By Greg Peel

The Dow fell 40 points, or 0.3%, while the S&P lost 0.3% to 1461 and the Nasdaq slipped 0.3%.

Greetings from your weary correspondent, now returned from the concrete wilds of Guangzhou. Did I miss anything?

Well I feel I need not discuss further the merits or otherwise of the Fed's open-ended QE3 ? my esteemed editor appears to have exhausted that topic ? only otherwise to ponder what might have been if open-ended QE from the Fed and unlimited bond purchases from the ECB had been announced in 2010 and not in 2012. Hindsight is, of course, a wonderful thing. But never mind ? unlimited monetary stimulus can only translate into unlimited equity price upside irrespective of underlying fundamentals, at least until the wheels fall off. Careful management is required from here, and that means fiscal management in particular. God help us. I enjoyed this quote from a Dow Jones news wire this morning:

"At a meeting in Cyprus on Friday, European Union finance ministers were reportedly unable to come to terms on a timeline for a more unified banking sector and disagreed over terms of rescue requests and the role of the ECB."

Meanwhile the US "fiscal cliff" is now on the horizon, with the fog surrounding the Fed having cleared. Perhaps the most extraordinary point of fact post this last, tumultuous week is that Wall Street is only 600-odd Dow points away from its all-time highs, marked in October 2007 when the global economy was booming. Okay it was in a credit bubble, but is the global economy really in a state now that would justify new highs for equity indices? Don't fight the Fed.

And don't fight each other either, might be the plea, as China and Japan quibble over some useless rock in the middle of the South China Sea. No one would ever go to war over a rock would they? (Don't mention Maggie Thatcher. I mentioned her once, but I think I got away with it.) Either way, having its two biggest trading partners at each other's throats is not great news for the struggling economy that is Australia, although the Aussie is down 0.7% from Friday night to US$1.0478 on such geopolitical tension, with a touch of RBA rate cut anticipation thrown in. On the latter, speculation is building of action from the central bank next month, although history would favour a November cut post September quarter economic data releases.

Our currency, once The Little Aussie Battler, is now living in Mosman and driving a Porsche, and getting really quite too full of itself in many a local's view.

On the matter of geopolitics, we are also suffering the ever present tensions between Israel and Iran and don't get me started on worldwide protests sparked by a certain piece of amateur video. Some people should get a life.

Middle East tensions have nevertheless contributed this year to the inflated price of oil, and oil was very much the focus of last night's trade on Wall Street. It was the Monday after the week that gave us QE3 and it is no stretch to expect some profit-taking, but there is also cause to ponder the bizarre statistic that Wall Street, despite aiming for all-time highs, has been down on 14 out of the last 15 Mondays. What is it about Mondays? (Cue the Boomtown Rats.)

Around 2pm New York time last night oil prices suddenly plunged by around US$5 in a move described by veteran energy traders as like nothing they have ever seen before. As the dust settled, Brent crude closed the session down US$2.87 to US$113.79/bbl and West Texas down US$2.92 to US$96.08/bbl. US stock indices, which have a significant energy sector component, dropped in sympathy. Yet no one could explain what the hell just happened.

One explanation offered was that a rumour hit the floor of an imminent release from the US Strategic Petroleum Reserve. The government later acknowledged SPR releases were being considered, but assured it was not about to do so. Another suggestion related to a very big inflation-trade position being withdrawn, impacting on everything from oil to US Treasuries. Both the ICE and Nymex exchanges were quick to ensure there had been no technical glitches. The plunge may remain a mystery.

The only other two pieces of news of note last night were firstly that first-day sales of the iPhone5 more than doubled those of the prior iPhone4S release, sending Apple shares skyward once more despite the weaker mood. And the Empire State manufacturing index ? a measure of activity in the New York Fed region ? has fallen to minus 10.4 this month from minus 5.9 in August to mark a third consecutive month of contraction (zero is neutral).

Outside of oil, base metals all fell back a percent or so last night having leapt 3-5% on Friday night in their first opportunity to respond to QE3. The US dollar index was up a little to 78.96, but those expecting new highs to be marked in gold anytime soon would have been disappointed by the enigmatic commodity/currency's US$9.10 fall to US$1761.40/oz.

On the bond front, the US ten-year is now yielding 1.84% despite having hit a low of 1.4% earlier this year and last week having QE3 confirmed. It's a trade-off between the Fed being in there buying and the easing of risk QE3 implies. Meanwhile at 5.96% and 5.02% respectively, the Spanish and Italian yields look comfortable for now.

The SPI Overnight was down one point.

The minutes of the September RBA meeting will be released today, but with all that has happened in the world of central banks since, the contents will not be particularly illuminating.

Hope you are all well, it's nice to be back. Be it ever so humble...

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