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This morning NYFRB President Bill Dudley came out and gave a dovish speech, talking about how the Fed could inject hundreds of billions or more of printed money into the economy.The markets did their usual thing: gold up, dollar down, yadda yadda yadda.
According to Rick Santelli, his Treasury traders got giddy and bullish. According to Bob Pisani, stock traders were eager to see the Fed Put.
Ok, fine, but this obviously can’t go on forever.
Goldman observed today that QE is priced into the bond market, and well, duh! Your grandmother knows QE is coming, and that more and more of every currency is being manufactured right now.
That doesn’t mean it can’t go on for a while, but it does mean that there’s nobody not aware of this trade.
When well it end? Not clear, but come November 2-3, if people are still long the QE trade, and the Fed actually does deliver, we could be due for a huge sell-the news event. Combine that with whatever happens during the election, and it certainly seems like a heck of a lot is building up to that day.