What's the effect of small amounts of quantitative easing, instead of 1 trillion, 500 billion, 100 billion as presumed? I'm thinking short something(?) and long commodities in this scenario. I'd make a case for banks or autos, but they're sitting on plenty of excess reserves. Short municipal and corporate bonds?
Side effects may include Abdominal cramps or pain, abdominal discomfort, bloating and gas, constipation, diarrhea, dizziness, fluid retention and swelling, headache, heartburn, indigestion, itching, loss of appetite, nausea, nervousness, rash, ringing in ears, stomach pain, vomiting... and even death!
I am hearing as much as $2 Trillion could be the amount for QE2 QE2 is a definite, the fed is going to stimulate the fuck out the economy until everything is all better again, in the mean time the dollar is going to become worthless monopoly money while commodities rally to infinity. QE2 is just more stimulus to prop up the failing economy that didn't work with the other trillions they threw into the economy over the last 2 years. Everyone will appreciate the free trillions now but its going to leave a huge negative on the economy going forward, will take years to play out but the problems that this spending will lead to will be enormous.
If QE is small, not at all, or on a month to month wait and see, long commodities will be a bad move - rethink this
Where's the inflation relative to the trillions already printed? If there's no QE2, who's going to purchase all those MBS's and bonds, from the busted banks and treasury? Maybe they buy treasuries without printing dollars - sounds moronic but they do own the yield curve. Feds are propping up the stock and bond markets. Seems a good case for being relatively long commodities, and a few sector stocks the Fed is buying.
Long the dollar, first of all. If the negative correlations hold, short stocks and commodities. Which, of course, is why it's not going to happen. Someone has to flood the world with money, after all, or deleveraging will swallow us all into a black hole like the one that destroyed the world twice in the first half of the twentieth century. The Japanese can only do so much, the BOE is now officially stuck, and the ECB is run by retards who'd be idiots if they had an entire brain to share between the lot of them. The Chinese Communists have no idea at all, they're just riding the wave of having given their long slaughtered people a small breath of freedom. So, Bernanke into the breach.