Operation Twist Twist

The expected Operation Twist Twist happened. The extra Twist in the earlier statement was to signify there was another twist in the tale when stocks and assets fell instead of rallying. The long bond buying of Fed should lead to lower long term rates for corporates and mortgages which should be positive for the economy and consequently the markets. The market has however got too used to handouts and like people used to living off a soup kitchen, the market refuses to have to work to make money. The lack of further Quantitative Easing in yesterdays policy led to a sharp sell off.

Well all this is really conjecture in the sense that nobody can really say why assets sold off. But the earlier para makes for a nice reading so why not attribute the sell off to Operation Twist Twist?

Now that this Operation is out of the way we should see the markets focus on the European situation. The markets seem hell bent on focusing on either events or negatives. So once the Fed event is out of the way we can focus on the European negative. Then we can move on to focus on the next ECB meeting, the next G-7 Finance ministers meet or the next Fed meet. All of it interspersed with the European negatives when no events are in the immediate time horizon. In this everchanging yet constant cycle of events and negatives the markets can oscillate wildly between hope and fear.