This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stock Under $10 that he thinks could potentially double or triple in the next 6 to 12-months. See what he's trading today with a 14-day FREE pass.

QE3: Bad News Is Bad News Again

NEW YORK ( Real Money) -- Given how the market rallied for months following the announcement of QE1 and QE2 it isn't at all surprising that we had a euphoric response to Helicopter Ben's QE3 last week. The big question now is whether it is different this time or can the market run for months like it did previously?

Although the it's-different-this-time argument is always dangerous, there are a number of reasons to believe that this may be the case.

First and foremost, the reason we have QE3 is because the first two rounds of QE obviously failed to achieve their goals. The Fed printed huge amounts of cheap money that boosted the stock market, but didn't fix the economic issues that were the primary problem, especially the stubborn high unemployment rate.

The other thing that is different this time is that the measures are open-ended. The Fed is going to keep on buying mortgage backed securities for as long as it takes. The problem is that if that doesn't work, it is pretty much out of ammunition. There isn't much more that monetary policy can do and obviously our politicians are useless when it comes to fiscal policy.

For quite some time the market has benefited from the dynamic that bad news is good because it will force the central banks to act and good news is good as well because thing are improving. But now that we have open-ended quantitative easing, from both the Fed and the ECB, we are going to shift back to a more traditional environment where bad news is bad and good news is good. The economic reports will likely see more normal reactions.

The central bankers no longer have the capacity to adjust to bad news with more announcements. They have already addressed the potential of future negatives by making their plans open-ended. Maybe they can increase the size of their programs, but they have already fully committed themselves and are unlikely to offer up anything else very soon.

So does this mean that the market is on the verge of topping out?

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV

Markets

DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Our Tweets

Brokerage Partners

Top Rated Stocks Top Rated Funds Top Rated ETFs