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Why QE2 Won't Be Enough


A look at how the markets have anticipated this second round of quantitative easing and what it will actually accomplish.

They call you lady luck
But there is room for doubt
At times you have a very un-lady-like way
Of running out

Your on this date with me
The pickin's have been lush
And yet before the evening is over
You might give me the brush

You might forget your manners
You might refuse to stay
And so the best that I can do is pray
-- Luck Be A Lady

I couldn't help but think of that song and those lyrics after my last article (see Bond Market Price Action Confirms Coming Period of Slow Growth) because for the past three weeks or so almost everything except the dollar has moved upward and onward, in a coordinated/correlated fashion. When you take a look at the run over the past month, it really has been something to behold:

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What's more, the run in commodities, while partially driven by revisions in the USDA's grain production estimates and supply problems in Russia as they pertained to wheat, has also seen a spectacular run during the past two months:

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I don't think I need to mention gold or even the recent action in crude oil because it all seems to mimic the bull run the other assets are having. In the meantime, the dollar has been on its own Bataan Death March:

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No positions in stocks mentioned.
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