Commodities’ prices and mainly precious metals started falling as expectations regarding monetary policy seem to pessimistic. Recently fed showed its intentions (which probably were not clear enough) to taper QE and follow a more restrictive monetary policy. While this has influenced the price of commodities dragging them down, the possible end of QE does not seem to have any effect on US stock markets which continue to break record highs. However studies have shown that every time interest rates are pushed higher stock markets react negatively as a result of the expectation of liquidity and the impacts this will have on the economy. Well, someone would say that with positive growth rates and unemployment falling this is not a problem. It could possibly be a problem as the government would soon need pay close attention to the debt levels and follow a more restrictive fiscal policy which could definitely harm both employment and growth. So, is US stock market really fairly priced? Which is the base scenario on a sensitivity analysis in terms of growth, unemployment and interest rates?
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