End of QE2

I agree, and am 90% out of the market as of a few weeks ago. There are negative effects in the global environment; Japan, middle east unrest, global debt crisis, etc... and,
AND the market has been going up up up regardless of it all... It's obviously an artifical increase and once the source (Qe2) goes away the only thing left will be the negative stuff, which should have already depressed the market year to date. I'll jump back in after the post Qe2 fall, provided there is no Qe3.

 

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Where are these "after-market hours" purchases documented? QE2 is primarily buying U.S. Treasuries and providing cheap money to others who want it. Buying equities? When would they sell? After they made 20%? 30%? To whom would they sell? Trades are documented. Don't be confused and think QE means Quality Equities. It means easy money.

That doesn't mean there wasn't some help injected into the U.S. equity markets in 2009 and 2010 because there was. even if it wasn't direct buying.

 

Are you kidding? I'll assume not, and that simply mis-guided and uninformed, which is typical of most,,, and sad. I'm not gonna provide you with the documented purchases.. lol. Do you own leg work. However, I will inform you at a high level of how Qe monies are disposed and hopfully you'll get it.

1st - QE is NOT "primarily buying of US treasuries". It IS primarily "providing cheap money to others who want it". If you take QE and Bailout monies combined (same thing really), the buying of US treasuries comes to around 10% of that money. btw, the practice of the US buying it's own debt via the Fed existed in systemic practice long before bailouts or QE, it's just increased lately due to the decreasing attraction of US debt.

2nd - Now closer to the point of after market buying of equities, specifically "... others who want it" (and have the political connections to get it). That 90% of QE and bailout money is generally going to fund some 20-40 specific programs itemized under QE funding (save the homes from foreclosure, etc..., mostly BS programs <wink-wink>), very little of those monies are hitting the pavement. Most of that money is held by "those who want it" Big ass politically connected financial institutions... which segways to #3.

3rd - Where do you think those big ol' financial institutions are putting thier money,,, treasuries? (lmao)... durrrrr.

Finally, and as a final hint without getting into details,,, please review aftermarket volume for the past 3 years, put it on a graph (as 8th grade homework), and please provide us that as documentation in support of answering your own question.

... then try to connect the dots.

 

Printing Money Sucks

I don't know. I would say maybe, but they are also talking about raising interest rates (finally) as Europe just did the same thing. The interest rate hike is their main weapon against inflation.

With people freaking out about all the money printing, im not sure, but I'd not put it past them. All i can say is that they aren telling us only a 1/3 of whats going on. There is talk that we are going to now attempt to bail out Libya? wth?

They just gave out 3+ Trillion dollars to foreign European banks. That's more than the annual income of everyone in the entire united states...for an entire year. Get some hard assets while you can.

[video=youtube;sSBdRVH3AUI]http://www.youtube.com/watch?v=sSBdRVH3AUI[/video]

 

QE is not buying equities. It's as simple as that. Much of the money can end up in equities indirectly though. All trades are documented and easy money does allow for those trades to occurr with very little risk to those with access to it. My education and experience includes an MBA and 25 years of business experience and I am heavily invested in PMs. I'm just not a crazy person who sees a gov't conspiracy in everything that happens.

And the third point is way off base. Most of the USD the financial companies are getting are still coming at 0% Fed rate. Anywhere they put it, it's going to make them something. Your initial point was that QE2 monies from the Fed were buying directly into the U.S. equity markets. They're not. They don't need to. Owners of those shares are all well documented, sure they're big banks and other large institutional investors - that's who's benefiting from the easy money.

 

ok,, we may be saying the same thing with the only difference being that you delimit between the Fed and it's few large banking benefactors.... I don't. Ultimately, it's Fed dollars, and they are as nearly to direct Fed dollars as you can get,,, The market sure as heck hasn't been driven by individual investors in the recent past.

As to point #3, your still missing what's going on... too bad.

 

I think this is more of an urban legend than something you can use as an investment indicator. Besides, markets are more powerful than the Fed.

 

Starting to see more articles addressing this topic. Saw this one yesterday and thought I would pass it along:

http://www.cnbc.com/id/42496641

Seems that traders are expecting some sort of continued liquidity pump but it is certainly not a given. On the other hand you have other people who really count like Dallas Fed President Richard Fisher who believe we should end the current QE2 program early (better hurry...)

http://www.cnbc.com/id/42489796

If the Fed ends their bond buying program some of the same old crowd (less Japan) will be buying our bonds but by all accounts in smaller quantites. Who can/will step in to fill the gap? How high will yelds have to go to attract buyers?

Bluesboy65

 

It appears they don't plan on raising interest rates until 2012. No concrete indication as to whether QE3 will happen or not. QE didn't start until interest rates hit zero, so in my perception lowering interest rates has the same effect as printing more money. Until I see lack of QE plus higher interest rates I'm still a buyer.

http://news.yahoo.com/s/nm/20110415/bs_nm/us_usa_fed

 

The biggest problem is going to occur in the bond market. With the Fed no longer stepping in to buy 70% of our Treasury notes, yields will have to rise to attract buyers. Strained treasurty acuctions may eventually result in a failed auction and will definitely result in higher interest payments as yields rise. If rates get too high too fast, look for the Fed to step back in and "calm" the market.

Bluesboy65

 

I have not read Bernanke has ruled out QE3.