Will QE3 raise stock prices? My answer is yes, but the impact will be quite small at first, and will only become visible with the scale of its impact on the Monetary Base (the Fed’s securities portfolio).

First of all, we need to recognize that the Fed’s balance sheet has not grown since May of 2011, seventeen long months ago. There has been zero monetary stimulus for over a year. Second, we need to recognize that, although the Fed promised to start QE3 on September 13th, it has not yet started. Don’t ask me why. I can imagine a number of (unsatisfactory) reasons why QE3 hasn’t started, but it hasn’t started. The Monetary Base is still the same size that it was in May, 2011. The Fed has provided no explanation for the one-month siesta.

Ex Moody’s Credit policy committee chairman Christopher Mahoney in ‘Seeking Alpha’