A QE rally in search of Main Street confirmation


By James Saft – While we may want to enjoy the quantitative easing-fuelled rally while it runs, it is probably best to remember that sometime, perhaps soon, a bull market will depend on improvement in the real economy.

Perhaps the biggest help has been from the ECB, which has said it will buy debt from euro zone countries, a move interpreted as taking a euro breakup off the table, at least temporarily. And the Bank of Japan this week weighed in with another $1 trillion or so in planned asset purchases.

Just by reducing the VIX by calming investors during the height of the crisis, the Fed was able to have a big impact on markets and potentially the real economy. When the Fed took extraordinary measures in 2008 and 09, the VIX was first in the 60s and then in the 40s, exceptionally high levels historically. It stands today at 14, about at the level you might find in a coma ward, so expecting much bang for the Fed’s buck from that quarter is unwise. more> http://tinyurl.com/8gkb635

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