The hot topic this week is if Fed will remove "patient " this week. My guess is they will not, based on what i feel and the data i gather so far. It will be very unreasonable and not market friendly if they do so. I may be wrong, what's you opinion?
Sure, by all means, let's restart QE and print another $4 trillion. It's doing wonders in Japan. And why raise rates? It's not like the 10 year is at all-time historic lows or anything. Oh, wait.... Sorry, you said 30 year. My bad. Let's use this chart... My take on what happens - the Fed either meets consensus and Yellen uses her speech time to be dovish or the Fed comes out with a dovish statement and leaves "Patient" in the statement. They're boxed in and they know it. It's only a matter of time before they lose complete control.
Wow. Let's start with a few facts and reality. QE in the US is not money printing, it's an asset swap of bonds for reserves. For some reason, the republican mind still cannot understand this concept. In Japan, it's different. Japan appears to believe in the wealth effect which is about as absurd as believing in an omnipotent being. Two, the Fed doesn't control the long end of the curve. There's a whole slew of factors going on that determine the long end. The Fed is not going to start hiking just because rates are very, very low. Maybe if there was a republican, and the omnipotent being sure does know how republicans like to destroy the economy from time to time, but if there were one, a republica, at the helm, then yeah, we should expect a hike and a recession. Three, given negative rates in Europe, the Euro is cheap.
I hope that was a sarcastic remark, if you woke up today and saw the market at historical highs, the unemployment rate at 5.5%, corporate profits surging, record amounts of cash on hand at major s$p 500 companies, GDP at 2-3%, housing prices up year over year, etc etc etc you would believe rates have got to be at LEAST 3%, but they aren't even close, they are 0%. Time for the fed to start raising rates, enough of the nonsense that the economy is to weak to raise them, whats weak about it, every time I turn on cnbc they have another bull talking about how great the economy is but as soon an inkling of a rate hike is mentioned they say oh the economy wouldn't be able to sustain this growth path if rates were to rise by 1%, come on, enough of the games....
No, it's not printing in the actual physical act. But the creation of money to purchase assets which is then given to the seller of those bonds/etc., is still money creation no matter how you slice it. The fact that banks choose to park it in reserves isn't what the Fed wanted when they designed the program and has been frequently lamented by various Fed members as a "lack of lending". Instead that money has been used to speculate on assets. It was you who mentioned the 30 year and raising rates in your first post. I actually mentioned the 10 year before I realized that you were pointing something else. What does the Euro have to do with anything in the conversation again?
I was right the last 2 times and I will be right again, fed is keeping the word patient in, if by chance they take it out which is a 1% chance Im telling you they will calm the markets down by saying they will NOT raise rates in June or Sept....they will actually announce no rate hike in 2015 and tell wall street continue to party on because rates aren't going up until 2016....you can see the market falling ahead of the announcement, almost as if its saying please please please don't remove the word patient....