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Last Wednesday afternoon, after much gnashing of teeth, the Fed finally revealed its long-awaited quantitative easing (QE) taper plans…
And the Dow jumped by almost 300 points.
Now, the taper itself is small to start – just a $10 billion reduction for the month of January. But the announcement was coupled with a pledge to keep the Fed funds rate at zero beyond the 6.5% unemployment threshold.
As a result, two things collided in the last 90 minutes of yesterday's trade: a clear indication that the economic recovery was strengthening and a classic "short squeeze," which merely added fuel to the fire.
As we approach the end of the year, that means the "Santa Claus rally" may have a bit longer to run.
But longer term, the market is now faced with less artificial stimulus next year and a gradual return to a market where direct pressures influence its direction.
About the Author
Dr. Kent Moors is an internationally recognized expert in oil and natural gas policy, risk assessment, and emerging market economic development. He serves as an advisor to many U.S. governors and foreign governments. Kent details his latest global travels in his free Oil & Energy Investor e-letter. He makes specific investment recommendations in his newsletter, the Energy Advantage. For more active investors, he issues shorter-term trades in his Energy Inner Circle.
As the orignal grass-roots speaker in June of 2005, for what became known as part of the" closing the enron loophole" bill HR 4173 for the oil markets, I'm still in shock with oil prices. That bill was signed by president Obama in July of 2010 limiting trading to one thousand contracts per account at forty two thousand gallons per contract. We oil dealers, and gasoline station owners were dumb about the oil markets, in regard to the value of the dollar, and gold that drove prices higher with a weak dollar. If you recall when crude hit that $150/147… Read more »