The Omicron Gap or The Taper Gap

If you want to chalk up the market decline to omicron, it should fill the gap. If taper is driving it, then this gap may not be filled until a far more brutal correction unfolds.

If you click the QT tag, you can see how stocks closely tracked the Fed's balance sheet in 2018. I cannot drill hard enough into your head: think of the market like a beach ball and QE like a fountain of water. The Fed is dialing down the fountain. The market is not solely driven by the Fed's balance sheet, but it is a mistake to blindly assume balance sheet expansion of any amount is positive for stocks. As support is taken away, what replaces it? It could be any kind of good news, animal spirits, what have you. If the only change is fewer asset purchases by the Fed, then ceteris paribus I'm looking for weakness somewhere in the market because it's at highs, not lows. I will bet stocks go down. The nightmare scenario for stock market bulls is that oil does not. As long as crude is rising or even stable, assume the Fed will turn the policy ratchet in a hawkish direction.