The second mouse gets the cheese.
All that I warned you about is steadily coming to pass – it’s last year, all over again. Europe is cratering, and the result has been carnage to the euro. This in turn is propping the dollar, pushing it towards a breakout.
It has been a little over one year since I first came out, suggesting that cash was a strong position; coincidentally nailing the bottom of the channel, almost perfectly.
Manufacturing in Europe continues to crack and their economies (sans Germany) are folding left and right. The latest US numbers were horrible, as all benefits from the Capital Goods Tax Deduction and cyclical winter activity have now fully worn off, revealing a country (ironically) increasingly at the mercy of exports.
Commodities continue to be brutalized, as the fluidness provided by dollars overtakes any advantage of trying to hold oil, gas, or rocks. For the second time in two years, it looks like the crude oil markets will implode on themselves.
And, of course, debt and derivatives standing with notional values in the trillions of dollars must be serviced, putting a massive bid under the USD…
But despite appearing on the cusp of victory, once again, I am aware of my vulnerabilities.
I have been mercilessly taunting QE3 speculators, especially when the ever elusive “next round” failed to materialize, time after time after time. However, this is difficult to juggle, because I really do believe that there will be more quantitative easing, ultimately. My mocking QE3 hounds isn’t about QE3, so match as timing and responsive policy – I think this is a big Catch 22.
I don’t know if Bernanke will announce more loose policy when the FOMC meets on June 19-20 or not. I suppose that ultimately depends on how much damage those of you who were counting on free money sustain over the next several weeks.
But, whether or not QE3 is announced, I will be prepared for it.
6 Responses to All Eyes Pegged On June 19
QE3 is coming. Inflation numbers still low, unemployment numbers still high, 0bama wants to get re-elected. Gotta juice the economy!~
Obama does not control monetary policy.
Correct in theory. But he appoints Fed board members and has influence in many ways.
Never underestimate the insanity that is Ben. I bet against him and lost badly a few years ago.
They don’t call him helicopter Ben for nothing and he has already public stated that a deflationary depression cannot happen under his tutelage. He is purported to be a Great Depression “expert” and his flawed analysis blames the FED for not easing enough as the depression took hold.
His actions have done nothing but confirm his stated beliefs as the monetary base has already increased some 198% over the course of the 0bama admin.
Some say, due to growing political discontent, the next round will mostly likely be covert and will almost certainly not be dubbed QE3, however, regardless of what it’s actually called, make no mistake about it; this is his only option!
If we are unwilling to accept the adjustment and deflationary pressures that come with it, which is always the requisite cure to an over expansion of credit, then, as Jim Sinclair so eloquently put it, “It’s QE to infinity.” Papering over the losses is the only other option.
Ask yourself: “self are you more comfortable holding your purchasing power in paper IOU’s which can be mass produced by the mere flick of Ben’s cigar, or in a scare tangible commodity which has proven to be a legitimate store of wealth for over 3,000 years?”
Go back. Read his paper again. There’s something fairly big that you’re missing.