The market is a fickle character.
Think of it as a person who changes his or her mind every week or so — or a spoiled child who doesn’t get their way and decides to cry and whine until they do.
Right now, we have seen future money printings put on hold. In the short term as we approach the holidays, we see policy makers coasting, letting the status quo be.
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However, they are going to be much more aggressive once we get to the other side of Jan. 1, 2012.
I would not be surprised to see another round of quantitative easing, or QE, in January — even if the Federal Reserve does not call it that.
In addition, I expect to see more buying of bonds by the European Central Bank (ECB) to keep interest rates down in countries like Spain and Italy.
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In addition, I expect that China and India are going to loosen capital requirements on bank lending to get their economies going again. These countries are a bit more reluctant to do this because they have inflation problems.
The recent selloff has more do due with hedge funds unwinding positions to raise capital to meet redemptions they are facing in the new year, rather than anything fundamental.
It is obvious that the West has a debt problem and will try to print its way out of it. Therefore, rather than being focused on the short term, I suggest you prepare for what is inevitable — which is more money printing!
About the Author: David Skarica
David Skarica is a member of the Moneynews Financial Brain Trust. Click Here to read more of his articles. He also writes the Gold Stock Adviser. Discover more by Clicking Here Now.
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