The Bank of England (BOE) joined the Federal Reserve in stating they stand ready to print more money should economic data continue to point to lackluster growth and high unemployment. Since central banks can print unlimited amounts of money, investors will increasingly become interested in alternate stores of value, rather than relying solely on paper currencies. Gold, silver, oil, and copper should all attract attention as printing presses get ready for another round of quantitative easing in the coming months.
Many asset markets may be due for a breather, but as we close out 2010 asset prices do have some potentially positive drivers:
- Economic data has been weakening, but not to a point where the odds favor an imminent double-dip recession.
- Central banks have signaled they are willing and able to print more money.
- Mid-term elections in early November should give businesses additional hope in terms of more market friendly policies.
With the S&P 500’s recent break above 1,131, we still believe some patience is in order. The CCM BMSI closed Tuesday at 2,251 (basically flat vs. Monday).