As long as cheap money/QE remains in the psyche of most of our current Fed members, including the Chairman, as the answer to any economic downturn, its use will always be a possibility with only the pain threshold that triggers it being the question. Today we’ll get a sense of Bernanke’s tolerance for what’s clearly a slowing in growth. If Bernanke doesn’t give the market what it wants today, the ensuing market selloff in the context of a fragile economy will just clinch an eventual QE program. So we’ll get the wink today or next time. The only question then follows, how long will any rally in asset prices last in response to the eventual QE and what market level will it come from as we know no economic benefit will derive from more QE.
