Seems a binary event will occur on Wednesday with the FOMC meeting. Expectations are for more easing, the degree of which is very unknown. The rally over the last week shows dovish expectations; the precious metals complex today is quite sanguine. My thoughts are a small policy change such as a twist extension would severely disappoint market participants. Quantitative easing, while very possible but not necessarily likely, would juice risk assets. Complicating matters is Europe’s mess and an election in 4.5 months by which the Fed would like to be out of spotlight. With the VIX near 18, short term put insurance seems prudent. Good luck!
Yet Credit growth in the US should keep the Fed from implementing QE3 from Sober Look.