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Silver Lining in the End to QE

Posted by WorldWideMarkets . on Jun 24, 2013 3:45:00 AM

The dollar won but the stock market was a clear loser from Big Ben’s announcement that QE will end sooner rather than later. But while the dollar may continue to gain on less supply or tighter monetary policy, the stock market may also become a little more healthy once investors get used to the new scheme. And that would also be good for the dollar. Energy and commodity prices have climbed on the hopes or speculation for economic growth as long as QE continued. Without QE, perhaps those prices will come off and the consumer may have a little more to spend. Spending on real goods and services would be healthier for corporate profits and push the stock market back up. A sign of a healthier economy generally. Which would attract investment and demand for the dollar in currency trading. From the Fed's perspective this was probably always the plan, but the U.S., and the big banks and entities in particular, have got too used to cheap money. If the economy is in major recovery mode, time for everybody to be weaned off the extraordinary measures that were QE.Ben Bernanke


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