Return of Risk…?

Fed Puts Stamp of Approval on Riskier Assets We believe that the Fed has no other option than to pump more money into the system to stimulate economic growth. As a consequence, QE2 will most likely artificially inflate asset prices in the short-term.  Part of the Fed’s intentions in facilitating appreciating asset prices is to … Continue reading

Dow 11,000 is just the start

Breaking 11,000 is the first step in a big move to the upside. Expectations of QE are lifting equity markets higher as anticipated. The Fed has run out of monetary ammunition with almost 0% interest rates, and has to resort to QE in order to minimize the chance of a double dip.  Get positioned for … Continue reading

Gold Rises to Record on Increased Demand for Wealth Protection

Economists at Goldman Sachs Group Inc. expect the Fed to announce as early as November a new round of asset purchases to support a weak economy. Treasury purchases may total about $1 trillion in another round of quantitative easing, according to Jan Hatzius, chief U.S. economist for Goldman Sachs.

“Gold has recently been driven notably by the perceived increasing probability of a new round of quantitative easing in the U.S.,” said Anne-Laure Tremblay, a London-based analyst at BNP Paribas SA. “Quantitative easing tends to be supportive of asset prices and is fuelling concerns about the potential longer-term inflationary impact of such measures.”

Busily going nowhere

Busily going nowhere

“Lord, make me chaste and temperate, but not yet…”

Comments out of the Fed this past week have ostensibly signaled that central bankers are heeding St. Augustine’s supplication and plan to tackle the greater threat of deflation before focusing on any new austerity measures.  And the financial markets seem to suspect such will be the case as well.  Despite a failed stress test of … Continue reading

Japanification, Liquidity Traps & Chateau Latour

Japanification, Liquidity Traps & Chateau Latour (Report from BofA Merrill Lynch) Developed market equities are stuck in a trading range Investors continue to prefer bonds over equities (Chart 1). Until there is a secular bear market in bonds, there can be no secular bull market in equities. We think a bear market in bonds will … Continue reading

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