What Happens When The Market Props Are Gone?
by Phoenix Capital Research
As stated in my weekly forecast earlier today, the markets are rapidly adjusting to the fact that QE 3 is not coming anytime too soon.
Indeed, the two primary pro-money pumpers at the Fed (Goldman stooge Bill Dudley and general Wall Street lackey Ben Bernanke) have completely changed their tunes regarding providing additional liquidity to the markets.
Indeed, Dudley who made headlines earlier this year by suggesting iPads were as relevant to inflationary data as food and energy (no joke, he did), is now openly stating that higher commodity prices (inflation) are hurting US households.
Even though I expect a moderate economic recovery to be sustained, the recent disappointing data suggest that downside risks to the outlook have increased. Let me list some of them for you:
· As I mentioned earlier, high oil and commodity prices have further strained many families that already had tight budgets.
This is quite an admission from a man who’s been one of the biggest proponents of “inflation is under control” at the Fed. To give you an idea of the impact of the above statements, Bill King, Chief Market Strategist at Ramsey King Securities notes that stock futures entered a nosedive within minutes of Dudley’s speech last Friday resulting in the market tanking for most of Friday’s session.