The Fed Disappointed… The Great Collapse is Here
by Phoenix Capital Research
I’ve been warning for weeks now that the Fed would disappoint with its September meeting. And boy did it.
As I forecast, the Fed didn’t announce QE 3. In fact, it didn’t announce any new policy of note. Instead it is simply reshuffling its holdings to focus more on the long end of the bond markets.
On top of this, the Fed announced it will only be moving roughly $400 billion of its portfolio around. This is the smallest major intervention the Fed has announced since it began implementing QE in 2009 (QE 1 was $1.25 trillion while QE 2 was $600 billion). Indeed, this move is on par with the Fed’s implementation of QE lite which to date has been about $300 billion give or take in scope.
Even more striking, while announcing this disappointing move, the Fed downgraded its view of the economy stating, “there are significant downside risks to the economic outlook.”
Previously, any admission of economic deterioration from the Fed resulted in the US Dollar selling off sharply as traders expected additional easing/ printing. This time around, the market senses that the Fed has disappointed and that the Fed’s move is largely symbolic more than anything else.
The end result of this: the market is Crashing just as I warned. The S&P 500 has gone from 1,200+ to 1,136, a 6% drop, in the overnight session.