Monday's big reversal


Yesterday was quite a volatile day. US stock indices were trading 1.5% to 2.0% higher with only 2 hours to go for the day when the Fed's Kaplan said the US central bank might start scaling back its QE program as the US economy is doing pretty well. 

That led to some massive selling, and the Nasdaq 100 index dropped 4% from its highs to close -2%, while other indices followed lower to erase all their daily gains. 

Everybody knows that the Fed's liquidity facilities are the only thing keeping equities at their current levels, and if the central bank starts to taper them out, markets might crumble. 

From other news, California\s Governor Gavin Newsom ordered bars closed and restaurants and movie theatres to cease indoor operations. It looks like most of the companies in these sectors will bankrupt, but politicians seem not to care. 

Later in the day, the US CPI numbers are due, but more importantly, the earnings season for the second quarter starts, which will be the key factor over the next days and weeks. 
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