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What Assets Perform Best During Quantitative Easing?

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A look at a variety of assets to see how they responded to QEs and Twists.

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Are there any other goals the Fed is trying to accomplish? The Fed wants oil and commodities to stay low. While one can argue that this is part of the Fed's inflation mandate, the Fed wants housing to go up, which is the biggest component of inflation by far. In any event, oil went up 41.8% annualized during the QEs and commodities in general increased by 25% annualized. Not good.

It is clear that quantitative easing has been a near complete failure for the Fed. What to do? Stocks went up 30% annualized while commodities went up 25%. Within the asset class of equities, the more speculative Nasdaq and small cap Russell indices fared even better than the S&P 500. As for individual commodities, cotton was the big QE winner with silver also faring very well.

I have written quite a few articles since late March which have shown that when bond yields collapse (like they did), stocks always go up, commodities usually go up, and bonds always go down. The QE study offers similar conclusions. About the only difference is when bond yields drop, commodities go up about 75% of the time and during QE they have gone up 100% of the time. As for the short side, bonds continue to be the No. 1 play. However, shorting anything other than bonds and the dollar looks risky.
No positions in stocks mentioned.
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