Friday, October 8, 2010

Simple explanation of today's market action

lousy jobs report - sparks further economy worries - enough to convince investors FED will resort to another round of Quantitative Easing - so stocks rise - bond mkt fairly flat - gold gains as more expected QE means more mass printing of paper dollars. It's that simple.

One day it will all end badly for stocks and bonds. For now, however, I remain somewhat bullish on stocks as long as QE pumping is in the cards and the banks don't quickly implode over the foreclosure mess. One of the hard lessons in all of this: it's pretty easy to inflate the stock market, but not so easy to rejuvenate the economy. QE just doesn't seem to have a trickle down effect on the masses. QE feeds the banksters who get freed from government paper and other worthless assets. The banks then throw some money at the stock market and up it goes. That's essence of what's going on (in very simple terms).

No comments: