Fed Policy, Interest Rates, Q.E. & the Dollar Debate

Great debate! Rickster and Steve goin at it. Larry tells Steve he is drinking the Fed koolaide, BWAAAHA!! I agree with Rick and Larry (not surprising since they both express concern for the ‘common man’ that’s the koolaide I drink, LOL!) Stay tuned to the very end for a GOLD forecast.

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CNBC:

Discussing whether the Fed is headed in the right direction, with Frank Holmes, U.S. Global Investors; David Goldman, First Things Blog; CNBC’s Steve Liesman & Rick Santelli.

more about “Fed Rates, Q.E. & the Dollar Debate“, posted with vodpod
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November 4, 2009. Tags: , , , , , , , , , , , , , , , , , , . Economy, Finance, Labor Department, Obama Administration, Politics, Popular Culture, TARP, Taxes, Unemployment Statistics, Wall St. 1 comment.

Meredith Whitney on the new normal & Fed exit from MBS purchases, its impact on banks, housing…

MEREDITH WHITNEY

Meredith Whitney - Photo: Bloomberg News

Update 2: Bloomberg on Whitney’s call:

The S&P 500 Financials Index slumped 1.5 percent, the most among 10 industries, after the House vote and as analyst Meredith Whitney said the biggest U.S. banks may face declining values on home-loan bonds with government backing as the Fed prepares to end its $1.25 trillion purchase program.

Bank of America Corp., JPMorgan Chase, Citigroup and Wells Fargo increased holdings of so-called agency mortgage-backed securities by 44 percent from the third quarter of 2008 to the second quarter of 2009, Whitney said in a note yesterday to investors. Those increases came as the Fed began buying securities backed by Fannie Mae, Freddie Mac and Ginnie Mae in an attempt to keep mortgage rates low and spur housing demand, she wrote.

JPMorgan fell 1.2 percent to $42.21, while Wells Fargo slid 3.1 percent to $26.82 and Citigroup lost 1.7 percent to $3.97.

Update: Ms Whitney wrote an excellent op ed in the WSJ last month outlining what we can expect in the financial sector and consumer going forward. Read it here.  ‘Main Street represents the foundation of this country. Reviving it should take priority over any regulatory reform or systemic overhaul.’

Meredith Whitney is IMO the best bank analyst on the street bar none.

She put out two notes to clients last night, ABSOLUTE MUST READS:

1) Ain’t Gonna Happen, where she argues that “normalized” earnings for banks is a fallacy, that it’s more likely we will see protracted consumer deleveraging, fewer consumers who qualify for credit, and dramatic regulatory change, which will negatively impact earnings for a protracted period, and

2) The Great Exit: The Biggest Market & Bank Risk Over the Next Four Months, a long note on the importance of the Fed’s agency MBS purchase program, where she argues that uncertainty over when the program will end (now scheduled for end of Q1 2010), and who the substitute buyer for the Fed will be, means that “prices will go down meaningfully and rates will go up meaningfully.” She argues that it is possible the mortgage market will again shrink notably: “We believe this represents one of the larger risks to the banks and overall market over the next several months.”

November 4, 2009. Tags: , , , , , , , , , , . Economy, Finance, Foreclosures, Housing, Politics, Unemployment Statistics, Wall St. Comments off.

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