The Credit Crisis Financial Stocks Short Journal

[Daal]

Vince Reinhart on Bernanke and more Fed Stimulus
http://noir.bloomberg.com/apps/news?pid=20601087&sid=aF9HMvf1Z5xk&pos=3
“Probably it makes more sense for him to wait until September,” Reinhart said. “You get those extra governors, you get a new vice chairman. It will be easier to do then.”

 

[Daal]

Fed to reinvest mbs proceeds. QE2 soon to come

 

[Daal]

Hoenig did a double dissent(language and reinvestments), soon the part where they breakdown hoenig disagreements might be bigger than the fomc statement

 

[Martinghoul]

This is a tacit acknowledgment that the current US experience reminds the Fed of Japan.

 

[Debaser82]

You guys think this will be supportive for asset markets and risk?

 

[Martinghoul]

Depends on which mkts... I would expect it to be massively positive for both Spooz and bonds. Not sure about other stuff.

 

[Daal]

Quote from Martinghoul:

This is a tacit acknowledgment that the current US experience reminds the Fed of Japan.

Really?To me just look like they dont want the markets interpreting the shrinking of the balance sheet as a sign of tightening. They will move in that direction when they do QE again(and Hoenig threatens to bomb the NY Fed building), they are not there yet

 

[Daal]

I also wonder why the Fed wont reinvest the interest payments from MBSs(they say they will only do principal payments), that transaction directly decreases M2(from the people's bank account behind that mortgage or from FNM FRE bank account when the person doesnt pay) and turns into Fed's cash(that instantly disappears from the system)

 

[Martinghoul]

Quote from Daal:
Really?To me just look like they dont want the markets interpreting the shrinking of the balance sheet as a sign of tightening. They will move in that direction when they do QE again(and Hoenig threatens to bomb the NY Fed building), they are not there yet

Well, to me, the focus on the size of the CB's balance sheet is very Japanese.

 

[Daal]

Correction, actually the Fed interest income only disappears from the system for some monthsr then they send the money to the UST at year end