Thursday 23 May 2013

Withdrawal of QE will not crash USA stock market

Today Federal reserve announce that it may withdraw from QE. Asia markets drop

My 1st post on 2nd May "Sell in May". I predicted correction will happen. And on my "Inflated asia asset" dated 7 May. I recommended to sell stock and buy bond.

Correction happen today. But I think markets are over reacted with the news. QE will not slow down in next 3 months. USA employment rate start to recover. But it is too early to confirm the trend. QE will be continued until employment market turn more health. It may happened in 4Q 2013. Employment rate is related with companies performance. Health employment rate require health companies earning. QE will withdraw at the same pace as earning and employment improvement. The effect of QE withdrawal shall be little. Federal Reserve will not allow QE withdrawal to crash the USA market.

Federal Reserve's statement signal low interest rate driving is nearly over. And Market shall be powered up by improving cooperate earning.

I buy REIT (Cambridge, Sabana) in Singapore Market today. With 7% discount, it seem to be good deal. I guess Monday 27 May 2013 market shall be stable. REIT will recover some of their lost. I shall have enough time to unload my stock and buy bond.



 


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