QE3 Need Not Apply
Kevin Cook here for Steve. Seems the White House needed him again for some portfolio fine-tuning. I just hope he gets a chance to give the President my second quarter buy list.
Monday's emerging breakout in the S&P above 1,420 began Tuesday as a typical post-surge back-and-fill day, which was fairly predictable since we have few near-term catalysts until earnings season kicks off next week. Then a little report known as the FOMC minutes showed up at 2pm, sparking a 10-point sell-off to 1,404.
And it was played as perfectly predictable by many Fed-wise investors and traders who knew to expect little encouragement about any "QE Next" possibilities. They were willing to let the sellers dominate the session so that they could pick up some more shares at better prices. The headlines like "VIX Surges Above 16!" went quietly back into their holes as we settled back near pre-minutes levels.
While many investors believe all the best possible news is priced into the market, I am still in the camp that this economy and corporate earnings can continue to surprise to the upside. And we don't need another round of QE to make it happen. We only need transparency and the certainty that Big Ben is there with the heavy artillery just in case.
Growth and stability are back. And if it's "artificial" stimulus or consequent inflation some are worried about, I say this: You don't get a "re-do" on saving the economy and creating jobs. If you give up the stimulus back-stop now to prevent a temporary battle with inflation, you run the greater risk of losing the entire war to the bottomless pit of deflation. Dramatic? Maybe. But also true.
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