The End of QE2

I’ve been writing Daily Profit every day
since October of 2008. I may have a missed a day or two. And I’ll be
honest, sometimes the market news is so boring, it’s really difficult to
come up with anything worth discussing.

One of the thing’s I Iove most about the markets
is that they change virtually every day. There’s always something new to
assimilate. If you’re a perpetual student like I am, there’s always
something to learn.

For instance, earlier this week, I was brushing up
on wireless network technology (CDMA vs. LTE) and cell phone tower
transmission technology. My man Jason Cimpl uncovered a gem of a company
that’s offering a completely new cell tower antenna technology. Scalable,
cheaper to operate and more powerful than existing technology, I just
added this company to the
Top Stock
Insights portfolio.

Anyway, today is not one of those days where I
will struggle for discussion items. New unemployment claims came in
higher than expected, the Producer Price Index inflation measure came in
weaker than expected, 10-year Greek notes spiked to 13% yield,
foreclosure filings dropped 27% in the first quarter and former S.F.
Giants slugger Barry “Big Head” Bonds was convicted of lying to
Congress.

Goldman Sachs (NYSE:GS) is being accused (again)
of “misleading” Congress about its sales of mortgage backed time-bombs
called collateralized debt obligations (CDOs). Interesting that Bonds
lied, but Goldman only misled. Apparently Goldman is a serial misleader.
But unlike Bonds, Goldman will settle before things get ugly, because it
has no illusions about defending its honor.

*****The drop in PPI is weird. Oil prices were up
huge. Commodity prices are perpetually rallying. But a surprise drop in
food prices took the PPI down a notch. I”m not comfortable forecasting a
drop for tomorrow’s CPI based on this.

The Fed has been using relatively benign inflation
data as an excuse to keep QE2 in place until its scheduled end in June.
So it won’t surprise me if PPI and CPI continue to support the Fed’s
actions.

*****Speaking of the end of QE2, bond yields have
steadily fallen since the Fed started buying Treasuries back in August.
That runs a little counter to what we might expect. A steady buyer should
have supported bond prices and pressured yields.

But let’s not forget that part of the Fed’s
rationale for QE2 was to support stock prices. That drove money out of
bonds and into stocks as the institutional crowd went for the “risk on”
trade.

Should we surprised then, if the end of QE2 also
signals the end of the “risk on”