Yesterday’s QE 2 announcement has come and gone, and now we will see how the market feels about the $600 billion dollar easing package. Early returns are positive for equities (at the expense of the dollar), with futures trading sharply higher this morning. A common belief is that new money printed by the Fed with QE 2 will find its way into emerging markets, which have already aimed to quell asset prices.
Foreign investment has poured into emerging markets in search of higher yields, and many analysts expect a series of measures to be taken by these foreign governments in order to offset this influx of capital, such as raising interest rates or taxes on foreign direct investment. The G-20 summit next week should be contentious after another round from money printing from the Fed has sent the dollar tumbling, and as China continues to find its stern voice against allowing the yuan to appreciate more rapidly.
S&P Futures are up more than 12 handles this morning, with leading stocks showing strength pre-market. Google Inc. (Nasdaq:GOOG) has opened higher out of its recent tight post-earnings consolidation, Apple Inc (Nasdaq:AAPL) is approaching all-time highs once again, and Baidu.com, Inc (Nasdaq:BIDU) is close to taking back all of Monday’s harsh red bar. Las Vegas Sands Corp (NYSE:LVS) and Chipotle Mexican Grill (NYSE:CMG) continue to out-do themselves, both opening again above all-time highs after relentless strength this strength. From a technical perspective, the S&P is opening near the first resistance area of 1205-1210, and could make its way up to the highs of the year at 1219 before meeting some turbulence.
