The second round of the Federal Reserve’s quantitative easing
program, better known as QE2, will expire this week.
The QE2 policy was officially announced on November 4, 2010,
and has been widely credited with subsequent stock market gains.
And now, according to rumors, the end of this “experimental” program
will kill the stock rally — with potential impact across all
markets.
Let’s think about that.
For starters, there is little “experimental” about
QE2. As EWI’s November 2010 Elliott Wave Financial Forecast pointed
out to subscribers, “In Japan, the very same remedy the
U.S. is applying today — rate cuts followed by quantitative
easing — finds its stock market still down more than 75% from
its December 1989 peak.”
Also, this chart, from EWI president Robert Prechter’s January
2011 Elliott Wave Theorist, shows “the effect” the
first round of quantitative easing (QE1) had on the market:
But investors have short memories. And even many of those who
remember how powerless the Fed was during the 2007-2009 crash
are convinced that “it’s different this time.”
What do the facts and the evidence say? Read the expanded, 2011
edition of our popular free Club EWI resource, The
Independent Investor eBook.
From the very first pages, the charts and graphs will show you
that the Fed’s QE programs are far less powerful than is
commonly presumed.
All you need to read this important 118-page eBook online now
is to create a free Club EWI profile. Here’s what else you’ll
learn:
- Why QE2 was a major tactical error
- Why interest rates don’t drive stock prices.
- Why rising oil prices are not bearish for
stocks.
- Why earnings don’t drive stock prices.
- What inflation has to do with the prices
of gold and silver
- Why the problem with the Fed is its very
existence.
- Why central banks don’t control the markets.
- MUCH MORE
reading this free report now — all you need is a free Club
EWI membership.
This
article was syndicated by Elliott Wave International and
was originally published under the headline What Will Happen to the Stock Market When QE2 Ends?.
EWI is the world’s largest market forecasting firm. Its staff
of full-time analysts led by Chartered Market Technician
Robert Prechter provides 24-hour-a-day market analysis to
institutional and private investors around the world.
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