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Don't Be Fooled: Tapering & Rate Hikes Can, And Will, Crash Markets

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Don’t Be Fooled: Tapering & Rate Hikes Can, And Will, Crash Markets

Submitted by QTR’s Fringe Finance

If the Fed follows through on what they’ve been saying for the past few weeks, I have no doubt markets will crash. The only question is whether or not Jerome Powell has the stones to follow through with his plans – and whether or not the market believes him. Last week’s rallies lead me to believe the market may be doubting Powell’s backbone as it relates to following through with his plans, but only time will tell. Either way, I think if we do taper and if we do hike rates, a market crash is inevitable. 

I felt like I couldn’t write an article fast enough on Thursday when it appeared the Dow was going to open up over 200 points and Wednesday’s massive rally would continue. But, alas, I got sidetracked and had to temporarily settle for a Tweet to timestamp my thoughts.

“Fading yesterday’s rally. At least for now, Powell is posturing like QE is over. While in the long term it’s probably not true, they’re gonna try it first & markets could puke as a result,” I wrote at about 10AM EST during Thursday’s trading session. Then, of course, the market turned sour before rallying again on Friday.

My prediction isn’t anything new: I think markets could be in for a pasting heading into 2022, with the NASDAQ leading the way, and I have been saying as much for months now. Volatility will continue heading into the new year, I’ve predicted.

Based on my belief that the taper is a non-sugar coated directional negative for markets, this week’s rally didn’t make much sense to me. Nor did CNBC headlines celebrating the market rally while simultaneously announcing the Fed would be “aggressively” winding down asset purchases.

Here’s the bizarro world we woke up

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