Stocks to Rally another 10% on QE2 Announcement?

Barton Biggs, another great contrarian indicator, is weighting in the bandwagon of overbullishness and one-way markets:
Oct. 29 (Bloomberg) -- U.S. stocks may rise 10 percent should the Federal Reserve announce a program of asset purchases known as quantitative easing, and emerging-market shares will keep rising, according to hedge-fund manager Barton Biggs.

“The conventional wisdom is the markets are going to probably sell off,” Biggs, managing partner of New York-based Traxis Partners LLC, said in an interview today with Betty Liu on Bloomberg Television’s “In the Loop.” “Investors may in fact get a “surprise” with “another 10 percent rally.”
If the conventional wisdom was that the market would sell-off, people wouldn't be buying every catastrophic economic data. The conventional wisdom is that of David Tepper: that no matter what happens, the markets are going to rise.
“We are only halfway along the way to a gigantic eventual bubble in the emerging markets,” Biggs said. “But we are not there yet, the fundamentals are too strong, too good, too much growth, and the valuations are still attractive.”

It would be a mistake for government stimulus measures to stop because the world economy is still in a “very dangerous position,” the 77-year-old investor said.
How can the fundamentals be too good, too strong, and the position be very dangerous at the same time?
“The Fed is doing the right thing,” he said. “Our government is not doing the right thing. We are still yammering away about fiscal austerity. We need more economic growth, and we need to make sure that we don’t tip ourselves and the world back into another recession. The price of that is going to be a bubble at some point.”
The Fed is doing the right thing for money managers and bankers — at least in the short term, until reality settles in again. We need more economic growth, but we aren't getting any. We are getting money creation growth, and waste growth. But this is a self serving statement from a portfolio manager...

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