Financial Markets Analysis - Fed Adopts Quantitative Inflation
Stock-Markets / Financial Markets 2009 Mar 21, 2009 - 04:04 PM GMTBy: Nadeem_Walayat
The big story of the week was the U.S. Fed's head long fling over the cliff into Quantitative Easing by printing more than $1 trillion (electronically) , this is on top of the $800 billion already printed on the sly as the Fed buys toxic junk such as the weeks announcement of buying $1.25 trillion of Fannie Mae and Freddie Mac mortgage backed securities, as well as other junk bonds, on top of $300 billion of US Government bonds to help finance the ever growing budget deficit. The implications of this extra supply of dollars is inflationary that devalues the value of all dollars. I have already warned indepth of the consequences of Quantitative Inflation so won't repeat it here.
Meanwhile the stealth bull markets spike higher left many analysts scrambling to cover their backs early week with analysis that typically suggested both that the Low 'could be in' and then again it 'could not be in'. Though the sell off late week again started to see a reversion towards the bearish mean.
Robert Pretcher made an in depth video and chart presentation freely available that illustrated his own views on the financial crisis and the prospects for the stocks and the housing markets in terms of a imminent bottom or not.
In the UK the mainstream press still continued to run with a ridiculous house price forecast for ANOTHER 55% drop on top of the 21% to date, my earlier analysis explained why this is extremely improbable. Though there was some further long-term bad news for the housing market as the FSA sought to regulate UK house prices.
Tomorrows analysis / newsletter will seek to update indepth either the trend for Gold or the US Dollar following the Feds decision to print (electronic) money that saw Gold and Commodities leap whilst the Dollar slumped which saw the hibernating dollar collapse proponents re-emerge in force to spell out the dollars imminent collapse, though the actual dollar trend so far is inline with my forecast / road map as of 20th Jan 2009 -
US Dollar Bull Market 2009 Update 4 - US Dollar to trade sideways with an upward bias for at least the first half of 2009, as the graph illustrates.
Gold Price Forecast 2009 - The picture being painted by the above analysis is that of gold strength going into March that looks set to see gold break above resistance of $936, to target $960, however this strength will soon evaporate with gold again targeting a decline back below the breakout point to trade back below $850 by mid 2009.
By Nadeem Walayat
http://www.marketoracle.co.uk
Copyright © 2005-09 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.
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By Nadeem Walayat
http://www.marketoracle.co.uk
Copyright © 2005-09 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.
Nadeem Walayat has over 20 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis specialises on the housing market and interest rates. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 250 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.
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