REST IN PEACE – QUANTITATIVE EASING

Here is the end of Fed’s unconventional monetary policy, its monthly bond-buying program. The reactions say after the FED decision that FED turned into a hawkish mood. I guess that is only an oxymoron. From our side we are more bullish.

The point is that after yesterday decision of the end of QE (Not Queen Elisabeth) the market dropped a bit, but not much and recovered, so all in all Mr. Market doesn’t care about QE anymore, it was already priced in. This announcement did nothing. The DJIA snapped a four-day winning streak on Thursday, but was not in free fall, only slipped lower. Remember how the people freaked out a year ago and forecasted the end of the world if the FED stops QE. They were all wrong. The world is not ended when the QE ended. The economists are usually wrong about the FED next move. They still say the end of QE means downturn. I doubt that totally.

After Q1 and Q2 tapering the market did some corrections, but in longer term they recovered and got much higher again and again. Our forecast is the same for the recent situation, might come some consolidation, but the bullish trend is still unviolated. So Hakuna Matata, don’t worry, the market survives everything and all of us. The good news is the interest rate is likely to stay at near zero until June 2015.

The BFM Assets Team.