Fed Moving Closer to Action?

With the release of it's latest minutes, the FMOC looks poised to act again.  At DWCM we have stated repeatedly that we are not in favor of any additional quantitative easing.  From our view and analysis, additional QE will only add additional debt that the US cannot bear and that any additional benefit QE may provide will be fleeting at best and will not result in any significant long-term growth.

You can read the full release of the FMOC minutes here in PDF form.  In addition the WSJ put out commentary here that summarizes the minutes.

• "Many members judged that additional monetary accommodation would likely be warranted fairly soon unless incoming information pointed to a substantial and sustainable strengthening in the pace of the economic recovery," the minutes said.

So this sets us up for what could be an extremely volatile week next week in the equity markets.  It is widely speculated that QE is already baked into the markets, hence the 10% increase in the major indexes the last few months.  If the Fed does not deliver there could be a sharp decline.  Or even if the Fed does act, if it does not provide the market with enough ammo or easing we could have a slide to the downside.