QE II Is Next For Other Usual Suspects!

The Fed has successfully achieved its objectives with the QE II program, which was aimed to support the markets (both equities and bonds) while devaluing the U.S. dollar. However, every country in the world needs a weaker currency in order to protect their exports and sustain the economic recovery, therefore, I believe the developed countries will most likely find reasons to ease more and the emerging markets, facing inflationary pressure, will logically increase taxes on capital inflows to limit currency gains. For example, Brazil last week doubled its foreign capital inflow tax rate to 4% from 2% to curb Real's strength, and I expect other developing countries to take similar measures. What do all these ultimately mean? I believe it will be excessive inflation and real assets such as commodities, and yes, even real estate (especially in distressed markets such as the U.S. and Japan) will fare very well in the next few years. This is the worst time to hoard cash as investors because your savings will be eroded by all the cheap money. This is why I think all assets will continue to do well in the short term, including equities, bonds, commodities, and real estate. On the currencies front, given all the liquidity, I expect commodity currencies' strength to continue as investors chase yields.