Good Morning. Today we start our fist full week of QE3 and the transformation of how economic data is evaluated. Good is now bad and bad remains good. Though with Bernanke promising to keep the QE press alive even while somehow labor miraculously improves, good may still be “kind of good.”
Yes the twisted logic of the capital markets became even more twisted. With the uncertainly created by “endless QE,” the market experienced some serious dislocations last week and caused greater confusion among traders.
Did Bernanke blow up the bond market? Can equity prices pullback into support at a minimum? Can an oversold USD still manage to catch a bounce even though $85 billion more of them will somehow appear each month out of thin air (to be honest it’s more like $40 billion in “new” dollars).