Beginning of the end of QE?

The FED started its two day monetary meeting yesterday, and today is the day for the big news, the most important news in a long time, and the market consensus is that the FED will begin to rein in its stimulus program. Investors expect the FED to reduce its bond purchases by $10 billion a month. From $85 billion to $75 billion a month.

This tapering is expected and the equity market may not move so much from here. Nor should the goldprices move so much, because so far in september we have seen a huge sell off in the goldprices. The tapering is largely priced in.

In my TA earlier with the headline: «where is the bottom?», I see a higher high, and a higher low. 50% retracement is at 1307. A great support. I will not be surpriced if the goldprices might rise after the FOMC meeting today.

I will pay attention to the FOMC Statement & Fed Funds Rate today at 2:00pm, and FOMC press conference at 2:30pm. Other important things to follow today: Building Permits at 8:30 and Crude Oil Inventories at 10:30.

Ben Bernanke is using the expected tapering as a way to exit his FED Chairmanchip. To reduce the QE he will argue that his money printing program has a positive impact on the market, and the size of the move is symbolic. So, this is the beginning of the end of quantitative easing?

Nope. The debt is too high. That`s why FED is printing money. They use QE to finance the federal budget deficit. The debt is so high and there is not enough buyers in this world to buy all the bonds. If the FED stopped to buy these bonds by QE, the bond market in the US would crash, and the interest rates would go straight up to heaven!

QE will never end.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

Advertisements

Leave a comment

Filed under Commodities, Stock market

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s