Posted September 17, 2012 9:45
Well, the market finally got what it wanted, QE3. The market was definitely excited as the market rallied 200 points on Thursday and then another 50 points on Friday as traders felt that they got what they had been hoping for. Not only did the market receive QE3, but more importantly the Fed announced open-ended QE. What this means is the monthly MBS (mortgage-backed securities purchases) of $40 Billion per month will continue indefinitely. The Fed also extended the Fed fund rates of 0-0.25% through the beginning of 2015. Both Gold and Oil rose following the announcement. This is due to the fact that the QE purchases will lead to inflation, which will most likely lead to higher Gold and Oil prices and a lower dollar.
The question surrounding the market is whether or not this ‘hopium’ of the ECB bond-buying program and the Fed’s QE3 will last. Will this end up being a sell the news event? Or, will this be the necessary catalyst to provide a sufficient lift to bring the S&P 500 to 1500? In my opinion, what will take center stage is the upcoming election. The outcome should have a pretty significant impact on the market. But for now, the next big piece of news is going to be the September Jobs Report that will be released on the first Friday of October.
