Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
WARNING - AI STOCK MARKET CRASH / BEAR SWITCH TRIGGERED! - 19th Jan 22
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
NVIDIA THE KING OF THE METAVERSE! - 10th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
MATTERPORT (MTTR) - DIGITIZING THE REAL WORLD - METAVERSE INVESTING 2022 - 7th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
METAVERSE - NEW LIFE FOR SONY AGEING GAMING GIANT? - 6th Jan 2022
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Fed Minutes Old News, There Will Be No QE3!

Stock-Markets / Financial Markets 2012 Aug 23, 2012 - 06:32 AM GMT

By: EconMatters

Stock-Markets

Best Financial Markets Analysis ArticleThe Fed Minutes are from the July 31-August 1 meeting, this was before they latest run-up in asset prices. For example, WTI was $88 dollars a barrel then, now it is $98 and with the new asset prices any QE3 thoughts have now been priced out of the market. In short, the Fed minutes from three weeks ago are outdated. There is no way with eight dollar corn prices and 4 dollar gas that the Fed does any major QE3, just forget that notion.



Chart Source: US EIA, August 22, 2012

The very run-up in asset prices has in essence precluded the Fed from being able to act, prices and inflation are too damn high to do any material actions now. So the bulls can start re-pricing this fact out of the market or they are going to be severely surprised when no major QE3 initiative comes down the pike.

Talk about putting the cart ahead of the horse. The bulls have taken and ran with a far- fetched notion that has a very low percentage of occurring right now. The old trade of buying the rumor and selling the news is actually backfiring this time because of the run-up in food, oil and gas. The Fed`s hands are now tied on this one even before they got a chance to do anything.

Expect some market signals that no QE3 will be coming in next week`s Jackson Hole speech. The rise in commodities will be mentioned, and this is the signal for NO QE3 of major proportions. Sure, Bernanke may throw the market a bone, but that`s about it! This is an election, and the last thing Bernanke, Obama, or any politician in office wants is high food and gas prices.

As usual the market`s first reaction is usually wrong, then they think harder about the issue and then take the other side. Bernanke got so much criticism the last two QE initiatives over high food and energy prices; well they were lower when they were entertaining the idea. But this latest run-up has pushed these commodities higher than they were during the other QE initiatives in the case of Gas prices and food prices.

In short, there is no room for Bernanke to move on this one, he is effectively boxed in, and eventually the market will get it, but they are pretty dumb most of the time. They usually have to be beaten over the head with the concept of $12 corn and $5 gas before they get a clue that this would instantly get Obama fired, Bernanke kicked out of office, and send the Global economy straight into a nasty recession.

You think China is having a hard landing now, just wait what QE3 would do to their fragile economy. If a QE3 initiative would be implemented, there would be an initial spike in commodities, then the side effects would push the Global Economy over the ledge, and ironic enough you will not be able to give commodities away.

You think Europe can handle high energy prices right now? Forget about it, half the Euro-zone is in a recession right now! Can you say Food riots in China? Nope, Bernanke and crew would have to be the dumbest Fed in the history of Fed governance on monetary policy.

Even if they were that stupid, there is no way Obama would let them self-destruct his seemingly locked bid for a second term. That`s the ticket for winning an election have run away food and energy prices right during the home-stretch of the campaign.

I don`t think so, these are smart people. They may make mistakes from time to time, but this is a NO Brainer given the run-up in gas prices since the last Fed Meeting. It doesn`t take a PHD Economist from Harvard to recognize that things have changed since they last met and discussed the issue, namely asset prices have risen dramatically.

Therefore, given the fact that environmental conditions have changed, this completely changes the data that they put into the equation regarding possible QE3 policy, and the new data effectively eliminates even the bandwidth available to maneuver here in regards to loosening policy measures. The start of both QE 1 & 2 had much lower starting points for commodities in the form of food and energy prices. This was after major market sell-offs, but the exact opposite has occurred this time as markets are in the midst of a humongous rally in Risk On Assets.

In short, the conditions are dramatically different from the first two QE initiatives in regards to Pre-Conditions or available flexibility to undertake an asset raising initiative which is emblematic of these types of monetary tools.

Nope, there is no way in hell with these current asset prices that QE3 is anything other than a major letdown for markets. Expect the Fed to start signaling the markets of this case starting next week.

By EconMatters

http://www.econmatters.com/

The theory of quantum mechanics and Einstein’s theory of relativity (E=mc2) have taught us that matter (yin) and energy (yang) are inter-related and interdependent. This interconnectness of all things is the essense of the concept “yin-yang”, and Einstein’s fundamental equation: matter equals energy. The same theories may be applied to equities and commodity markets.

All things within the markets and macro-economy undergo constant change and transformation, and everything is interconnected. That’s why here at Economic Forecasts & Opinions, we focus on identifying the fundamental theories of cause and effect in the markets to help you achieve a great continuum of portfolio yin-yang equilibrium.

That's why, with a team of analysts, we at EconMatters focus on identifying the fundamental theories of cause and effect in the financial markets that matters to your portfolio.

© 2012 Copyright EconMatters - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in