Another round of quantitative easing in the U.S. will depend on the direction of the S&P 500, Marc Faber, editor of the Gloom, Boom & Doom Report told CNBC Monday, following Federal Reserve Chairman Ben Bernanke’s failure last week to hint at QE3.
“(QE3) depends on the S&P, if the S&P drops 100-200 points, then yes, for sure we will have QE3 but if the S&P stays here or even goes up, the likelihood of QE3 diminishes,” Faber said.
Since the start of 2012, the S&P has risen 9 percent, compared to gains of 11 percent for the Nasdaq Composite
and a 6 percent return for the Dow Jones Industrial Average .
“Bernanke targets asset prices, he doesn’t admit that, but he doesn’t want asset prices to go down,” he said, adding that the first two rounds of quantitative easing were largely responsible for the upside in U.S. stocks last year.
“The S&P went up from 666 on March 6 2009 to 1,370 [currently] so it has more than doubled and that has to do with QE1 and QE2,” he said.
Faber adds that the movement in oil prices will also contribute to the Fed’s decision on whether to implement QE3 or not.Page 1 of 2 | Next Page