Weekly Commentary: QE 3

September 17, 2012


Last Thursday the Fed announced QE 3 saying that it plans to spend $40 billion per month to purchase mortgages and it pledged to keep short term interest rates low until mid-2015. The news started a 2 day stock market rally which put the DJIA at its highest level since 2007.

Retail sales were also reported last week and were up 0.9% for the month of August mostly due to higher gasoline prices and auto sales. Without those items sales were only up 0.1%. Oil prices are back close to $100/barrel and gasoline prices have risen for the last 2 months and may weigh on consumer spending going forward. CPI was also up 0.6% for the month, the highest monthly increase in 3 years, due mostly to higher gasoline prices.

“If the world was perfect, it wouldn’t be.”
– Yogi Berra