3 Responses

  1. Harold Sader
    Harold Sader April 12, 2013 at 7:26 am | | Reply

    Two thoughts regarding ” sharp divisions….”
    1. Notwithstanding the adamant ideological denials regarding the effectiveness of the QEs, it appears implicit that they have been significantly, if not totally, helpful, and,
    2. At the moment, at least, the U.S. market(s) is/are the closest thing to an investment safe haven for equities.
    Your thoughts, please !

    1. wkort2
      wkort2 April 12, 2013 at 1:28 pm | | Reply

      As to your first point, yes “QE” has helped. Even though the money was used to buy bonds (I heard one wag make inference to it going directly into the market), it has kept rates artificially low, keeping U.S. equities very competitive and keeping a strong bid under residential real estate. This is not to mention the positive impact it has had on corporate borrowing costs. One other element is the implicit telegraphing of the message that the Fed does not want to make another “1937 mistake”, tightening too soon and sending us back into the “Great Recession.”

      On your second point, I tend too believe that we have a long way to go, but I’m not willing to give the market “safe haven” status (if I did we would get clobbered for certain). We have traveled a long way. “QE” will eventually go. Scary corrections will happen for reasons that are not apparent to us now. Who knows, the Eurozone (i.e. Germany) might stop having nightmares about the Weimar Republic and start printing money a la Japan, thus creating another viable equity alternative to the U.S. common stocks.

      Thank you for paying attention to may ramblings and thank you for the questions.


  2. Bill
    Bill April 12, 2013 at 12:34 pm | | Reply

    Thanks for the continued analysis. You have enhanced my ability to see the other side of both the fear and hype that keeps the financial media rolling.

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