Weekly update: quantitative tightening and the stock market

Weekly Market Update for March 24, 2023, from DeWayne Hall: Quantitative Tightening

We have to say we’re kind of impressed with the resilience of the U.S. stock market this week. While our banking system has walked to the edge of the cliff the past two weeks, the great majority of stocks have refused to crater, which would be surprising (if not astounding) if not for the fact that the Fed has quietly ended quantitative tightening (QT). 

That’s right. 

While publicly announcing a quarter-point rate hike this week, behind the scenes the Fed was putting almost $400 billion back on their balance sheet, the largest spike since the pandemic craziness. In other words, the Fed has reversed 2/3 of their quantitative tightening program in just two short weeks, and probably isn’t slowing down any time soon, as the banking dumpster fire appears to just be getting started. There’s no telling how far Jerome and his gang will go to try and contain this mess they helped create. At the very least, it looks like QT is dead.

Can you say, QE Infinity? How does government market manipulation forever sound? 

And yet while all that money flowed back into the system, the banks don’t appear to be getting any better, and equities aren’t enjoying a normal QE bump with all that infusion of liquidity into the market. Yikes. 

But we digress. 

The bottom line is the major indexes remain in a fairly tight trading range, with technology leading the way and, logically, financials bringing up the rear. Everything in between is just a choppy mess, being pushed every which way by the noise coming from the good ol’ boys club in both Washington and Silicon Valley. We remain steadfast that until a strong trend finally emerges, we continue to focus on limiting exposure and not losing money. Opportunities will arise, typically when everyone least expects it, and we’re confident we’ll be ready

So here’s a small tip of the cap to the stock market for hanging tough when the walls looked to be closing in. Let’s see if it lasts. 

The views expressed represent the opinion of Good Life Asset Strategies, LLC. The views are subject to change and are not intended as a forecast or guarantee of future results. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. Stated information is derived from proprietary and nonproprietary sources that have not been independently verified for accuracy or completeness.