Bernanke’s Jackson Hole Speech may have threaded the QE3 needle but it may be premature to conclude QE will be announced at the September FOMC meeting. In reality the Fed doesn’t have to actually do a QE to keep asset prices from falling. The fear of any Fed action will be enough to keep the bears at bay. Only a worsening US Jobs report (less than 100k print) will make QE3 a sure bet. The macro data in Europe is not improving – manufacturing is down, unemployment is up, consumer confidence is down and the economy is still contracting. The ECB’s bond buying plan is welcome but you can’t wax a car and hope it fixes the engine. Europe needs structural changes. If the Euro is not to resemble a dead autumnal leaf floating on a pond, Europe and particularly Germany will have to agree “sharing is indeed caring” when it comes to normalizing the sovereign bond yields prevalent in the market today. At Thursday’s ECB meeting – I expect 0.25% rate cut (a non-event rally), no clarification on the issue of “seniority” of bonds ECB purchases and a likely commitment to unlimited bond buying in the 2-3 year duration. The ECB will also assure the market that there is no challenge to such a policy and that this action does not contravene its mandate.