Federal Reserve chairman is a Helicopter.
The only think he knows is printing money. He will destroy the US economy, crash dollar and kill the household saving for the savvy americans. Be prepared for the worst to come. In the last week, many members of the FOMC argued in favor of ending any form of QE, citing rising inflation expectations. Ben Bernanke said No , we need more printing of money since he is hiding facts. He is not sharing the true picture of the US economy to the whole world, leave alone the american public. According to Ben Bernanke, The printing presses are still on and another edition of QE is coming.
How will the market take this? Will it embrace risk assets (stocks) because more money printing is coming or will it worry that the Federal Reserve is going too far and inflation is coming back?
I fear the latter. As I have pointed out many times before, traders now have a better grasp on the effect of QE on the markets. My analysis of History of QE in the last 5 years.
Stocks peaked seven weeks after QE1 ended (the market was slow to understand QE)
Stocks wised up and peaked three weeks before QE2 ended
Following this pattern, I have argued that this time stocks will peak on the announcement of QE3. Is the hope of QE3 one of the supporting reasons the S&P is up 11% YTD? In other words, has the market already experienced the QE3 rally [buy the rumor] and will its announcement mark a peak in risk assets (sell the news)? If I were correct that stocks (risk assets) fail to advance on more QE, inflation fears would be cited as the reason.
According to WALL STREET PAPER ON WEDNESDAY I.E. 28TH March-2012
The Federal Reserve is propping up the entire U.S. economy by buying 61 percent of the government debt issued by the Treasury Department, a trend that cannot last, Lawrence Goodman, a former Treasury official and current president of the Center for Financial Stability, writes in a Wall Street Journal opinion article published Wednesday. He adds further last year the Fed purchased a stunning 61 percent of the total net Treasury issuance, up from negligible amounts prior to the 2008 financial crisis, He has warned that U.S. economy and markets are “at risk for a sharp correction” if conditions aren’t “normalized.”. I have proved my point again. US dollar is dead and dead dollars dont bounce back. Money from heaven is a hell path for the economy.
Disclaimer: This is just a research report and not an investment advice. All financial transactions carry a RISK.