With Bernanke on Friday again making it clear that he believes another program of asset purchases is needed to both help the economy grow and avoid deflation, he got backup on Saturday from Fed members Rosengren and Evans. Rosengren votes and said “insuring against the risk of deflation may be much cheaper” and Evans, who doesn’t vote, said “much more policy accommodation is appropriate today.” Following this ‘confirmation’ for action on Nov 3rd, the markets will turn micro over the next two weeks as we go thru Q3 earnings in earnest. We’ll get some more Google’s and also some more GE’s and thus the market will become more discriminating thru the process and combined with a US$ that is very oversold and a bond market that has priced in QE2, consolidating at or below current levels is the most likely outcome for stocks in the next two weeks I believe.
Time to get micro for a few weeks
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