2 QE, or not 2 QE, that is the question – waiting on the Fed

Update: The ‘sages’ at the Fed speak:

Federal Reserve officials moved to prevent the Fed’s huge balance sheet from shrinking, an attempt to spur the U.S. economy’s recovery and avoid deflation.

At the end of a policy-meeting Tuesday, Fed officials said they would reinvest the proceeds from expiring mortgage-backed securities into longer-term U.S. Treasurys. The move should help a weakening economy by keeping mortgage rates low….

…The latest move by the U.S. central bank represents just a tweak in its strategy for managing its huge portfolio. But it’s a significant one since it could be a step towards new large purchases of both government bonds and mortgage-backed securities.

The Fed said it will release more details about the reinvestment operation later Tuesday….

Will Gentle Ben and Team FOMC give the markets what they want and talk QE2 in their Statement this afternoon?..the SF Fed came out and said we may have a SECOND recession in the next 1-2 years. Uhm that’s a double dip peeps face it, we never got out of the ‘ditch’ Obama keeps rambling on about.

The Zombie Market has started going up on BAD data again, expecting QE2. If Daddy takes the Punch Bowl away what will they do? Bonds and Stocks are moving TOGETHER, really WRONG that is.

WSJ:

Market speculation that the Federal Reserve will act to boost the economy at its meeting today has grown recently, but most analysts caution the U.S. central bank is unlikely to take any major steps.

U.S. stocks were higher Monday amid investors’ hopes that Friday’s weak jobs report could prompt the Fed to either resume buying assets, reduce an interest rate it pays banks on reserves to zero, or signal it will keep its benchmark short-term interest rate near zero for longer….

And what COULD they do for QE2, I am hoping the MS 1 pg refi for all is coming personally, I think it would boost consumer spending and cost nada.

These SOOPERGENIUSES have tried everything EXCEPT helping homeowners DIRECTLY, and it has ALL FAILED. Know why? Cause the ROOT of the collapse is HOUSING and CONSUMERS drive the US GDP that’s why. And I don’t even need a string of letters after my name to tell you that. Heh.

…The Fed could resume purchases of Treasury debt or mortgage-backed bonds, likely by using proceeds from existing holdings of such debt as they mature — at least to start with. It could stop paying interest on the excess reserves that banks hold at the Fed to encourage banks to lend more. The central bank currently pays 0.25% on excess reserves. Or it could try making a more explicit pledge to keep its benchmark short-term rate near zero for longer than the “extended period” phrase it has been using since March 2009.

But most analysts believe the Fed will only talk about these options at Tuesday’s meeting — leaving any action for if and when the economic outlook gets really bad. Dan Greenhaus, analyst with Miller Tabak & Co., believes the Fed will adopt a “wait and see” attitude, assessing incoming economic data and any further developments in the fiscal outlook before the Sept. 21 meeting….

Oh, they are going to wait until the economy ‘gets really bad’. Gee what the hell is ‘really bad’, we are already at 16% UE folks and here in AZ walkaways are spreading. It is nationwide, and once it is in the bloodstream of regular folks that they too can default as Hyatt did, well, it is a SEA CHANGE in attitudes these SOOPERGENIUSES are IMO unprepared for. If we, the people, really STARVE THE BEAST, GO GALT, whatever you want to call it, well if/when that happens the ‘system’ will REALLY be tested.

Why not just address HOUSING in a REAL way instead? Hmmmm?

The geniuses said we have NEVER had a consumer led housing led recession before..well guess what WE DID, the MOTHER of recessions. Time to think OUT OF THE BOX. If the consumers and their BIGGEST ASSET, their homes led us INTO recession then GEE, maybe addressing that the way they SAID they were with TARP but didnt, will help lead us OUT.

Consider this the Twofer Tuesday thread too, school has begun and I am on duty!

PS More bad economic data-inventory correction is SO OVER

and here is Calculated Risk on the ever-rising REO Inventory

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August 10, 2010. Tags: , , , , , , , , , , , , , , , . Economy, Finance, Foreclosures, Housing, Obama Administration, Politics, Popular Culture, TARP, Taxes, Unemployment Statistics, Wall St. Comments off.

Breaking: Fed Decision…BUYING LONG TERM TREASURIES!! 10 Yr yield dropping, BOOYAH for housing, refis for all :0) (but buy GOLD cause inflation in 2 years will be UGLY)

UPDATE: On the wires now

The U.S. Federal Reserve on Wednesday, in a surprise move, said it will buy up to $300 billion worth of longer-term U.S. government debt over the next six months and expand purchases of mortgage-related debt to help ease credit market conditions.

Bill Gross, PIMCO, who should know, just said the FED long term means the 10 yr not the 30..yep…yay for housing, rates at 4.00 for all Americans BOOYAH!!!

BACK OFF TIMMEH, BEN IS DA MAN!

FED STATEMENT HERE

To provide greater support to mortgage lending and housing markets, the Committee decided today to increase the size of the Federal Reserve’s balance sheet further by purchasing up to an additional $750 billion of agency mortgage-backed securities, bringing its total purchases of these securities to up to $1.25 trillion this year, and to increase its purchases of agency debt this year by up to $100 billion to a total of up to $200 billion. Moreover, to help improve conditions in private credit markets, the Committee decided to purchase up to $300 billion of longer-term Treasury securities over the next six months. The Federal Reserve has launched the Term Asset-Backed Securities Loan Facility to facilitate the extension of credit to households and small businesses and anticipates that the range of eligible collateral for this facility is likely to be expanded to include other financial assets. The Committee will continue to carefully monitor the size and composition of the Federal Reserve’s balance sheet in light of evolving financial and economic developments

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Donald L. Kohn; Jeffrey M. Lacker; Dennis P. Lockhart; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.”

Steve Liesman to Bill Gross how much concern this is essentially monetizing the debt? Thats exactly what MiM has been saying :0) FED is reflating and taking no prisoners, my fear is Obama will sack Ben and put in Summers who wont do what Volcker did and kill the inflation when needed later….but hell take the bounce and refi if you can, rates should drop down to 4.50 now….

GOLD taking off, was under 900 now backing up over 920

DOW now up over 100

US Dollar dropping hard now, market averages popping up…..UPDATE: Dollar drop

Doubling size of amount of agency MBS (mortgage backed securities)  Fed buying 750 billion and buying up to 300 billion of long term treasuries in next 6 months!!

FED balance sheet increasing to three trillion

CNBC

treasury rates PLUNGING per Rick Santelli

Dollar getting whacked a bit says Rick, A whole new world Santelli says

this is huge

March 18, 2009. Tags: , , , , , , , , , , , , . Economy, Finance, Housing. 1 comment.

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