No One Really Expects QE3: Strategist
Even though the U.S. stock markets jumped Tuesday, as investors eye a Federal Reserve meeting later this week, no one really expects a new round of quantitative easing yet, one strategist said.
Instead of more quantitative easing , investors expect FedChairman Ben Bernanke to discuss "what arrows he has in his quiver"—the commitment to keep interest rates low and maybe extending the maturity of some of their purchases, said Marc Pado, U.S. market strategist for Cantor Fitzgerald.
"So, I think that even though the market moved up on expectations that Bernanke was going to be the voice of reason in the room after all the turmoil we had, I think they’re going to focus more on that than the actual QE3," Pado said.
Nicholas Colas, chief market strategist at Convergence Group said investors should assume that Bernanke will "tread a middle path" during any possible announcement later this week.
“I think the bar is set very high for how he balances that message so we all feel that, yes, the Fed is going to keep interest rates sufficiently low to help the economy move forward, but not so strident that we worry that the recession is just around the corner,” Colas said.
He added that for the near term he thinks equities are oversold. He expects a move back into equities, and out of bonds and commodities.
Colas also said he thinks gold , which dropped about 3.8 percentin volatile trade on Wednesday, is overbought, and there is more volatility ahead.
"I think of gold as like car insurance," Colas said. If you own a car, you own some insurance, but you don’t make it the cornerstone of your investment strategy."
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Disclosure information was not available for Nicholas Colas, Marc Pado or his company.