EDITOR'S NOTE: The Linn Group, which partners with Farm Futures for the Farm Futures Market Center provides weekly in-depth reports on key industry areas. The cycle letter looks at key issues from around the world impacting markets. This report is prepared by Dan Hueber, market analyst, the Linn Group.
A little over a week has gone by since QE3 was announced the sun has still managed to rise and set each day, babies are still be born and the Chicago Cubs maintain the 2nd worst record in Major League baseball. I guess nothing has changed after all. Realistically, no one was expecting any immediate impact from the new rounds of stimulus but you have found the predictable voices either condemning or praising the move. It is interesting to note that the voting members at the Federal Reserve approved QE3 by a vote of 11 to 1, a seemingly bulletproof majority. But when you include the opinions of non-voting members, almost 1/3rd of the committee was raising at least some objectives to the move.
Additionally, there was criticism coming from other parts of the world concerning the program; Guido Mantega, who is the finance minister of Brazil, called the move Protectionist and warned of a currency war. While that would sound like a harsh statement, QE moves by not only the United States but also Japan took a toll emerging economies such as Brazil as their currencies escalated, curtailing export competitiveness. Do you remember, it only seems like a couple years ago that the United States and the IMF were scolding Brazil and other underdeveloped nations for their irresponsible financial programs. My, how times have changed.
Download the complete report by clicking on the link below.