Posts Tagged ‘QE1’

Notes From Underground: Will Tomorrow’s Unemployment Provide Certainty?

May 7, 2015

MAYBE. It’s the release of the most important economic data for market watchers, the unemployment report. The JOBS NUMBERS have taken on added importance as the FED has made its data dependent interest rate decision overly reliant on job growth and more importantly, AVERAGE HOURLY EARNINGS. Last month’s nonfarm payrolls were well below expectations and the market reacted in a HOLIDAY-SHORTENED trading session (Good Friday) with a rally in all ends of the interest rate market and the U.S. dollar being sold in response to a FEDERAL RESERVE remaining at the zero interest rate level for longer than previously anticipated.

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Notes From Underground: Good Trading Advances One Funeral At A Time (Thanks, Max Planck)

July 23, 2013

When Max Planck opined that “Science Advances One Funeral At A Time” it is believed that he meant that when proponents of long-held theories die, science is allowed to advance. In terms of trading I have applied this to mean that long-held losing trades have died a death due to lack of liquidity to support a flawed analysis. The BOND MARKET is going to provide the opportunity to put the wit of Planck to work as we try to examine the ways in which the FED will deal with the vast amount of reserves with which it has flooded the financial system. As traders and investors, the FED‘s decisions will impact the entire spectrum of the GLOBAL MACRO WORLD. Therefore, it is time to embark on thinking about ways the FED can remove reserves in the least disruptive and to anticipate what plans the central bank may have.

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Notes From Underground: Volcker Finds His Voice

June 4, 2013

Ex-FED Chairman Paul Volcker delivered a speech on May 29, which served as a “shofar” blast, warning the FED and its governors to be cautious in possibly undermining the credibility that all central bankers strive to maintain. Mr. Volcker does not doubt the intelligence of Chairman Bernanke  but what he worries about “… is a matter of good judgment, leadership and institutional backbone” (READ THAT AGAIN). “A willingness to act with conviction in the face of predictable political opposition and substantive debate is, as always a requisite part of a central bank’s DNA.” Now, knee-jerk FED supporters (insert name here) will maintain that is what Bernanke did in presenting QE1, QE2 and QE3–but he certainly had the support of a democrat-controlled HOUSE and SENATE in 2010. Also, the White House was a fervent supporter of massive monetary stimulus as he helped keep the economy from sliding into a chaotic state of asset liquidation. The FED may have suffered the barbs of some “tea party” legislators but for the most part the major powers in Washington and Wall Street provided the needed support for the FED.

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Notes From Underground: WAS BERNANKE HAWKING A HAWKISH OUTLOOK???

June 22, 2011

I feel like I’m the odd analyst out in that Bernanke failed to impress upon me that he is a DOVE in HAWKS’ feathers. Reading the FOMC statement over and over leaves me wondering just what made the statement so strong an anti-inflation stance. The FOMC release reiterated that the FED is relying on closing the output gaps, “including low rates of resource utilization and a subdued outlook for inflation over the medium run–are likely to warrant exceptionally low levels for the federal funds rate for an extended period.” This is not the musings of an inflation HAWK.

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