Santa Rally Hopes Dashed

Monday, stocks were thinly traded in Asia. Markets were closed in Europe and the U.S. in observance of the Christmas holiday. Here’s a look back at history to learn what happens when you reduce rates before inflation is conquered.

Tuesday, stocks closed unchanged in Asia, were little changed in Europe, and ended slightly higher in the U.S. on 8B shares traded. The 10-Year U.S. Treasury bond yield rose 3% to close at 3.86. Precious metals miners gained 1% and their miners rose three times that amount.

Wednesday, stocks ended little changed in Europe but lost 0.3% in Asia, and 1.2% in the U.S. on 9B shares traded. Precious metals lost 1% and their miners fell three times that amount. The Dow Jones Industrials closed below 33,000. The S&P 500 ended below 3800. Apple finished under the 130 benchmark.

Thursday, stocks lost 0.5% in Asia but gained 0.6% in Europe and 1.4% in the U.S. on 9B shares traded. Precious metals rose about 1%. The Dow Jones Industrial Average ended above 33,000, and the S&P 500 Index finished above 3800.

Friday, stocks gained 0.8% in Asia but fell 1.3% in Europe and 0.4% in the U.S. on 9B shares traded.

Finally, the Federal Reserve balance sheet declined 13B to 8.55T. For the year, the reduction amounts to about 70% the amount the foot-dragging Federal Reserve announced that they would achieve.

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