As many Americans know, there’s an unspoken rule that you should never discuss three topics at the Thanksgiving table: money, religion and politics. Initially innocent “discussions” on these subjects often devolve into contentious arguments and have ruined countless family gatherings across the country.
One central bank ends QE, another increases it. This is not a trick, but a treat for the markets. The global equity markets found additional buoyancy on Friday after the Bank of Japan surprised the markets overnight by expanding its monetary easing program to about 80 trillion yen a year, up from Y60tn-Y70tn previously.
Third-quarter GDP rose 3.5%, surpassing the median expectation of 3.0% on Bloomberg, and pulling the average growth rate up from 1.25% in the first half of the year up to 2% over the first nine months of the year. In the details, consumption rose 1.8% in Q3 just shy of the 1.9% rise expected, but a noticeable pullback from a 2.5% spending pace in Q2.
The Federal Reserve with its historic ending of quantitative easing seemed almost hawkish and perhaps a bit oblivious to the impact that the ending of QE might have on the Europe and the rest of the world.
After years of smooth sailing off the 2011 low, U.S. stocks are suddenly caught in a whirlwind of bullish and bearish crosswinds. In times like these, it behooves traders to take a step back and look at the bigger picture.