The five pessimist forecast the Fed QE3 will lift stocks and commodities prices but in a lesser magnitude compared to QE2. Ed Yardeni talks about the meeting five attended:
The conversations were spirited with lots of debates. The consensus was quite pessimistic about the outlook for the US and global economies.
Everyone seemed to agree that the Fed would most likely leave the federal funds rate at zero for a long time and that a third round of quantitative easing is likely later this year. David Blanchflower, who is a former member of the MPC of the BoE, is in favor of QE-3.0. The rest of us were against it. Most agreed that it would probably boost stock and commodity prices again, though not as much as QE-2.0.
QE2 has been a great boost behind gold prices and gold investors are eyeing economic developments for sings of further monetary actions from Fed.
