A FEW TRILLION GOES A LONG WAY

Back in late September, I was on a Fox Business show and was asked what I thought it would take to get the market bullish again. Tongue in cheek, I stated that maybe we wake up one day and the Fed announces a few trillion to just buy up the whole S&P. Well…not so sure we are not there.

First, we get the washout on October 4th where I told you I thought the market could rally off of. I actually told you that day that A low was probably in but in no way, did I expect this. October 4th started Operation “Twist” as well as an announcement of something “Tarp-like” and “QE-like” from Europe. Japan now announces $263 billion in QE. Europe announces $1.4 trillion. China looks like they are taking part also. On top of this, the Fed announced last week the potential for more QE. All this going on, while GDP is still in the plus column here. Just remember, QE1 came in right at the March 09 lows. QE2 came in right at the August 2010 lows. So there is a rhyme and a reason here as trillions now flood the world. But markets love it…simple as that.

After the recent washout low, we have seen a straight up move and a series of wild gaps and reversals. The outcome of all this, as well as the news out of Europe is that this morning, all major indices, all foreign countries, commodities, financials, baseball cards, Beanie Babies and everything else under the sun will be gapping up big time above the handles they have formed over the past week or so. The “duh” statement is that if this breakout holds, market is going higher. The outlier moves, both up and down…continue.

Just one last note. I woke up this morning to hear a Wall Street strategist already talking about a “melt-up” in the market. This is just 23 days after the call was in for a bear market and a depression ahead.

See what a few trillion will buy you.

 

Gary Kaltbaum owns Kaltbaum Capital Management, LLC (“KCM”), an investment adviser registered with the U.S. Securities and Exchange Commission. The opinions expressed herein are those of Mr. Kaltbaum and may not reflect those of KCM. The information offered in this publication is general information that does not take into account the individual circumstances, financial situation or individual needs of an investor. The information herein has been obtained from sources believed to be reliable, but we cannot assure its accuracy or completeness. Neither the information nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Any reference to past performance is not to be implied or construed as a guarantee of future results.

 

7 replies
  1. Greg S says:

    Gary, aren’t you happy that we have nice orderly markets that have stable and competitive prices, reflecting the true value of stocks. Sigh…

  2. Butch W. says:

    You might consider changing the title of this blogsite, “the voice of market logic”-I ask you… what market logic??
    Once again, I was in a bit and back out the same day … I might as well have gone to the casino, at least I would have gotten a free watery drink.
    I wake up this morning to a market gain based on the rumor of a rumor that European debt crisis is being attended.. a rumor that can signal nothing good or even hints at suggesting a real remedy for the economy but the markets reacts as tho housing starts were up ten percent last month and new orders across the sector.. there is a real disconnect with this current market that frankly gives me pause to consider if the next few months might be much different from what we have been conditioned lately to expect… I smell a trap especially when politics control the markets..call me skeptical.

    • gary k
      gary k says:

      I dont quibble with anything you say…except…I do my very best to drown out all that noise ans just watch the market.

  3. Jason says:

    Gary you do put your best foot forward with your analogy of these markets.You have an outstanding memory of the events that led up to the 10-27-11 HUGE Rally.

  4. Dennis S from Orlando says:

    Hi Gary
    In response to your radio program Friday and the 80 year old Veteran who had bad things to say about you. Read below, this might explain the persons mind set and those who think Like him.

    What is a Political Bigot?
    Anyone who sees their Political Party as Superior to all others, its leadership beyond reproach and Ideas as the Final Word. In turn they loathe and hate any Party, Party Leader and Party Follower with an idea different then their own. They reject the idea that two people can simply have a difference of opinion. They believe their ideas are the answer to everything. They see anyone opposing their ideas as a liar, or someone with malicious intent. Rather than defending their ideas through open debate, they will verbally attack any who oppose them. These attacks are without merit and are nearly always nasty and personal. Racist, sexist, homophobe and hate monger are typical of the labels Political Bigots will use against their opponents. These attacks are most common in print media and online Blogs, where the attacker cannot be challenge and the person being attack does not have an opportunity to defend them self.

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