By Walter Kurtz, Sober Look

The third round of quantitative easing (QE3) by the Federal Reserve appears completely unlikely at this stage. Here are the reasons:

1. PPI ex-food/energy, a leading indicator for CPI which is monitored closely by the Fed, has been rising at a decent clip with the latest number at 3% year-over-year.  This will make the FOMC think twice about injecting additional liquidity.

2.  Capacity utilization, though low by historical standards, has been growing.  The latest number is quite strong, particularly excluding utilities which are operating below capacity due to warm weather. In fact manufacturing output increased 0.9% m/m in December.

3. Whether by design via “operation twist” or due to flight...