Staying liquid and holding defensive stocks will help investors ride out the end of the Fed’s second round of quantitative easing, known as QE2, top hedge fund managers Savvas Savouri, partner at Toscafund; Chris Goekjian, chief investment officer at Cheyne Capital; and Luke Ellis, head of the multi-manager unit at Man Group, tell Reuters Insider.
“Wasn’t there an American preacher who said the world will end at 6:07?” Savouri said. “We’re still here. I think the same thing applies to QE2. Will there be a QE3? Is it a big Ponzi scheme, this game between the Treasury and the Fed? Whatever the view is out there, the catalyst for a U.S. Treasury sell-off won’t be the end of QE2. There will be a catalyst at some point, but I suspect the origins won’t be in Washington. It’ll be somewhere in the Far East.”
“So whether QE2 is the end of the QEs, whether they do a QE3 or QE4 or just some other version of it, they’re gonna keep pushing until there is inflation in the U.S.,” Ellis said.