It’s going to happen…
When the Federal Reserve took its first steps down the road of debt monetization with the first quantitative easing program (QE1), we knew there were going to be more. QE2 followed QE1. QE lite – where the Fed promised to keep interest rates low until the end of 2014 – followed QE2. And now, QE3 is on the way…
[ad#Google Adsense 336×280-IA]It’s going to happen – as surely as we’ll see QE4, QE5, and on and on and on.
That’s the problem with reckless money printing.
It’s like jumping into a swimming pool. You can’t ever “un-jump.”
So now it’s just a question of timing the announcement for maximum impact.
Think of it like President Obama’s announcement last week in support of gay marriage.
We suspect he’s held this position all along. But announcing formal support just before a $40,000-per-plate Hollywood fundraiser stuffed an extra $15 million into his campaign coffers.
The Fed will design the announcement of QE3 the same way.
We’re going to keep printing money to buy up U.S. Treasury debt. Whether we call it quantitative easing, QE lite, or “stealing” from our grandchildren… it doesn’t matter. It’s going to happen anyway – no matter what happens in the stock market or in the economy.
But the Fed has to time the announcement to create the maximum financial impact.
There’s no benefit to announcing QE3 when stocks are rallying, economic statistics are improving, and the average person on the street is feeling like things are getting just a bit better. Why spoil the party by pointing out the shell game that caused the improvements? Besides, nobody wants to hear about bank bailouts, debt monetization, and currency devaluation when times are good.
It makes more sense to wait until stocks start to fall, economic statistics turn lower, and folks get that uneasy feeling in their guts again. Then we can tell them how quantitative easing made everything better.
It’s not hard for the drug dealer to convince the recovering heroin addict that the pain will go away after just one more hit. And it won’t be hard for the Fed to gain support of another quantitative easing program once the stock market gives up most of this year’s gains.
Stay ready to take advantage of a quick drop in the stock market. The Fed will announce the third round of quantitative easing at some point this year. My guess is it’ll take a move down to around 1,300 or so in the S&P 500 to bring it out.
I’m willing to start buying around 1,310.
Best regards and good trading,
Jeff Clark
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Source: The Growth Stock Wire