Bernanke, to date, has proven that he is no Volcker. Therefore it is a safe bet to state that his only possible reactions will be [i] continue to inflate [ii] do nothing further. It is unlikely, with a Presidential election looming, and Romney publically stating that he will be replaced, that he will favour any requests from Obama to “help” his chances in winning the election through an improvement in the economy.

Bernanke sincerely believes that inflating is the way forward, unless he has been lying for all these years. Therefore, the question becomes not “if” but “when” will Bernanke open the spigot of further money/credit creation again?

How quickly do markets react? Quickly. Any announcement of further QE will have an effect in the market as soon as the words leave his lips. The initial move, may not be the true move. QE will, at some point create another bull move in stocks, but, the first move may not be bullish, it could go either way, such are the games played in the market.

However, this move in the market, does not represent the move in economic indicators. They require far more time to register inflationary pressures. I suspect therefore, tomorrow Bernanke will announce a new QE.