Regardless of how one feels about quantitative easing, the move by the FOMC should be viewed as having done more than was anticipated, but less than what was feared. The Fed committed to doing some QE, but only using the agency debt and MBS debt repayments, thus maintaining a steady balance sheet. They are not looking to expand the balance sheet from here, nor become more restrictive through attrition by retiring debt. Real stimulus that can create jobs must be done through Congress. However, neither side of the isle wants to be cooperative at this point in time. Both the Dems and Reps want to polarize the elections and need ammunition like extending tax breaks for the rich or failing to create new jobs. Therefore, the Fed is looking to provide some sense of stability while politicians take their war to the polls. The lack of cooperation is one of the reasons why midterm election years tend to be negative for the economy and the market. It is as simple as counting backwards by 4s and seeing what the market has done during midterm elections. The bigger question is whether or not a lame-duck Congress will push through a stimulus that attacks the real deficit problem, entitlements. Where Euro zone countries have taken the unpopular, but aggressive steps to reduce their deficits, the US is stubbornly refusing to take the tough steps. A move to cut entitlements would instill confidence in the US. Unfortunately, that isn’t going to happen before November and the bulls are running out of time.