I have done a 180-degree spin in my view on future Fed action. I am long equities and the AUD and short the USD.

I am having a hard time thinking of reasons that the market could go down. If the economic news is bad, markets will anticipate further QE. The market may even prefer bad news on the economy because it will mean the Fed provides a lot of liquidity that will not be invested in productive activity and will therefore find its way into financial assets. If, on the other hand, there is surprisingly good news on the economy, equities should still rally. Even if the newsflow is neutral for the next month, the drumbeat of news pieces on QE and regional Fed people giving interviews about it should support risk assets.

So I can’t see risk assets falling until after the next Fed meeting — and then only if the Fed thinks the economic news is strong and does not embark on more QE, while at the same time the market thinks the news is weak (which would be a pretty surprising failure of communication on the part of the Fed).