My problem is this: the market is pulling back because of worries about the fed " easing ip on the accelerator" with regards to bond purchases. Every time bernanke mentions this, the market falls, although this time is a bit more protracted. However, if the economy and normal market fundamentals were fueling the market rise, then why would a few comments by the fed kill the rally? That tells me the market is up due to investors having no where else to go as far as investments due to rates being so low. The mere talk of any possible rise in rates( competition with stocks) is causing investors to head for the exits. It also says investors arent convinced the economy can carry stock valuations without the help of the fed.
Interestingly enough, I think the market is falling in spite of the dovish stance of the Bearded Blunder. Think about it, Ben didn't really say anything surprising, and committed to continuing QE for a long while still.
My guess. The markets are falling due to BIS report and worries on China and Japan. It amazes me sometimes that some have no idea there are other people in the world.
The bond issue is what makes this look scary. In all the other recent stock market corrections, bonds rallied. Now we're seeing bonds (and practically all other assets) plummet while interest rates spike. The proverbial rock and hard place appear to be tightening in on the Fed.
The slightest "bump in the road" of ANY kind looks scary when the whole thing is dependent upon the phony-baloney of Fed money-print.