Thursday, October 16, 2014

Have Stocks Stopping the Free Fall? Wait till the Fed Speaks to see a turn around.

(Reuters - Jonathan Spicer and Michael Flaherty) - The Federal Reserve should keep buying bonds for longer than planned in the face of volatile markets and falling inflation expectations, a top U.S. central banker said on Thursday, even as another Fed policymaker warned against an over-reaction. James Bullard, president of the St. Louis Fed, is the only official at the central bank to publicly suggest putting on hold the Fed's widely telegraphed plan to halt its asset-purchase program later this month. Yields on U.S. bonds, which have plunged the last few days, rebounded after his comments. "We can go on pause on the taper at this juncture and wait until we see how the data shakes out into December," Bullard said on Bloomberg Television. "Inflation expectations are dropping in the U.S. and that is something that a central bank cannot abide." "A reasonable response by the Fed in this situation would be to invoke the clause ... that says the taper was data dependent," he added.But stock market values and bond yields have dropped sharply in recent weeks as investors fretted over the health of the world economy, with fears growing that Europe could tip into recession, damaging the U.S. economy. The dollar has continued its climb, causing measures of medium-term inflation expectations to ease.

( SEC has charged a small firm, Athena Capital Research, with using rapid-fire trades in the final seconds of the trading day to manipulate the closing prices in some NASDAQ-listed stocks. The SEC alleges Athena used an algorithm called Gravy to "mark the close." It traded on the order imbalances that occur at the end of the day. When there is an imbalance between buyers and sellers, NASDAQ routinely runs an auction to fill the order imbalances at the best price at the close. Athena, the SEC says, placed orders to fill imbalances, then traded shares on the market prior to the close on the opposite side of the order.

( The Big Picture Stocks Stage Positive Reversal, Wiping Out Early Losses. 07:08 PM ET - Stocks made several U-turns Thursday, eventually closing just above the break-even line. The Nasdaq and S&P 500 edged up fractionally. The IBD 50 popped 1.5%. Volume fell across the board. The indexes were sharply negative until Federal Reserve non-voting member James Bullard said the Fed should delay the end of its bond-buying program,

(CERR Investments).  Here we go again, big industry asking the Feds to stay in the game and buy more bonds and not end QE3. Keep bank deposits, money markets, and bond interest rates as low as possible.  Feds should share in the blame it people loose money in the markets since they are driving people to the markets.   More free money to the big banks and big industries. This is not a fair game when the few can drive the market.  Big industry is pushing down prices to get a better entry.  The middle east is pushing down gas prices to keep shale oil and other industries price prohibitive. Is this just business as usual?  Watch for Feds to give a speech at any time now to cause markets to react.