What I see: a weakening economy with increased financial risks. Policy response-to scared to start tapering, but instead puts further into place different dislocations:
3)Lower interest rates for awhile, but higher inflation will lead to negative real rates-that won't stand the test of time
4))The FED buying up all new treasuries-that won't stand the test of time
5) Looks like stagflation to me-under that scenario-companies will find it hard to make the markets sales and earnings estimates
6)Bullish for oil, NG, gold and silver
I should also add, with the FED buying up just about all to perhaps 110% of the Treasuries new issuance, they are enabling the disfunction of Washington. As a consequence, the US will become a worse and worse credit with budget deficits and unfunded liabilities growing unchecked until the day the markets force the FED to no longer be a buyer. Interest rates will have to adjust 200-400 BPS in a very short period of time. Until then, the game of musical chairs continues.
gotta admit, i just dont get it. its as if the fed believes the unprecedented qe will have little to no aftershock. i'm befuddled. is the economy, still, really that bad that they have to print 85b a month???? since they know taper decisions are fueling the mkt rally, i suppose they believe that as the economy gains further ground and they taper, the two actions will offset each other and the mkt will just more or less flatline in the stagnation period from 2015-2020....ie, rich will invest and make purchases if assets at a minimum maintain a set value and dont crash. seems reasonable to me....its just that i've never seen an equity mkt not trade irrationally on sentiment...and if i knew that equities would not appreciate for the foreseeable future due to a qe end which fueled the rally, why would i hold? i fear the worst is yet to come.
Well everyone in entitled to their opinion but my portfolio is the best it has been in many years. I am sure others feel that way. If I am fortunate enough I hope to be out before the dam breaks. In the meantime thanks Ben.