Today, we finally see some lights in the battle of the US election. Right now, the next unknown factor is the breadth and depth of the quantitative easing II (QE II) policy. Whether this proves to be eventually right or wrong, only time will tell. For sure, QE II will force US dollar to depreciate further. So what! The US economy is not growing fast enough to boost the employment rate. What's the use of having strong US dollar when the economy is not able to sustain it. Inflation will definitely come in the future. But, what choice do they have?
Anyway, US has the ability to print trillions of reserve currency and the world will be have to absorb it one way or another. This hot money is already flowing into the emerging economies like Singapore. With QE II, I believe this will continue further. Is this sustainable? - this is questionable. Be it QE I or II or III or IV, the effects of the liquidity injection will diminish eventually. You can bet that our authorities are monitoring these events very closely. The newly introduced property measures will help to ensure that the hot money will not create a property bubble that may burst when the "music" stops. The appreciating exchange rate policy will hopefully address the inflationary effects brought about by the recovery in the economies of the regional countries and growing domestic demand. As for stock market, my feel is that we are not in euphoria state yet but that does not mean we will not experience any correction in time to come. Volatility is still prevalent in the market, so invest with care.
Disclaimer: The content in this blog contains purely my personal opinion and it is in no way a substitute for professional financial advice. You should seek advice from a professional financial advisor with any question regarding your financial matters.
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