The stock market rallied because it saw something they didn't expect from the Federal Reserve minutes: the Fed has had a robust debate on a third round of quantitative easing.
"Fed Debates QE3," our headlines ran. "Some Members Say Slow Growth, Lower Inflation Could Make QE3 Appropriate," another ran.
Of course, there is no consensus on this — the minutes made it clear that others felt that more QE would not solve the current economic problems — but still. And it's clear the bar is much higher for QE3 than QE2. But still: the genie is out of the bottle.
Stock traders, of course, despise QE of any sorts ("QE will cure the panic...but not the disease!" one trader wrote to me immediately), but that won't prevent them from profiting on the trade...look what QE2 did for asset prices before.
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