Some weeks feature a contrast between past and future - a possible inflection point. Here are the current elements:
It is a big week for news and data.
Prior Theme Recap
Last week I expected the theme to emphasize volatility. The market was at interesting technical levels and there was plenty of news to push it one way or the other. In a sense I was right about the theme, since the talking heads made the moderate crossings of "unchanged" seem like big news. The volatility cocktail was more like a Shirley Temple.
The potential was there, but the economic news was mostly calming. The contribution of mixed corporate earnings was enough
The stock market is trading within 2% of its all-time peak reached at the beginning of April. And following an impressive bull market that recently entered its sixth year, it seems that the trauma that was the financial crisis is becoming a distant memory. Of course, the stock market did not achieve its miraculous recovery all on its own. Instead, it had the generous and ongoing support of the U.S. Federal Reserve for much of the journey to recovery through its daily asset purchases as part of its various quantitative easing (QE) stimulus programs. With all of this in mind, the experience of the last few years raises a worthwhile question to ponder. Exactly what would the markets have looked like without QE? Exploring the answer to this question is particularly worthwhile, as it provides important insights into what to expect from the stock market once the Fed ends its