Given the slapping Bernanke has received and the absolute conviction that QE2 is unnecessary and will deliver unprecedented runs in every speculative market, something is clear, when everyone is convinced the markets are going up, it will never happen. One thing for sure however, stimulus is over forever. Now with stimulus over, markets will swing without a net and will be left on their own, which will be interesting, especially after such huge spec runs as we have witnessed.
When you look at the QE2 event, it is nothing more than the backside of the intervention trade where the Fed knew at some point it would be required to soak up treasury supplies or the front end of intervention would be all for naught. The other implicit notion that the QE2 is an automatic on all specs rising may be a late call. Markets have a great tendency to front run implied future economic policies, thus setting early market responses for rallies or breaks. One could argue the greatest bullish scenario for rally took place from the March of 2009 until spring 2010. That would leave the runs in stock and commodities now in the price areas where all depends on the kindness of others, not on any economic justification.
