In this week’s Market Commentary, John Hussman argued that Fed’s first phase of Quantitative Easing (QEI) was not the reason for bringing the financial institutes back from collapse; the currently discussed QEII is not going to work; and even if it worked, Fed cannot unwind the positions without much harm to the economy; and there is not really much gain to be had left in the stock, bond and commodity markets:
Read the Hussman Weekly Market Commentary here
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My impression is that much or all of the potential upside of quantitative easing is already fully reflected in stock, bond and commodities markets. Investors now rely not only on QE itself, but also on its success. This is a dangerous place to be. The Strategic Growth Fund is tightly hedged, with a staggered strike position that provides additional downside protection for our holdings. The Strategic International Equity Fund is largely but not completely hedged against local stock price fluctuations, owing to the fact that valuations and market conditions are not uniformly as negative abroad as domestically. We did reduce our exposure to foreign currency fluctuations last week on further dollar weakness. While the dollar may decline further, our view again is that much of the effect of quantitative easing on the financial markets is already priced in.
Read the Hussman Weekly Market Commentary here
Also check out:
