It's starting to get interesting, I think. Bottom line: watch volatility for clues ...

It is mostly agreed that QE1 and QE2 did little, if anything, to bolster the real economy. The Fed even acknowledged that they very much relied on the wealth effect of rising stock markets to support the habits of consumers and businesses. But some analysts have predicted QE3 could actually workfor the real economy by shoring up sentiment of businesses and consumers.

That certainly might help. The difference between this time and previous periods of monetary accommodation is the open-endedness. If the Fed effectively closes the open-endedness of QE3, they risk shooting themselves in the foot by undermining their support measures before they finally might work as hoped.

It's been said only a major market meltdown will bring about needed action on the fiscal front. After all, that's what happened in 2008 to necessitate stimulus measures. Might the Federal Reserve "inadvertently" create the conditions for a market meltdown as they flirt with increased transparency? It may be a round-about way to get lawmakers to perpetuate the status quo and delay the inevitable yet again.

So ...


Commodities Essential. 21 November 2012

Trade Essentials.

No new recommendations or adjustments at this time.