Good Morning Dave, That is indeed an interesting article. I have often wondered why the Fed would want Bonds to look like a good investment if that is taking money out of the economy which could be stimulating it? I think that was part of their plan to keep the money out of the markets but it only resulted in more Speculative money coming into the markets rather than longer term investors IMO. The Markets turning unstable added even more attraction to the Bonds and continued the cycle of money being pulled out of the markets and also out of the economy. If the Fed is now trying to stimulate the economy by stimulating the markets then that could indeed turn into another Bubble of Trouble. It is interesting that with the decline in the Dollar that you do not here anyone attributing the decline to Inflation Eh? I will indeed be keeping an eye on the VIX for a piercing of the Bollinger band as I have seen that phenomenon working with a Lot of stock and Index charts both in short term and long term timeframes. Whenever it occurs in the longer term charts it is usually a good longer term signal. Thanks for the links Dave! Enjoy the Day! :^)
The first issue deals with monetary policy. The recovery scenario propagated on Wall Street is that Fed monetary policy will bail out the U.S. economy. All eyes and hope are on Mr. Greenspan. There is a blind faith that Mr. Greenspan will once again work his monetary magic. By lowering interest rates and flooding the markets with liquidity, it is hoped that the U.S. economy will metamorphose itself into a recovery. The belief in the efficacy of monetary policy has never been higher. Mr. Greenspan contained the collateral damage of the stock market crash in 1987. He single handedly bailed us out of the S&L crisis. He brought us out of the recession of 1990-91. He doused the fires of the Peso, Russian Debt and Long Term Capital Management crisis. Why wouldn’t he be able to fix the current economic crisis and restore economic growth in the United States?
There is also widespread belief in the “Greenspan Put,” the belief that monetary policy can put a floor underneath stock prices. However, things aren’t going according to plan. The economic formula of booming money supply equals booming financial markets which leads to economic recovery isn’t working.
After the most aggressive round of Fed easing in decades, the financial markets and the economy aren’t responding. In past economic cycles, Fed easing normally produced a recovery in the financial markets first. The rise in stock prices would signal an approaching recovery in the economy. However, signs of recovery are missing as evidenced by the Consumer Confidence Index, Gross Domestic Product, and the NAPM Manufacturing Index.
Market Data 
Markets 
AI
