European Crisis: A Path To QE3
There is little doubt in anyones mind that the current crisis hitting Europe may be just what the Federal Reserve ordered for another round of quantitative easing. In the very least, the Federal Reserve has already made it clear they will re-invest all the current QE2 proceeds. It seems to be clearer each day that the Federal Reserve policy of printing trillions of Dollars has done little to help the system. Europe is on the brink of collapse again and the Unemployment Rate has barely dropped. The only thing that has occurred in a major way is the spectacular rise in commodity prices. These prices have recently taken a tumble on the back a surge in the Dollar. It seems like the stage is set for another type of easing, print money policy. Obviously, the Federal Reserve will not call it QE3 as the unpopularity would be negative, but it is highly likely they will have some sort of new policy in play.
The markets are sharply lower today as the European crisis continues. The SPDR S&P 500 ETF (NYSE:SPY) is trading at $131.97, -1.64 (-1.23%) as the Dollar is surging. The PowerShares DB US Dollar Index Bullish (NYSE:UUP) is trading at $21.82, +0.17 (+0.79%). The markets remain on edge over the many new bailouts needed in Europe.