There is just no other conclusion from a macro-economic POV. The stock market is doing great; The economy improving. Where would we be without quantitative easing?
Moreover, this is not just my opinion, but the conclusion of a great many economists in a recent survey:
*Sixty-two percent of panelists said the Federal Reserve’s plan to purchase up to $600 billion in Treasuries was good for the economy and most said it should continue through to its planned termination in June. Sixteen percent said the Fed’s unconventional easing policy had hurt the economy.*
And here is a fact-filled editorial on Republican scare tactics and the truth about the condition of the US economy, debt markets, taxes, and the dollar. A really good, important read:
*“There’s no evidence that the market is treating the U.S. government like it’s broke.” The U.S. today is able to borrow at historically low interest rates ... Financial products that pay off if Uncle Sam defaults aren’t attracting unusual investor demand. And tax revenue as a percentage of the economy is at a 60-year low, meaning if the government needs to raise cash and can summon the political will, it could do so.*
the fed inflating is a good reason to act accordingly.
just don't expect real returns from economically sensitive parts of the market.
the fed's inflating will actually hurt those sectors in real terms.
Something the Krugmans of the world don't get.
<<*Sixty-two percent of panelists said the Federal Reserve’s plan to purchase up to $600 billion in Treasuries was good for the economy >>
LOL, I bet these are all WS types and they are biased.
They only care about financial markets, not the real economy.
And what you don't get is that Bernanke's support for financial markets and the institutions that live off of them only adds to the problem.
Ditto for the Obama stimulus that largely went to feed the same interests along with the public sector.
This all sifens resources that otherwise could have gone to Main Street in order to provide a temporary boost to financial assets (and the public sector) in order to feed the parasites so they can continue bleeding Main street while diluting the value of the currency.
Temporary. Get it???
<*“There’s no evidence that the market is treating the U.S. government like it’s broke.” The U.S. today is able to borrow at historically low interest rates ... Financial products that pay off if Uncle Sam defaults aren’t attracting unusual investor demand.*>>
Haha, see what happens the moment they stop QE2 ...errr "unconventional easing policy"...errr printing LOL.
<< And tax revenue as a percentage of the economy is at a 60-year low, meaning if the government needs to raise cash and can summon the political will, it could do so.>>
Are you nuts?
As to why tax revenues are down so much, you might ask yourself why that is???
A sign of strength in your mind??
Lack of profits mean anything to you?
What do you think happens if you raise taxes in this environment?
If you really think they can keep up with these charades, you're a fool.
govt needs to reduce it's role and the public sector needs to be cut down to size.
As does the financial sector!!!
The inequities between the public and private sector have become too much for the private sector to bear.
As to your continuing political partisanship and blaming of a previous administration, this is really getting old.
the democrats have had control of congress for over 4 years now and things are no better.
In fact, they are being made worse.
And eventually, you are going to have to face up to that reality.
And grow up.
Neither political party deserves our respect.
And until the whole political process changes such that lobbyists don't have so much influence, I doubt much will change.
*the democrats have had control of congress for over 4 years now and things are no better....*
June, you look at better, but you see worse... that is just delusional.
You say: *...until the whole political process changes such that lobbyists don't have so much influence, I doubt much will change.* Great. So, you are going to give a tea party and change the whole process? Nice try, in theory.
Get real... The choice is about you, personally, making a difference by understanding the distinction between better and worse, and acting on that knowledge at the ballot box. That IS our system.
So, where do you stand, June?
Do something or Do nothing?
Benefit the majority or Benefit the minority?
John Stewart or Rush Limbaugh
Gartman was on CNBC saying QE IS OVER. Interest rates are going to skyrocket when Ben steps out of the Treasury market since the FED was the only buyer in the treasury market. CASH IS GOOD, actually King. I highly recommend you go there.
I agree with you and if I had to pick a side, I'd say I'm certainly more Austrian School than Keynesian. This is why I like guys like Marc Faber so much. He understands market psychology so well. I like Jim Rickards as well although he doesn't have many positive things to say about the stock market.
Ironically, even though I'm very bullish about precious metals and commodities, my largest gains have always been in other sectors such as tech and consumer discretionary. Again back to Faber, he knows that stocks in general are "hard assets" just like gold and oil. Only US government bonds and us dollars are worthless paper, the key to survival is to simply accumulate more of those useless dollars than the average Joe so that you can beat inflation. We still have to use dollars....at least at this point hahaa....
http://www.youtube.com/watch?v=zjcj7U5kdjA Jim Rickards on the SDR.
There is no doubt one has to consider the environment of politics and fed policy when it comes to investing.
I myself, have been in precious metals and materials for the last 10 years or so and have been rewarded with a much better return than stocks. With a dollar that becomes increasingly less valuable every year, it makes it harder to stay even let alone make a real profit.
No business or household continue to stay afloat when they finance 40 cents of every dollar, government is no different. As Albert Einstein once said the most powerful force in the universe is compound interest.
wclass, I'm basically agnostic when it comes to the market and politics. The Fed will do whatever it does and as an investor I just act accordingly. If the Fed keeps rates low to inflate things, then I just follow along for the ride by being in good stocks. You can't argue with the returns the market has given since the March 9, 09 low of 666 on the S&P. There will be corrections from time to time but they are to be bought. I would love a nice 20% correction so I can buy on the really cheap but we may not get a big one like that with rates at zero for who knows how long. Just enjoy the ride and try and make some money since those dinners and gas tanks aren't going to get any cheaper anytime soon.
Yes... Thank you, Ben.
I think the market is very treacherous right now... Libya and the rest of the turmoil makes it even more so. I have sold a bunch of stuff and have $ to put back to work when the coast is a bit more clear.
If the troubles continue, energy, energy services, and alt energy could be one place to go.
If the troubles recede, the economic recovery continues, commodities, industrials and, increasingly, consumer discretionary probably still have room to run.
What do you think?
Yes, reflation increases risky asset values as it forces yield-starved money out of safer securities offering paltry returns. But the endgame results in inflation and FED tighening which exposes asset bubbles and their invevitable collapse. "As long as the music is still playing, you've got to keep dancing".