QE3 May Still Be An Option

Author Larry Berman

Posted: 13 Apr 2012 re-posted from etfcm

The gaggle of Fedspeak this week seems to support the notion that QE3 is still an option, but only if the data warrants. So the market seemed to take that to mean a 380K print on initial claims was a shot across the bow that the jobs market is decaying and that will bring the Fed back to the money printing table. If you ask us, the only real politically palatable outcome is an extremely slow shift to better policy making (let me say that again clearly: AN EXTREMELY SLOW SHIFT TO BETTER POLICY MAKING!) taking a decade or more, but in the interim, debt monetization to ease the debt stress and the unavoidable pain of a generation of debt excess. The Piper must always be paid—one way or another.

So risk is on and earnings are likely to be OK this quarter as GDP is likely a bit better than expected. But let’s play close attention to the Google clicks, the Fedex slips, the Intel chips, and the CSX trips to see how the go forward economy is likely to fare. Our bet is that the US economy cannot decouple from the world despite Kudlow’s rants and we are making the next trading top in the next few months.


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