THE cavalry may not ride to the rescue this time. Equity investors have been relying on the Federal Reserve for support ever since the American central bank presaged a second round of quantitative easing (qe) last August. In a November article for the Washington Post, Ben Bernanke, the Fed's chairman, acknowledged the impact of qe on shares, stating that "higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion." But with the current round of qe about to end, Mr Bernanke gave no hint that a third programme was on its way in a keenly awaited speech this week, acknowledging merely that "economic conditions are likely to warrant exceptionally low levels for the federal-funds rate for an extended period."
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