Wednesday, October 13, 2010

Phil Flynn: Can Rising Commodity Prices Derail QE 2?

The odds of quantitative easing continues to go up almost as fast as corn prices as the Fed Minutes confirmed that the Fed is getting ready to run the printing presses. The FOMC is worried that, “the recent and anticipated progress toward meeting the Committee’s mandate of maximum employment and price stability to be unsatisfactory”.

The Fed says that economic data had been mixed, with readings early in the period generally weaker than anticipated but the more recent data coming in on the strong side of expectations. So, “in light of the considerable uncertainty about the current trajectory for the economy, some members saw merit in accumulating further information before reaching a decision about providing additional monetary stimulus” But that they would consider it appropriate to take action soon.”

How soon? While the Fed is talking about more purchases of securities, European Central Bank Governing Council member Axel Weber is talking about an exit stagy. He said that the European Central Bank should stop its bond purchase program while our Fed is talking about stepping it up thus creating the potential for a larger wedge between the Euro and the dollar and a continuing spike in commodity prices......Read the entire article.

The "Super Cycle" in Gold and How It Will Effect Your Pocketbook in 2010


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