It'll be hard for the Fed to launch QE3, virtually every asset is over-priced, and instead of being the last one out of the door it is better to be the first one out of the door. So before mayhem lets loose like seen 2 weeks ago in the Silver market, it is good to bid adieu to Equity based assets.
Jeremy Grantham of GMO, not only has a decent track record on the big calls, but after having wrecked the "Batterymarch" fund in 2000 and owning upto his mistakes, now overlooks close to $ 100 bn in global assets . Up until now, he'd been suggesting that investors had until early October to milk what they could from 'risk-on' assets. But he's decided that – given how far the market had already come this year – it's time to "lighten up on risk-taking now".
The broad impact of the Japanese earthquake remains unknown. The upheaval in the Middle East could yet spring some nasty economic surprises. Add that to the end of QE, and rising inflation in developing countries, and there are just too many risks out there.
"A third round of quantitative easing would very probably keep the speculative game going. But without a QE3, there seem to be too many unexpected (indeed unexpectable) special factors weighing against risk-taking in these overpriced times."
The fact is, the Fed may pull QE3 out of a hat. But it'll need an excuse first. And as I mentioned a couple of days ago, QE is no longer an easy option politically. Federal Reserve chief Ben Bernanke certainly doesn't command the same level of adoration that Alan Greenspan once (undeservedly) did.
And little wonder. The voter in the street reckons that QE is little more than a handout for Wall Street. It hasn't helped house prices to stabilise in any obvious way. It hasn't helped them get jobs, or pay rises. And it has driven up the cost of food and fuel. When you put it like that, why would anyone want more of this money-printing nonsense?
Trying to point out that things might have been worse without it isn't easy if you're talking to someone who has lost their job and their home. 'Worse how?' might well be their response.
Jeremy Grantham of GMO, not only has a decent track record on the big calls, but after having wrecked the "Batterymarch" fund in 2000 and owning upto his mistakes, now overlooks close to $ 100 bn in global assets . Up until now, he'd been suggesting that investors had until early October to milk what they could from 'risk-on' assets. But he's decided that – given how far the market had already come this year – it's time to "lighten up on risk-taking now".
The broad impact of the Japanese earthquake remains unknown. The upheaval in the Middle East could yet spring some nasty economic surprises. Add that to the end of QE, and rising inflation in developing countries, and there are just too many risks out there.
"A third round of quantitative easing would very probably keep the speculative game going. But without a QE3, there seem to be too many unexpected (indeed unexpectable) special factors weighing against risk-taking in these overpriced times."
The fact is, the Fed may pull QE3 out of a hat. But it'll need an excuse first. And as I mentioned a couple of days ago, QE is no longer an easy option politically. Federal Reserve chief Ben Bernanke certainly doesn't command the same level of adoration that Alan Greenspan once (undeservedly) did.
And little wonder. The voter in the street reckons that QE is little more than a handout for Wall Street. It hasn't helped house prices to stabilise in any obvious way. It hasn't helped them get jobs, or pay rises. And it has driven up the cost of food and fuel. When you put it like that, why would anyone want more of this money-printing nonsense?
Trying to point out that things might have been worse without it isn't easy if you're talking to someone who has lost their job and their home. 'Worse how?' might well be their response.
Safe Harbor Statement:
Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.
Nothing in this article is, or should be construed as, investment advice.
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