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CREDIT SUISSE: TWO BULLISH DRIVERS FOR 2012

Just expanding on the previous QE3 post here.   Looks like Credit Suisse is working under a similar theory.  They see the QE3 catalyst and the movement in tail risks as bullish trends in 2012 (via Business Insider):

“We stick with our benchmark of equities and keep our 2012E year-end S&P 500 target of 1,340. Equities will likely be guided by two key issues in 2012: a)investors moving into equities as a deflationary outcome is averted when there is de-facto co-ordinated QE in late Q1; and b) the movements in tail risks (which we see predominantly coming from the Euro crisis, aggressive fiscal tightening in the US and Chinese housing).

Excess liquidity is rising strongly – and this is before there is more QE in 1H2012E from the [Bank of England]], Fed, BoJ, with the ECB initiating QE in late Q1, in our view.

Two months ago, the FOMC were split 7-3, with the minority in favour of a tightening policy. Now, the FOMC split is 9-1, with the 1 dissenter (Evans) clearly favouring an even looser monetary policy (making Fed tightening contingent on a certain level of unemployment or inflation target being met). As we mentioned above, our economists expect QE3 to start in 1H2012.”

Source: Credit Suisse

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