While his given view is not new news, voting member Williams in a speech released two hours ago said “if further action is called for, the most effective tool would be additional purchases of longer maturity securities, including agency MBS…At the Fed, we take our dual mandate with the utmost seriousness. This is a period when extraordinary vigilance is demanded. We stand ready to do what is necessary to attain our goals of maximum employment and price stability.” Lacker (another voting member) on the other hand in an interview on Bloomberg Radio today didn’t support further action right now. Either way, there are more Williams type doves on the FOMC than Lacker’s and ahead of Bernanke’s semi annual testimony next Tues in front of Congress, we can only assume that Ben’s B52 is getting its maintenance checks. It is this high possibility that is creating a cushion underneath this market and is likely seen by the bounce off the lows today at the same time the CRB index is at the high of the day. This said, the ‘high’ from central bank action over the past 12 months has gotten shorter and shorter in its impact and QE will have to face off against a likely rough earnings release period in determining where stocks go from here. I say, sell into any QE stock rally, the gig is up.
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