QE1 QE2 QE3 now QE4!!! BUBBLE ben bernanke ready to print more worthless dollars!

Discussion in 'Economics' started by S2007S, Sep 26, 2012.

  1. S2007S


    Markets are already crying for more QE, talk on wallstreet is that they want more from BUBBLE ben bernanke, and when wallstreet cries BUBBLE ben bernanke comes in and prints more worthless dollars, so to think about it in the next couple of months I think the market will certainly see something new out of BUBBLE ben bernanke. The fed will realize that the market wasnt digging the new QE3 so to make things better and boost equity prices they will have to push another round of QE. Market is worthless without QE.

    Fed May Need to Boost QE 'Dramatically' This Year: Pros
    Published: Monday, 24 Sep 2012 | 12:08 PM ET
    Text Size
    By: Jeff Cox
    CNBC.com Senior Writer

    The Federal Reserve's latest easing move has been nicknamed everything from "QE3" to "QE Infinity" to "QEternal," but some on Wall Street question whether the unprecedented move will be QEnough.

    With unemployment remaining high and the effects of previous Fed-sponsored quantitative easing programs a matter of debate, the central bank is embarking on a round of mortgage-backed securities purchases that will last until the jobless rate comes down to acceptable levels.

    From Morgan Stanley chief equity strategist Adam Parker's point of view, the Fed soon will find its new program inadequate.

    "QE3 will likely be insufficient to significantly boost equity markets and we wouldn’t be at all surprised to see the Fed dramatically augment this program (i.e., QE4) before year-end," Parker said in a research note.

    He said the probability that the Fed will need to juice up the program will increase "particularly if economic and corporate news continue to deteriorate as they have over the past few weeks."

    As it stands, the latest round of easing will see the Fed create money that will allow it to buy $40 billion of MBS each month.

    Following the conclusion of its September meeting two weeks ago, the Fed said that rather than target a specific amount of purchases — the "quantitative" part of QE — it instead will keep buying until the unemployment rate hits an acceptable though unspecified level.

    But Parker said that total will achieve only incremental help in the Fed's quest to spike asset prices, particularly in the stock market, and help out the housing recovery, which it hopes will generate a "wealth effect" that will lead to more hiring.

    "Although QE3 is open-ended, the currently announced pace and program of purchases is much smaller than previous QE programs," he said.

    Parker estimates based on the previous QE effects that the Standard & Poor's 500 [.SPX 1461.15 4.26 (+0.29%) ] will gain an average of .015 to 0.25 percentage points each week. That won't be enough to offset typical market volatility of 2.3 percent per week, nor will it be enough to spark the economy, he said.

    "QE3-related gains could cumulate to 3-4 percent return by year-end, but we see headwinds — negative earnings revisions, especially for 2013, and reappearance of tail risks — that could dominate and more than offset these potential gains," he said.

    Parker warns that "size matters" when it comes to QE, but said one thing the Fed got right this time was that MBS purchases, which were the focus of QE1, are more effective than purchases of Treasurys, which were the focus of QE2.

    "So far, the announcement of size and composition of QE3 looks like a light version of the QE1 extension," he said.

    Parker isn't the only one warning about QE effectiveness.

    Capital Economics said there are too many other headwinds in the global economy for the Fed's easing efforts to be a game-changer. Moreover, the firm said pushing down mortgage rates when they already are at all-time lows also probably won't be much help the housing market.

    "The Fed can commit to deliver whatever economic outcome it likes, but the problem is that the crisis in the euro-zone and/or a stand-off in negotiations to avert the fiscal cliff in the U.S. may well reveal it to be like the proverbial Emperor with no clothes," Capital economists Paul Ashworth and Paul Dales said.

    Stocks have continued to creep higher since the QE announcement, and Parker acknowledged that the Fed's actions probably have accounted for two-thirds of all the market's gains over the past six months.

    Bob Janjuah, fixed income strategist at Nomura Securities, advises investors to watch 1,450 on the S&P 500 as a critical level. He forecasts that eventually the Fed money-printing effects will wear off and the index will tumble to the 800 level.

    "The important message now is to accept that, in my view, risk assets are in a bubble which of course can extend, but which can reverse sharply and suddenly," he said in a note Monday. "Up here, ‘valuation metrics’ are not going to help much."

    Parker advises investors to focus on "growth stocks" — those that have underperformed — with a focus on lower quality. Discretionary sectors and telecom could underperform, while the health care stocks, in particular Stryker [SYK 56.76 0.27 (+0.48%) ], would excel.

    He believes the next phase of easing "will be announced by year-end."
  2. I think the markets are waking up to the notion that all of the QE in Bennie's mind won't fix our problems.

    Just because the banks get stuffed with excess reserves and bad mortgages get "forgiven" by taking them onto the Fed's balance sheet (whatever the Hell THAT means in the end)... doesn't solve our basic situation... that is, too many unemployed/underemployed... and no policies on the horizon to fix THAT!

    For the housing market and the economy in general to recover and get healthy, we need strong employment growth. Odumbo and his policies are AGAINST that... we'll see if Romney can do anything if elected.

    QE is NOT the answer, it's just the only arrow left in Bennie's quiver.

  3. BSAM


    Buy gold.
  4. S2007S


    All they have to do is keep inflation on the rise so they can keep debt from outpacing growth....

    The other question that I still ponder about is how the fuck does buying tens of billions of dollars worth of MBS have anything to do with job creation.

    As I have said since the start of TARP and QE back years ago there is no solution or fix to this crisis. BUBBLE ben bernanke and friends think they have solved the problem, but all they are doing is creating an even bigger problem, no one realizes it just yet, but in due time it will be very noticeable and by that point way to late to fix it, the dollar is worthless as inflation is going to get even worse. BUBBLE ben bernanke has no idea the problems he has put into this economy and the rest of the world.
  5. S2007S


    I think gold is going to 2000 by early 2013 and well beyond $2500 by the end of 2013. There might be one of those days where the dollar collapses sending gold up to over $2500 an ounce in a week or 2, the possibility of this happening is getting closer and closer in my opinion.
  6. No, not true.
  7. TGregg


    Time for a gobzillion of QE every minute pumped into the markets.

  8. Just more sufferin' for the common folk most of whom still think the FED is a governmental agency.:D

    The FED, same as the current version of the US dollars, is nothing more than an inbred child between financial institutions and Washington DC from an incestuous marriage. Neither parents are particularly bright and it shows in the final product. To make it worse, the child is down with a genetic order called "easy money" syndrome. The child later went on to wreak havoc on the parents and later the entire village and as the last resort, they got to lock him up in a mental institution, in order to stop the madness behaviors resulting from the "easy money" syndrome as such behaviors were about to destroy the entire village.
  9. Daring


    Hard to trust artificially inflated markets.

    I think the old dow days are over, the new buy and hold is probably gold.
  10. Bernanke wants inflation.

    I think the sooner we go hyper inflation the better, let's get it over with. What he needs to do is shock and awe, doubling of QE every month until hyper inflate targets are achieved. No upper cap, 1 trillon a month so be it.

    #10     Sep 27, 2012