From BusinessInsider: Following a series of disappointing
global economic data that was recently topped off by Friday's disastrous U.S.
employment situation report, the new economists' consensus is that the Federal
Reserve will announce a new round of easy monetary policy at the end of its
June 19-20 Federal Open Market Committee meeting. This is good news for those who were worried
that stocks would tumble without active Fed-sponsored accommodation.
Even so, Barclays' Barry Knapp cautions against getting too
excited too soon. "Although the
market has begun to look to the Fed for stimulus, equities will likely be much
lower before the policy put is exercised," wrote Knapp in a Friday note to
clients. More from his note:
With one month left in the Fed’s 3rd stimulus program, the
equity risk premium (ERP) is again expanding toward levels reached last summer.
ERP retracements following the end of QE1 and QE2 were greater than 100%; a
similar move appears to be underway...Using history as a guide, our ERP
scenario analysis places the downside potential for the S&P between 1,100
and 1,200…..
Read more:
http://www.businessinsider.com/barclays-barry-knapp-1980-scenario-stock-market-rally-2012-6#ixzz1wtknyU42
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