Deflation – it is still the talking point …………….. but what about the huge run up in commodity prices, what about inflation (yes, its low, but its still there). And the USD – falling now, thats gotta bring some inflation into the US.
Now looks like some more QE from the Fed. Reinvest proceeds as mortgage-bond holdings roll off. Thats sort of QE-Lite, right? But still …. Maybe thats the compromise b/c Bernanke didn’t sound too keen on doing much in front of the Senate recently.
I think the deflation story is being pumped up a bit – bond funds to sell into the highs on the ZN (&physical too of course).
I think the QE-Lite story is being pumped a it too. Still more upside to run in equities, the QELite story has barely started. Then another fall in the ES (ps. I am not an end-of-the-world-ist, these are views for tradeable moves, not apocalyptic visions). OR, OR! What about the moves last night … bit of a sell off in the es on the opne then bid for the day …. no great rally, but bid for the day …..
So, is this the reaction to the QELite idea ?? – if so …. watch for a fall sooner rather than later