- We'll have the easing the market wanted, but with limited economic benefit. For example, we may see a slight improvement on Bernanke's "grave" characterization of the labor market. The ball will have been kindly passed back to fiscal policymakers.
- We'll have another wrinkle in potential long-term disappointment, in terms of being able to unwind open-ended bond-buying without uprooting markets. Can you imagine the market's reaction when Bernanke (or his successor) signals an end is in sight to the program?
- We'll see the Fed lose some credibility as an institution should QE 2.5 do little to promote "maximum employment and price stability." By the way, the Fed is preparing to offer this bond-buying plan into the teeth of rising commodities prices, partly thanks to the prospect of a QE 2.5 announcement concurrent with the Midwest drought.
Convo Bites for the Starbucks Line
- After Intel's (INTC) sales and earnings warning, I don't think the company's product event this week will reawaken the bulls. If anything, it may illuminate challenges for Intel.
- When I hear strategists say it's okay to buy stocks in "overbought territory," that raises a red flag in my mind.
- Retail is shifting into a slow period with back-to-school priced in. So, as we head into August retail sales and consumer confidence reports later this week, don't force things when it comes to top names such as American Eagle (AEO), TJX (TJX) and so on.