The Fed has now gone beyond the mere idea of monetary stimulus and is now invoking the concept of monetary “vaccination.” On Thursday, one Fedhead called for inoculating the economy against some as-yet unspecified disease with preventative interest rate cuts. In the Age of QE, just when we think we’ve seen everything, we now see the Fed expand the creative horizons of QE vernacular.
The market, which was feeling a bit hungover Thursday morning, thanks to a big dive in Netflix (NFLX) after earnings, took heart in the Fed rhetoric and rallied off its lows. Allegedly strong earnings from Microsoft (MSFT) on Thursday after the close sparked a gap-up open on Friday. All of the major indexes reversed into the red after an initial gap-up open, with volume higher on the NYSE and lighter on the NASDAQ.
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