Though Groundhog Day is next month, one could be forgiven for experiencing a sense of déjà vu as stocks continue to tumble, with the Dow Jones Industrial Average down over 500 points midday Wednesday.
 
The steep reversal in global equity markets, which sent Asia and European markets down over 3% and then the major averages in the U.S. equity market, is unlikely to elicit any response by policy makers—least of all the Federal Reserve, which just last month initiated raising its key interest rate targets.
 
The Standard & Poor’s 500 was down over 3.5%, hovering just over the September 2014 low of 1814 during the time of the Ebola scare, UBS NYSE floor director Arthur Cashin e-mailed. “Beyond this land there be dragons,” he quipped to his cohort of market mavens who receive his missives.
              
That’s even with the plunge in energy stocks and high-yield bonds spreading to the banks and other financial stocks. As of mid-session Wednesday, the Financial Select Sector SPDR exchange-traded fund was down 4% on the day and within a hair of qualifying as a bear market at just shy of 20% below its recent highs.
 
The Energy Select Sector SPDR ETF was off nearly 6% but that did not reflect some truly stunning one-day moves in some oil-related stocks as crude futures plunged over 7% with the soon-to-expire February futures at $26.40 a barrel, the lowest since 2003. ConocoPhillips traded down over 9% while Devon Energy  plummeted nearly 15%. Chevron was off over 7%--even more than IBM, whose earnings report released before the market opening stunk up the joint yet again.
 
None of the news is really news: the ongoing rout in commodities generally, with oil just being the most prominent; concerns about China’s economy and its currency; generally weaker-than-expected U.S. economic data, including December housing starts released earlier Wednesday. Expectations coming into this earnings season were low and haven’t disappointed. It’s really just more of the same.
 
Some in the market also are beginning to mutter about U.S. politics adding to the markets’ malaise. A peek at the calendar shows that Inauguration Day is exactly a year away. David Ader, head of government bond strategy at CRT Capital Group, observes that in addition to the familiar litany of economic concerns, “the intensifying anxiety over the outcome of the presidential election. NO market can be comfortable with Trump, Cruz or Sanders and, dare I say this? Clinton is the most mainstream of the lot economically speaking.”
 
That leaves monetary policy as the ever-present panacea. The best that the markets can expect is that Fed officials’ oft-stated intent to hike rates four times in 2016 is no longer operative, as they used to say in the Nixon White House. The federal funds futures market has all but taken another quarter-point hike off the table in March and lowered the odds for a June move from about even-money at the end of 2015 to about one-in-three odds currently. Indeed, only a single increase is now anticipated by the futures.
 
As a result, Treasury yields have racheted lower. The two-year note—the maturity most sensitive to Fed moves—is down to 0.81% from 1.095% just before the turn of the year. The benchmark 10-year note is at 1.97%, down from 2.307% ahead of the end of 2015. In other words, the Treasury market has undone a quarter-point Fed hike—even in the face of heavy liquidation by foreign official holders, such as China and oil-exporting countries to prop up their currencies, that pushed U.S. yields up by some 0.20-0.30 percentage points, according to various estimates.
 
Even in this flight to quality, the Fed can’t do a volte-face so soon after embarking on its rate hikes. In other words, the Greenspan-Bernanke-Yellen put has expired.
 
Other central banks, such as the Bank of Japan and the European Central Bank, already are all in on quantitative easing. The People’s Bank of China, meanwhile, is juggling contradictory aims: preventing the yuan from falling further, which requires tighter policy, while trying to stimulate the economy and keep the stock market from sliding faster, which takes easier policy. Emerging market central banks from Brazil to South Africa are in policy hell, dealing with simultaneous recessions and inflations as a result of the plunge in commodities and their currencies.
 
No wonder the markets are in full retreat. They were pushed higher mainly by central banks, which now can do little but watch. For now.