Dow Tops 11,000, Treasuries Rise on Fed Easing Bets

[Elmore Furth]

'Quantitative easing' is a euphamism for 'printing money,' a Federal Reserve tactic used aggressively since 2008. Since September of 2008 the Fed has increased its balance sheet to $2.3 trillion in bank stocks purchased by increasing the printing press money printing rate. Now the Fed is talking about printing another $500 to $800 billion by next June.

The goal is to prevent deflation but there is a hyperinflation risk down the road.

What Is Quantitative Easing?

WEEKEND ECONOMIST: Parity and beyond

By Inyoung Hwang - Oct 8, 2010 11:01 PM CT


U.S. stocks advanced this week, sending the Dow Jones Industrial Average above 11,000 for the first time since before the May 6 crash, on speculation the Federal Reserve will buy more debt to boost the economy.

Alcoa Inc. gained 5.4 percent after third-quarter earnings topped analysts’ estimates. Exxon Mobil Corp. and Chevron Corp. rose at least 2.4 percent as commodity producers rallied on bets the Fed will increase asset purchases to pump more cash into the economy. J.C. Penney Co. jumped 18 percent, the most in the Standard & Poor’s 500 Index, after William Ackman’s hedge fund announced it had bought a stake.

The S&P 500 advanced 1.7 percent to 1,165.15 this week. The Dow rose 176.80 points, or 1.6 percent, to 11,006.48. Both measures closed at the highest levels since May yesterday after the economy lost more jobs than forecast last month, bolstering speculation the central bank will attempt to stoke growth.

“The key driver has been the prospects of quantitative easing,” said Komal Sri-Kumar, the Los Angeles-based chief global strategist at TCW Group Inc. who helps oversee about $109 billion. “The markets think there could be the increase in money supply coming from the Fed’s renewed purchases of Treasuries. It’s a green signal for investors to take on more risk.”


Dow Tops 11,000, Treasuries Rise on Fed Easing Bets