The Fed is apparently considering cranking up the printing press again.. Next week, if the Fed announces they’re planning to begin quantitative easing again via their buying Treasuries, that will demonstrate 2 things:

• Thing 1:  that you can sleep better knowing the Fed will spend whatever it takes to stop deflation. (tongue firmly in cheek)
• Thing 2: that the economy is so weak and the prospects so dark, the Fed is about to use-up one of their last policy bullets in a desperate move. 

Many of the stock market players will focus on the Fed bailing out the economy and spending whatever it takes. If you can only see slightly further than your nose, that conclusion is going to be the one you reach. Though at some point, even the stock market players will wake up and smell the coffee.    Contrary to this, the bond market players will see an action by the Fed to begin printing money and buying Treasuries as a sign our economy is desperately weak. One of these two markets will get it right.  
 
One of these markets can be described this way:

• It always predicts next year’s profits will be higher and therefore current prices are cheap. 
• It focuses on company income statements, not balance sheets. I point this out because income statements are easier to manipulate. 

The other market can be described this way:

• It focuses on company balance sheets and whether you’re likely to get your money back. 
• It pays attention to economic information.
• It tends to be less volatile than the other market.

That should help you understand which market will get it right.   For those still struggling with the answer, the Bond Market – the second one in this example — is the right answer.   At least it is in my view.