Nothing is more desirable than to be released from an affliction, but nothing is more frightening than to be divested of a crutch.
~ James Baldwin
This is an excerpt of an article that was originally published on Seeking Alpha as premium content. You can read the entire article there.
There’s been no shortage of potentially market-moving news for investors to digest so far in 2011. From major geopolitical strife in the Middle East to the sovereign debt crisis in Europe to the multilevel Japanese catastrophe, markets have been remarkably resilient so far. Perhaps that’s because these types of events aren’t what’s driving the markets.
The only news items that seem to have any lasting impact on the stock and bond markets these days are those that pertain to monetary policy, particularly that of the US Federal Reserve. David Rosenberg recently pointed out that there has been an 86% correlation between the Fed’s balance sheet and the S&P 500 over the last 2 years. So it seems logical that the biggest question facing investors these days relates to the possible next steps for Ben Bernanke and company. Specifically, investors and analysts are speculating about what happens when QE2 ends in June.
Read more about the QE Quartet at Seeking Alpha . . .