Economic reality has been divorced from market action since June 4, when the QE-Whatever rally began earlier than in previous years. It is also when Europe took a page from our Federal Reserve and began to print in earnest.
Anyone looking to do anything other than follow the uptrend was severely financially penalized. And in order to make money, you had “to believe” and view the world through Costanza glasses.
My thesis was/is that economic reality will eventually take hold and bury anyone stupid enough to stay in anything longer than three weeks. So far my thesis has been only somewhat incorrect. Free money will do that to a market.
But my other supposition was/is that Obama will win the election unless “They” can crash the stock market two weeks before the election. Given how the stock market has more than doubled over Obama’s term, the market is the only Policy Tool that has “worked”.
But now, with 2 weeks to go before the election, it is being “leaked” that Bernanke will soon be finished. And in the NYT no less! This is the reason for the market’s fall. Not that Romney is winning, because he is not. Really.
Uncle Ben’s Free Money Regime has been the sole reason for the stock markets performance. Remember, earnings are actually falling while the markets have been rising. And the market’s leadership has been clearly faultering. That is an untenable fundamental and technical backdrop.
Am I a conspiracy theorist? Is my hat made of Tin foil? Many would say affirmative. But mark my words, Ben or no Ben, the policy of Free Money Forever and ZIRP will be with us for a long time to come.