Home > Uncategorized > 2011/08/26: QuickPost: Hurricane Benny a Full Force Problem?

2011/08/26: QuickPost: Hurricane Benny a Full Force Problem?

We certainly hope not. And it’s possible equities already discounted the impact of what is likely to be a lack of explicit QE2 commitment by Mr. Bernanke today at Jackson Hole. The further challenge facing traders and portfolio managers is while the discussion of what the Fed Chairman might say has been ubiquitous, it’s possible it has already been built into the market on yesterday’s late session slide.

In fact, the question “To QE3 or not to QE3?” never was likely to be definitively answered at Jackson Hole today. It is not even what happened last year; even if the hint was very strong and the conditions were ripe. However, that is much less so the case today in the wake of QE2 only being a qualified success. Especially in light of the lack of any improvement in the US economy, which was due in part to the inflationary spiral of risk assets, it is less likely that any forceful statement on further quantitative easing will be forthcoming.

In any event, there are certainly quite a few other factors that combine with the likely lack of that commitment by Mr. Bernanke which are also bearish. Yet, will they push equities down further after yesterday’s slide? Or was the negative implication anticipated and already built in on yesterday’s selloff? Even with the further slightly worse than expected slippage in US Q2 GDP released this morning and the anticipation of quite a bit of disruption from the real hurricane (Irene, that’s about to slam the East Coast), it will be interesting to see how the equities respond. That will also inform the view on other asset classes. On current form, it will be most interesting to see if September S&P 500 future still holds important  1,155-45 interim support after whatever Mr. B. has to say. Also of note, the German DAX has also retested it important interim support at 5,440-30.

Thanks for your interest.

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