The Day Ahead: The Fed Is Like an Old Flame
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Heartbreak, to put it mildly, is the pits. Through the years, I have broken down relationship-induced heartbreak into four stages: (1) initial anxiousness that the gaping void in your life will never be filled again (week one); (2) raging anger at the other person for their serious judgment error in dumping you (week two); (3) healing process begins by exterminating all physical evidence of the relationship and hitting the "scene" (week three); and (4) wiping the other person clear from your head, except for certain remembrances that are inevitable along the way (week four and beyond).
Your Fed at a Glance
- November 2008: $600 billion QE plan
- March 2009: $750 billion QE plan
- Note: After QE1 ended in March 2010, the S&P 500 was higher by 73% or so vs. March 2009.
- November 2010: $600 billion QE plan
- Note: From November 2010 to June 2011, the S&P 500 rose 11%.
- Operation Twist 1: September 2011
- Operation Twist 2: June 2012
- Boost to stock prices immediately, and then over a longer period
- Eventually set the stage for the housing market's 2012 recovery
- Companies are issuing new debt at attractive rates, buying back stock, increasing dividends and improving their capital structure by refinancing.
- The Fed has shown investors globally the full range of tools at its disposal. Pre-Bernanke, not many had been aware these abilities existed. (You didn't, so stop.)