When will the FED stop its QE 3 or 4 or 5 (sorry I have lost track on which one it is), is a great question. At some point they will have to stop flooding the market with liquidity as they insinuated yesterday that it could be soon. I am not convinced they will, but putting that aside, the market and banks are already making the program seem like it should be ended. While the stock market reacts negatively, banks and corporates are issuing more junk debt and chasing yield by issuing more structured products and securities that kind of got us in the problem years ago. I realize that ending the program is a hard choice, but at some point rates need to rise otherwise you will have a massive asset bubble (call Alan Greenspan). The real issue here remains that the way we grow our economy is the cut corporate taxes, encourage hiring and make businesses want to spend money. While low interest rates help,corporations are still hoarding cash and not investing the capital in their businesses.
QE needs to end soon otherwise we will have another crisis.....
Coming next, England and slamming the pound!