“However, there is a good chance that a super-dovish Fed will take further measures this week either in a second dose of Operation Twist, by further lengthening the maturities of its balance sheet or by emphasizing that it expects to hold the federal funds rate at current levels all the way into 2015,” he wrote in a weekly outlook.
“Neither measure could possibly help the U.S. economy,” the strategist added. “After all, there cannot be any American consumer or businessperson who is hesitating to borrow because interest rates are too high. More likely, such ‘aid’ would further undermine confidence, thereby perversely acting as a drag on growth.”
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Full disclosure: Tom Lydon’s clients own GLD.