This doesn’t make much sense.
Stocks keep dropping this afternoon, with the Dow down more than 100 points and on pace for a fourth straight day of declines. The last time the Dow fell by this much was July 24, which at the time capped a string of three straight triple-digit losses.
Considering the Fed minutes from yesterday nearly put more central-bank stimulus on a silver platter, today’s move is a bit of a head scratcher. Some market observers are pointing to comments from St. Louis Fed President James Bullard, who earlier Thursday on CNBC threw some cold water on QE3 prospects. He noted modest economic growth should keep the Fed on hold, at least in the short term.
But still, the QE trade is taking place in other asset classes. Gold is up sharply, the dollar is down, the euro is up and bond prices are up (yields are down), which are all moves one would expect ahead of more Fed accommodation....MORE