Despite the fact that Dr. Doom hasn’t been the most accurate predictor of the equity market rallies, one still always has to look at the markets from both a bull and a bear perspective.

Consider, first, that the previous QE rounds came at times of much lower equity valuations and earnings

Moreover, fiscal support is absent this time: QE1 and QE2 helped to prevent a deeper recession and avoid a double dip, respectively, because each was associated with a significant fiscal stimulus.

In short, QE3 reduces the tail risk of an outright economic contraction, but is unlikely to lead to a sustained recovery in an economy that is still enduring a painful deleveraging process

Source: The Mint

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