The Fed Just Killed Fundamental Analysis Forever
It’s been an interesting few weeks, hasn’t it? Beyond the roller coaster of a ride and panicked market reaction to what is normally good news (like rate cuts and the Fed injecting liquidity), below the headlines a fundamental transformation of the markets is taking place. We’ve seen interventions by the Federal Reserve in the marketplace before, most notably after the 9/11 attacks and again in 2008 and 2009 as liquidity became an issue. But what is happening now is unprecedented in size and scope. The US government, through the Federal Reserve, is injecting so much money into the markets through multiple instruments that it’s impossible any longer to make evaluations on price action based on fundamentals. Put another way, the whole notion of price as a reflection of an honest, transparent, voluntary ‘struggle’ between a buyer and a seller has been washed away by the flood of money. Banks, funds, huge corporations and institutional investors have been given a...