Saturday, August 18, 2012

NO QE3 this Year– 3 Reasons Why

If you’re of the opinion that QE3 will be announced at FOMC in Sept. - here’s 3 reasons why it won’t happen

1. YTD the market is up 12% – this along with a slightly improved unemployment picture is the single biggest reason Uncle Ben doesn’t need to turn the printing presses on. Retail sales improved in July as well. The next two points are solid indicators this thesis is correct.

2. If QE3 was imminent Gold would be rising - It’s not. Gold has been in consolidation for almost a year and 16% off it’s Sept. 2011 high

3. The strength of the USD - If currency holders believed futher intervention was coming they would be sellinng – they’re not. Likewise if they actually believed the ECB was capable of fixing Europe you would see those dollars buying Euros – again they’re not.
The real question isn’t whether QE3 will happen or not in the fall.
It’s what happens to the equity markets when it doesn’t.

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