U.S. Doesn’t Need QE3 Says Haverford’s Smith

If Ben Bernanke is anything, he's consistent. Just as he's said all year, in the face of a world full of promise that's turned to risk, "the Fed stands ready to act." Of course, no one knows when or what calamity it will take to actually get them to act, but given the souring situation he's now facing at home and in Europe, it doesn't seem to me like such a bad time to add a little juice to the system... just to be safe.

And yet, the bearded banker isn't budging—which for some, is just fine.

"I don't think we need QE3," says Hank Smith, chief investment officer of Haverford Trust, in the attached video. This sentiment conflicts with the hopes and dreams of traders everywhere who know what they want and when they want it. "We should be thankful the Fed is doing what it's doing."

Of course, with today's surprise quarter-point cut in Chinese borrowing costs, the first such move in eight years, speculation is also rampant that it was not only a coordinated move within the realm of global central banks, but perhaps a bet, of sorts, on Europe.

"China wouldn't be doing this if they didn't think there will be a fix to the banking problem in Spain," Smith says, echoing a theme that continues to provide lift to markets all over the world. "This rate cut really gives more credence to China coming in with a soft landing," he adds.

While Europe did its bit to boost confidence on Wednesday (at least the markets thought so), less than a day later the Germanic boot of reality is already trampling some hopes, while kicking certain other doors closed. I am referring to comments made by Chancellor Angela Merkel that ''no single meeting" would fix the problems in Europe and no matter what steps are taken it's going to "take a few years" to resolve, so investors need to "be patient." This all comes despite ample evidence that leaders there are "dithering."

"Patience is not a word I would associate with what Europe needs right now," Smith rebuts. "They need more decisive action, particularly as it pertains to protecting the banks." Part of his confidence comes from the fact that we have come to the edge of the cliff with Europe many times in the past three years, but we've never gone over.

"So our view is Europe will get its act together—they will protect banks. And if all that happens, we could certainly see a 1,000 point rally in the Dow."

In other words, we may just be about back to where we were at the start of May.