Stockflation at the Gates of the 'Stimulus Rapture'

Is the ‘Stimulus Rapture’ about to commence?  More signs appear each day that it is not necessary.

Shock-and-Awe Quantitative Easing or Incremental Quantitative Easing – either way, I’m not feeling the idea of a new massive stimulus all that much these days.  In fact, it scares me.

My “Raise Rates” post from yesterday made the case that we’ve seen enough “emergency response” from the Fed.  Outside of Fed Funds rates being at “permanent midnight”, the impotent yet ongoing fiscal stimulus (government spending) has not been shown to have done much of anything either  – and please don’t tell me about Jobs Saved, this was never the stated intention until the whole Jobs Gained plan failed.

Here are two pieces of fresh evidence that the Federal Reserve/Federal Government tag team can start thinking about standing down:

Bloomberg is chronicling the better-than-expected earnings season this morning noting that 85% of S&P companies have beaten estimates thus far.  More importantly, giant cyclical companies like UPS, CSX Railroad, Intel and Boeing are growing just fine without waiting for QE2.  To be fair, a lot of the growth these companies are recording is from overseas business, but you’ve got to start somewhere.

More disturbingly is the fact that outside of home prices, inflation is becoming more and more of a reality.  Don’t take my word for it, just take a look at this list of the top performing ETFs over the last 90 days (via The Fly):

Top performing ETF’s were:

1. SGG +68% (sugar)

2. AGQ +66% (silver)

3. CZM +65% (China)

4. EDC +54% (emerging mkts)

5.  BDD +52% (metals)

6. JJT +51% (tin)

7. BAL +50% (cotton)

8. UYM +43% (basic materials)

9. CU +42% (copper)

10. JJS +39% (soft commodities)

Must the evidence continue to mount?  Must gasoline prices and grocery bills shoot up to stratospheric heights?  Can’t we acknowledge that US corporations cannot continue to grow, even overseas, without hiring more US employees.  And can we not agree that this is preferable to relying on government creating jobs?

The propping up of the dead and the dying via federal spending and zero percent rates is not warranted with markets and prices rebounding elsewhere.

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  1. Market Talk » Blog Archive » Links 10/22/2010 commented on Oct 22

    […] Is fresh, massive stimulus via QE2 really necessary? The Reformed Broker blogger Josh Brown isn’t so sure. He notes companies continue to report decent earnings. And more disturbing is […]

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