.
Stocks MIGHT have gotten a slight indirect boost - but only from the fact that stablizing housing helped boost the overall economy, which resulted in higher profits for companies, which resulted in higher stock prices. It's pretty doubtful that QE played much part in that increased profitablity - though it probably played some (but just how much is impossible to quantify).
The fact is there is ZERO proof - ZERO - that the stock market surge had much of anything to with QE.
One of the factors holding back a resurgence in the housing market (nationally-speaking, some states are booming) is the truly lousy weather we've been having in most of the nation. Also a good many companies and individuals left construction during the downturn. Here in Florida, a state where housing is surging, the construction is being held back by difficulty in getting experienced crews.
My neighbor's house only just started this week, after a six week delay. The construction manager (for a large company) told me its because he needs 10 crews and he can only find 6. They're all working 6 day weeks and 12 hour days.
Wall street DIDN'T BENEFIT from QE (at least not in any major, direct, measurable way). The QE purchases went into HOUSING MORTGAGES. There was NO stock purchases AT ALL - NONE, NADA, ZIP.
Stocks MIGHT have gotten a slight indirect boost - but only from the fact that stablizing housing helped boost the overall economy, which resulted in higher profits for companies, which resulted in higher stock prices. It's pretty doubtful that QE played much part in that increased profitablity - though it probably played some (but just how much is impossible to quantify).
The fact is there is ZERO proof - ZERO - that the stock market surge had much of anything to with QE.
Ken
Yeah, its doing so great because everyone is employed and spending because of all the new jobs we've created.
One of the factors holding back a resurgence in the housing market (nationally-speaking, some states are booming) is the truly lousy weather we've been having in most of the nation. Also a good many companies and individuals left construction during the downturn. Here in Florida, a state where housing is surging, the construction is being held back by difficulty in getting experienced crews.
My neighbor's house only just started this week, after a six week delay. The construction manager (for a large company) told me its because he needs 10 crews and he can only find 6. They're all working 6 day weeks and 12 hour days.
Yeah, when housing got clobbered and the jobs just disappeared, a lot of highly experienced workers simply left the business in disgust. It's #1 on the list of industries that are short of skilled workers:
...According to a talent shortage survey conducted by staffing firm Manpower Inc., skilled-trade jobs (heating and air conditioning, electricians, plumbers, pipefitters, etc.) are the hardest jobs to fill this year...
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
