Monday, October 27, 2014

The Most Interesting Week of 2014 is Here

Why do I think that this week is going to be the most interesting week ahead?

1) The Very Last QE Ever (that we know of)


Monday, October 27, 2014 is going to be the last day that the US Federal Reserve will conduct their POMO.

Why is this important? Personally, I am in the camp that QE is the outright propping of assets in the US financial market. I know, very conspiracy theory-ish, but that's just what I think it is. I think it's a horrible and stupid programme for the economy, but it's fantastic for asset prices. Yay, more money, who doesn't like that?


With Monday being the last day of QE ever, and liquidity of US stocks being at historical lows, things might get very interesting. Without volume, there is no confirmation. We haven't been seeing much volume and breadth lately. Another "correction" starting after Monday? Who knows.

2) FOMC Meeting to announce end of QE (or extension of it?)


2pm US Eastern time, we will be getting the FOMC statements about their supposed end of QE. I think many market participants are expecting massive jawboning and "forward guidance". If the Fed announces another round of QE, I'm taking off my short positions, it would be ridiculous.

Edit: NOVEMBER 30TH, not October!
3) Swiss Gold Vote

If you haven't heard much of the Swiss gold vote, don't kick yourself over it. With gold being one of the most hated investments over the past few years, it is no wonder it has fallen completely off the radar. No one even bothers to report about it anymore.


Honestly speaking, the chances that the Swiss vote actually votes yes is actually extremely realistic. I don't think anyone would have the guts to go with the no camp here. This isn't like the Scottish vote when the poll results were bouncing around the midpoint. It's definitely not as close, but there is a slight tilt.

What would happen if the Swiss votes yes regarding their gold? I think the Sober Look has a fantastic write-up about it. Summary: Gold goes up.

So Monday is the last day of QE.
Tuesday and Wednesday is the FOMC meeting.
Thursday in the Swiss gold vote.

As a gold cheerleader, I would love to see the gold vote go through. As someone who has been bearish on US equities given their ridiculous valuations, I would love to see QE finally stopped, especially since "the market has recovered and everything is going so well". But alas, the market does not move as I wish, if not I would be a bazillionaire. I'm just trading probabilities here now folks.

Any thoughts about the effects of the end of QE and the impact of the Swiss gold vote? Would love to hear them!

4 comments:

  1. Actually, the Swiss Gold Vote is November 30th

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    1. Oh screw me, you're totally right, ahahaha my bad! Thanks anon!

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  2. i think QE needs to end. it is a horrible and selective socialism. sadly, QE only ends while the S&P continues making new highs. when the S&P falls back to trade in the 1800s i think the talk of QE will be back on the table.

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    1. Hi Ladykiller,

      Agreed, I think QE has gone on for far too long. "data-dependent" seems to be dependent on S&P points. I await Wednesday quite eagerly!

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