Will the S&P go to 1000 or 1200 ?
- Thread starter fly down
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Well, think back to all the Fed intervention (mostly big rate cuts) in 2007. For a little while, stocks rallied on QE fumes but the real beneficiaries were gold, oil and non-USD currencies.
That may be playing out again. There are smarter ways to play QE than buying stocks in this terribly uncertain economic environment. Ok, buying at 1040-1060 was a risk worth taking, but now? Best case is a run-up to 1220, but I wouldn't bank too much on that for awhile.
Plus, years and years of QE didn't do the Nikkei much good after 1990, did it?
i dont doubt anything at all youre saying about qe, its real effect, 2007/2008 or how this is similar. all i'm saying is that betting against this freight train is suicide.
it will continue until all the folks that thought it would die have died. then, when it is profitable for the big guys, the market will collapse. it is rigged. rigged.
it will continue until all the folks that thought it would die have died. then, when it is profitable for the big guys, the market will collapse. it is rigged. rigged.
Well, I'd say stock shorting should be hedged with some positions in Gold, other currencies and maybe other commodities/oil.
If QE "works" and stocks go up, I can't imagine gold and currencies like EURUSD and AUDUSD not also rallying (think 2007 again).
If QE starts to fall apart, *maybe* USD becomes reserve currency for a bit like 2008, but stocks should crumble so your shorts hedge you there, too.
The last thing I can imagine is a return to the 1990s--super cheap oil, gold mostly going down, strong USD, huge bull market in stocks. At least not with the current policies.
YAY for bubble ben bernanke doing a fine job of keeping this rally intact by offering more quantitative easing going forward. Bubble ben is really fucking up this economy, in the long run you will notice that the steps being taken now to keep the economy propped up will only be more problematic going forward. Bubble ben bernanke thinks this is going to create real economic growth, ha. Again they are trying everything possible to keep this economy going, there is no such thing as real economic growth when the fed is intervening every step of the way.
Of course, there is a difference between growth based on productivity and growth based on borrowing, as experienced during the Reagan Presidency. A critical factor is how borrowed money is spent. If it is spent on wasting assets, e.g. a fancy car or a doublewide that becomes a rusted hulk in fifteen years, a senseless war or useless weapons, etc., the result is a loss. If however it is spent on appreciating assets, e.g., a home in Sante Fe in 1965, or a headstart program in Alabama, the result is a gain. So, economic growth based on Federal borrowing is not necessarily bad, nor is it necessarily good. It depends on how the borrowed money is spent!
The Fed has announced that they will use the proceeds from mortgage related assets they hold to buy Treasury bonds. That will put more money into the economy without being inflationary. That will also put downward pressure on long term interest rates. (Quantitative easing) How that money is spent is more important than whether it is borrowed. Let us hope it is spent on appreciating assets rather than wasting assets.