From mid-November last year, S&P 500 futures fell from a high of 1259 to a low of 1136 in around 9 days - 123 points (or 9.7%). This was enough, it seemed, for the Central Banks of the world to get on the phone and press the big green 'print' button in a coordinated response to markets waking up to the dismal reality hidden under the covers. From May 1st highs at 1412 to today's 1300.5 lows is a 112point drop in around 13 days (or a drop of around 7.8%). While the most recent move is slower and smaller so far - today's action in stocks (and even more so in Gold) perhaps reflects the reality that QE3 is inevitable (gold) but not until stocks have fallen enough to warrant 'extraordinary actions' by the Fed. Do we have another 2-3% drop before the Fed picks up the phone?
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and as we noted earlier, perhaps it is worth considering how the 'USD-fiat-based unit of account that the S&P 500 is priced in' is now dramatically different from the 'non-fiat-currency unit of 'risk' that credit is priced in'. Critically, credit markets remain a far more effective indication of the business cycle or credit demand/supply to put it another way, than the USD-devalued unreality of US equities...
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