The SPX and NDX have hit new highs but the RUT, which is the small cap index has not. The RUT’s last high is from March 2021. I guess that tells you that small companies are the ones hurting the most from this pandemic and not growing near as much as the 500 largest firms represented by the SPX. For the remainder of this week, markets will probably consolidating until J Powell speaks on Friday at 10 AM eastern. So get ready for some fireworks.
The consensus is that there will be no change in policy since the Covid variant has created disruptions in the economy. While infections, hospitalizations and deaths have increased, people and firms have figured out how live with a virus that seems to never go away. On the other hand, there is a lot of pressure on the Fed to move on and move on in the way of reducing the $120B in bond purchases every month.
There really is no reason to continue that insane Fed intervention other than to cause a temporary disruption in the markets. It really does need to stop and workers need to get back to work. But if there is even an hint that the Fed will begin tapering on Friday, markets will drop at least two to three percent for starters. If no change, markets will probably continue moving higher.
As for the vaccine, I am eagerly waiting for my third shot! Now you know how I feel about that subject!
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