Courtesy of John Nyaradi.
The Federal Reserve’s “Operation Twist” is met with a global stock market “twister”
One day after unveiling “Operation Twist,” global markets were caught up in a financial tornado that ripped around the world in a global sell off in the major indexes.
Equity indexes (SPY) (DIA) (IWM) swooned while the U.S. Dollar (UUP) and Treasuries (IEF) soared and gold (GLD) fell along with an overall rout in the commodities markets.
Today’s worldwide market losses were estimated to be in the range of $500 million with $1 Trillion so far this week (TGIF.)
Market participants seemed to realize that the Federal Reserve was out of bullets, that Operation Twist wouldn’t be a big help on top of already lackluster results from QE1 and QE2.
Fear sprung from Europe again where it appears a capital squeeze is on regarding the necessity to recapitalize banks there and Greece continues to hurtle towards apparent destruction and depression.
The big economic news came yesterday when Dr. Bernanke and Company said there were “significant downside risks” to the economic outlook and that was reinforced with a report out of China indicating that the HSBC PMI report for September had declined into contraction territory at 49.2, a decline from 50.2 in August. A hard landing in China becomes a growing possibility.
On a technical basis, major indexes are nearing significant support that, if broken, could lead to further significant declines ahead.
Wall Street Sector Selector remains defensively positioned, expecting lower prices ahead.
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