Thoughts on Monetary Stimulus

Ahead of Bernanke's congressional speech, the XUA (as of 10 am) is down 1% while both the GLD and SLV are down marginally. No further QE?

Comments on the Bernanke speech-

- The Bernanke's speech starts by focusing on job growth and states the belief that past job gains due to a "catch-up" and significant growth is needed to spark additional job growth.
- Looking fro moderate economic growth to continue (So low job growth will continue?)
- Bernanke sees resources slack, housing market woes, bank lending continue to weigh on the economy while the stronger business profits are a tailwind.
- Inflation expectations remain subdued.  (at some point, the increase in money will push inflation higher)
- The Fed is ready to act if economy weakens. (i.e. no QE right now)
- QE has lowered interest rates and raised stocks prices, thus increased the wealth effect. (Hardly. For instance, see the following....)

and

http://www.hussman.net/wmc/wmc110912.htm

- Believes the housing marketing is stabilizing. (I believe the improvement is in the very early stages and still could stall out, but yes the housing market looks like it is stabilizing)

My comments- unless economic growth or expectations there of really roll over, it is unlikely we will have further QE or monetary stimulus in the short-term. With M2 and MZM still pointing to, albeit very subdued, growth, a nascent stabilization in housing, and on the looming elections, I believe the Fed will remain on the sidelines for the time being. In addition, dividend futures (as shown here http://politicalcalculations.blogspot.com/2012/06/future-changes-for-s-500.html) point to some improvement in economic growth.

Update- at 11am, the XUA is down 3.4%, the GLD is down 1.65% and the SLV is down nearly 3%.