Are We Seeing A Pricing In Of QE3?

Something very weird is happening this morning, as gold, and silver moved well off the early morning lows, with gold jumping nearly $20 an ounce. We saw some awful economic news this

with the CPI coming in hotter than expected, and June Empire Manufacturing plunging, going to a negative reading. Yet despite the awful news, stocks are WELL off their lows, and the precious metals moved well off their lows. So what gives? I hate to say it, but it looks as if the gold market is starting to price in another round of quantitative easing, or at least some kind of fiscal or monetary stimulus to help get the economy going again. It's painfully obvious the economy can not sustain on itself, as the private sector just is not there right now. We could see a rebound in the latter part of the summer, as the effects of the Japanese earthquake and tsunami begin to wear off. The auto sector, particularly Toyota

, Honda

and to a less extent, Ford

were really hit hard by the Japanese 'quake, and that is a big reason why the

was atrocious and missed estimates badly. Only 54,000 jobs were created in the month, compared to estimates of around 170,000. The dollar is still strong, but equities have paired their losses in half, which is puzzling everyone this morning. The best way to play this is to go long the gold miners, such as Goldcorp

, Barrick Gold

and Newmont Mining

if you believe that additional stimulus is coming. I'm not saying we're going to get a "QE3." In fact, the Federal Reserve can not call it quantitative easing, it will probably have to call it something else. Perhaps "Special Asset Program" (or SAP, since they think we're saps for not knowing what it really is.) Another way to play it is to go long commodities, like oil and copper, and essentially anything risky. Names like United States Oil Fund

, Occidental Petroleum

, and other oil related equities should outperform if we get another round of easing. Very odd that we're not down more this morning. Banks are down, but not as much as I would have thought. Definitely some food, and potential fruit for thought.