We're finally here. About nine years after quantitative easing (QE) began, quantitative tightening (QT) is about to start. On Wednesday, after the Federal Open Market Committee releases its statement, Janet Yellen will follow with a press conference that she will do her best to make as boring as possible... [but] I expect no different an outcome this time and I believe the market -- with the S&P at an all-time high - is headed for a brick wall the deeper QT gets.


After QE1 ended when we knew exactly the full size and expiration date (March 31st, 2010), the market topped out three weeks after and then fell 17 percent. After QE2 ended when we also knew the exact amount and deadline (June 30th, 2011), the market peaked one week later and then fell about 20 percent. Around the time QE3 ended with the lead up being a very methodical process of tapering, stocks had a hissy fit of about 10 percent only saved by James Bullard who hinted that maybe they won't end QE.

In the two months after the well telegraphed first rate hike in December 2015, stocks fell by 13 percent. The stock market of course therefore wasn't very good at discounting the end of major monetary stimulus actions even though they knew what was coming.

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