So, QE is finished and everyone is waiting for a reckoning. The reckoning may come. I have written many times that the reckoning will occur for sure when the country, government and economy are destroyed. The reckoning could also occur if the political scene turns against the Fed and there is a general understanding that stimulus is theft. There is not much chance of that happening.
There is not a doubt in my mind that the stock market is ready to drop big time. I have even taken some small bearish positions, bearish ETFs. I am still at least 90% cash. I am also certain that if it does start to tank, all of the central banks in the world will stop at nothing to crank it back up.
Lets suppose a serious decline begins. What is responsible for any good economic numbers? It is the unending asset enhancement initiative. If asset prices start to drop without permission form the folks at the top, a national emergency will be announced. The Federal Reserve will accept the responsibility of buying stock outright with both hands to “save the world.” Congress may also authorize them to do so. Will Americans believe it is a right and necessary policy? All of them who are long stock in their IRAs and through their pension funds will buy into it automatically.
So, just because it is time to unwind QE all around the world, don’t thing the various governments around the world will stop tampering with the financial markets. Do they have any tools left? They can come up with new ones.