I agree. The market is obsessed with QE3 and they are seeing 'hints' everywhere. This latest move up in risk assets has already driven oil back to $100 and commodities up. both headline inflation and core plus iexpectations will get upward pressure which will further tie the fed's hands from starting more LSAPs
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Global Macro Trading Journal
- Thread starter Daal
- Start date
I agree. The market is obsessed with QE3 and they are seeing 'hints' everywhere. This latest move up in risk assets has already driven oil back to $100 and commodities up. both headline inflation and core plus iexpectations will get upward pressure which will further tie the fed's hands from starting more LSAPs
Quote from Martinghoul:
I don't get this at all... I thought the statement was extremely balanced and he basically didn't say anything that would indicate which way they're leaning. He said that they might offer more stimulus or they might move towards less accommodation.
It reinforces the Bernanke put. It reinforces the Fed minutes where QE3 was raised as a possibility.
So in reality this means (as I mentioned yesterday) that QE3 might be as little as one more bad jobs report away.
I don't see why your interpretation is so asymmetric... Why doesn't his mention of withdrawal of accommodation reinforce the opposite, which has also been raised as a possibility?Quote from m22au:
It reinforces the Bernanke put. It reinforces the Fed minutes where QE3 was raised as a possibility.
So in reality this means (as I mentioned yesterday) that QE3 might be as little as one more bad jobs report away.
Again, I don't see the reason why we would use such an asymmetric interpretation, given that the comments were so evenly balanced.
Quote from Martinghoul:
I don't see why your interpretation is so asymmetric... Why doesn't his mention of withdrawal of accommodation reinforce the opposite, which has also been raised as a possibility?
Again, I don't see the reason why we would use such an asymmetric interpretation, given that the comments were so evenly balanced.
I take your point, however financial markets participants (including but not limited to me) are skeptical about withdrawal of accommodation.
Whereas Bernanke has a solid history of providing accommodation at the smallest sign of economic weakness, and has explicitly referred to higher stock prices as a positive outcome of FOMC policy.
Quote from Martinghoul:
I don't get this at all... I thought the statement was extremely balanced and he basically didn't say anything that would indicate which way they're leaning. He said that they might offer more stimulus or they might move towards less accommodation.
No. The language definitely suggests a lean towards easier policy. Heck, even that clueless Hatzius guy from GS saw it. Just a lean, yes, but that's the way central bankers usually do things. First the minutes of the meeting from yesterday, then an interview with Rosengren this morning, then the Beard's testimony. By late August, it'll be the full Helicopter Ben.
Obviously, if the next NFP print is +350K, then things will change. For now, QE3 is absolutely on the table inside the FOMC.
Of course it's on the table. So is no QE and so is an exit. I know the mkt is very sensitive to this, but, again, to me the idea is that everything is on the table. Moreover, if Europe does explode, all bets are totally off.Quote from ralph00:
Obviously, if the next NFP print is +350K, then things will change. For now, QE3 is absolutely on the table inside the FOMC.
Well, there's the change. This kind of talk of 'additional measures' or 'further accommodation' wasn't part of the Fed conversation a few weeks ago. Go back and listen to the Beard's last press conference. There is no question, his testimony today leans significantly more dovish.
Now does that mean we're going to get another rally in shares and commodities like we got after Jackson Hole last August? That's another question. The entire planet knows the David Tepper trade at this point.
Now does that mean we're going to get another rally in shares and commodities like we got after Jackson Hole last August? That's another question. The entire planet knows the David Tepper trade at this point.
Yeah, but Italy wasn't 300bps over bunds a few weeks ago... I don't see anything wrong with saying that, in the current environment, all options are open. At any rate, it doesn't matter, I have seen a variety of responses in the mkt, but the majority seem to agree with you. I am in the wrong, it appears.Quote from ralph00:
Well, there's the change. This kind of talk of 'additional measures' or 'further accommodation' wasn't part of the Fed conversation a few weeks ago. Go back and listen to the Beard's last press conference. There is no question, his testimony today leans significantly more dovish.
Now does that mean we're going to get another rally in shares and commodities like we got after Jackson Hole last August? That's another question. The entire planet knows the David Tepper trade at this point.
Quote from Martinghoul:
Yeah, but Italy wasn't 300bps over bunds a few weeks ago... I don't see anything wrong with saying that, in the current environment, all options are open. At any rate, it doesn't matter, I have seen a variety of responses in the mkt, but the majority seem to agree with you. I am in the wrong, it appears.
I believe the majority is not looking at the numbers. Back in late 2010 there was a trifecta of low inflation(core 0.6% and falling), low iexpectations (1.1-1.3% and falling) and weak employment. Right now there is only weak employment, the other two at at about the right target but the trend is up(so far). Get this trend to reverse for a while and I join the QE3 camp