Category: Quantitative Easing
The analysis published under this category are as follows.
Wednesday, March 19, 2014
Bank of England Lights A Fuse Under the Field of Economics / Interest-Rates / Quantitative Easing
By: Raul_I_Meijer
There will be many people who don’t care, there will be many more who don’t understand, and there will be boatloads who refuse to believe it’s true, but it still is. The Bank of England, in one single document, discredited, just at first count, 1) the majority of economics textbooks, 2) vast swaths of the entire field of economics, run as it is by economists educated by those same textbooks, 3) most governments’ economic policies, designed by these economists, 4) much of its own work, also designed by the same economists, 5) Paul Krugman and 6) the “committee” that hands Krugman and his ilk their Not-So-Nobel Prizes.
Thursday, March 13, 2014
QE Stimulus Bubble will Burst / Stock-Markets / Quantitative Easing
By: John_Mauldin
Seth Klarman: Investors Downplaying Risk “Never Turns Out Well”
Today’s Outside the Box is unusual in that it isn’t an original document but rather a summary of a client letter from one of the greatest investors of our generation, Seth Klarman, who is also one of the more reclusive – he rarely speaks in public or grants interviews. He is known for his very deep value investing style and willingness to pursue value where others get very nervous.
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Saturday, February 15, 2014
Watch For A Fed QE Taper Time-out / Interest-Rates / Quantitative Easing
By: Sy_Harding
Good luck to new Fed Chair Janet Yellen and her expectation that the Fed can continue to taper back its QE stimulus at the current pace until it is completely gone by summer.
The economic reports say it is not going to happen.
In her optimism regarding the economy, expressed in her testimony before Congress this week, Yellen pointed to GDP growth hitting an average annual rate of 3.5% in the last half of last year, compared to only 1.7% in the first half.
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Monday, February 10, 2014
Quantitative Easing The Killer Solution / Stock-Markets / Quantitative Easing
By: Darryl_R_Schoon
On September 20, 2008, the Wall Street Journal wrote: When government officials surveyed the failing American financial system this week, they didn't see only a collapsed investment bank or the surrender of a giant insurance firm. They saw the circulatory system of the U.S. economy—credit markets—starting to fail.
A similar crisis had happened before and bankers understood that if the circulatory system, i.e. credit markets, [continued] to fail, a deflationary collapse in demand even more severe than the Great Depression would happen. In 2008, aggregate levels of debt were far higher than in the 1930s and the consequences would be also.
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Friday, February 07, 2014
How Can Money Printing Exist and be Absent at the Same Time? / Interest-Rates / Quantitative Easing
By: Matt_Machaj
In the past years, the Federal Reserve dropped many inflationary bombs on the markets. Inflationary in the purely monetary sense by supplying money in almost ridiculous amounts, especially base money figures. During this process some commentators believed that the dollar would soon evaporate, that investors will run away in favor of the euro (like the EBC had not been printing euros for their banks), or maybe in favor of the yen (like the Japanese central bank was not that inflationary), or who knows maybe even the yuan. The dollar was supposed to be either dropped by international investors, or killed from within by internal inflationary rates (or possible by those two factors combined together). None of this happened. How are we to explain this if the Fed went almost crazy in monetary creation?
Thursday, January 23, 2014
Citigroup - U.S. Taper Is Not QE Tightening / Stock-Markets / Quantitative Easing
By: Bloomberg
Michael Corbat, Chief Executive Officer of Citigroup Inc., talks about the structure of the bank, Federal Reserve monetary policy and global growth rates. He speaks with Erik Schatzker on Bloomberg Television's "Countdown" on the sidelines of the World Economic Forum's annual meeting in Davos, Switzerland. Corbat told Schatzker, “People shouldn’t want us to be everything to everyone…We’ve gone through a pretty significant transformation. We’ve got the right business mix.”
Friday, January 17, 2014
U.S. Bonds and MBS Buying Program in Reversal? / Interest-Rates / Quantitative Easing
By: Matt_Machaj
After the announced “tapering” all the doubts were centered around the question, how big the “tapering” is. All trails lead us to speculation about how the so-called backing out could influence the market in the long run. First let us illustrate all the different versions of Quantitative and Qualitative Easings (episode 1, episode 2, episode 3…) that happened since 2009. Here is a graph that you’re already familiar with, depicting an immense growth in the balance sheet of the Federal Reserve since 2009. Contrary to graphs presented previously in the Market Overview, which summed up government securities and mortgage backed securities bought by the Federal Reserve and presented them in total:
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Wednesday, January 15, 2014
Where the Fed Went Wrong When It Decided to Taper QE / Interest-Rates / Quantitative Easing
By: DailyGainsLetter
John Paul Whitefoot writes: The merriment, mirth, and cheer on Wall Street over the holiday season may have been a bit premature; in fact, the optimism about the U.S. economy that ushered in the New Year may have already come to a screeching halt.
In mid-December, the Federal Reserve surprised investors when it announced it was going to start tapering it’s generous $85.0-billion-per-month easy money policy in January to just $75.0 billion per month. The pullback was a surprise, because the Federal Reserve initially hinted it wouldn’t ease its monetary policy until the U.S. unemployment rate fell to 6.5% and inflation rose to 2.5%. At the time of the announcement, U.S. unemployment stood at seven percent and inflation was hovering around historic lows below one percent.
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Monday, January 13, 2014
Clear Evidence That Fed QE Doesn’t Create U.S. Jobs / Economics / Quantitative Easing
By: Graham_Summers
Over the last five years, the US Federal Reserve has substantially changed the investing landscape of the capital markets in the last 12 months. In particular we need to assess how ongoing QE programs affect notions of “risk” and rates.
In the period from March 2008 to late 2013, the Federal took a series of strategic steps to attempt to rein in the financial crisis and to support certain financial institutions that it deemed most critical to the health of the financial system.
Wednesday, January 08, 2014
Stock Market 2014 - Can Yen Carry Trade Offset Fed QE Tapering? / Stock-Markets / Quantitative Easing
By: Gary_Dorsch
For the Nasdaq-100 Index, the Bull market turned five years old in November. Wall Street hopes the hard-charging Nasdaq Bull - that has more than tripled investors’ money since Nov 2008 is still in good enough shape to keep the gains coming in Year Six. Many Main Street investors are still wary of the “Least Loved” Bull market, - and they’ve missed out on the money minting rally. Since the turnaround began on March 9th, 2009, the S&P-500 index has chalked up gains of +175%, - ranking it as the fourth longest bull market of all-time. In cash terms, the US-stock market has generated $13.5-trillion in paper wealth.
Sunday, January 05, 2014
Fed Admits It's Clueless How QE Actually Works / Interest-Rates / Quantitative Easing
By: Mike_Shedlock
Inquiring minds are investigating three articles from today, stating opinions of three different Fed governors.
Tuesday, December 31, 2013
Quantifornication - Did Bernanke Get It Right? / Interest-Rates / Quantitative Easing
By: Richard_Mills
The Federal Reserve thinks recent economic news from the U.S. is good:
- Jobs are being created
- Consumers are spending money
- Trade & manufacturing growth is strong
So on Dec. 18th 2013, they announced a decelerating QE III environment.
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Tuesday, December 31, 2013
QE Tapering Lessons for 2014 / Interest-Rates / Quantitative Easing
By: Matt_Machaj
In the last Market Overviews (and also to a considerable extent in the last several Premium Updates) we have discussed in detail differences between tapering and tightening. As we have stated, a personal change of the Fed's chairman will not change the essence of its policy. Now we hear that some form of tapering will indeed happen. Despite this we have three varied tools to consider about some forms of backing out from its expansive policies:
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Friday, December 27, 2013
Why the Fed Will likely NOT Taper QE 2014 Despite December Statement / Interest-Rates / Quantitative Easing
By: Submissions
Georgi Ivanov writes: A largely unnoticed message from the Chinese Central Bank in late November has raised questions about the upcoming tapering of the Federal Reserve’s quantitative easing (QE) initiative, which would mean an end to the monthly $85 billion of fresh money that enter the American monetary system. Signals about the end of the Fed’s stimulus package began in 2012, and were supposed to end in the fall of this year. However, the Bernanke and co unexpectedly announced that the policy shifted gears and QE is now supposed by the middle of 2014.
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Tuesday, December 24, 2013
Ben Bernanke's Spoonful of Sugar / Interest-Rates / Quantitative Easing
By: Peter_Schiff
The press has framed Ben Bernanke's valedictory press conference last week in heroic terms. It's as if a veteran quarterback engineered a stunning come-from-behind drive in his final game, and graciously bowed out of the game with the ball sitting on the opponent's one-yard line. In reality, Bernanke has merely completed a five-yard pass from his own end zone, and has left Janet Yellen to come off the bench down by three touchdowns, with no credible deep threats, and very little time left on the clock.
The praise heaped on Bernanke's swan song stems from the Fed's success in initiating the long-anticipated (and highly feared) tapering campaign without sparking widespread anxiety. So deftly did the outgoing chairman thread the needle that the market actually powered to fresh all-time highs on the news.
Monday, December 23, 2013
QE Tapering vs. Tightening Issue Continued / Interest-Rates / Quantitative Easing
By: Matt_Machaj
Last week all (investors') eyes were on the Fed, and the Fed delivered. A small (if you can call $10 billion "small", but it is on a relative basis) form of tapering of the Quantitative Easing program was announced and markets reacted to it. It turned out that our assumptions about investors' expectations were correct - they were expecting to see no tapering and they were surprised by it.
As mentioned previously, even though tapering and tightening are often viewed as synonyms, they are exactly the same thing. Let's discuss this more thoroughly.
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Saturday, December 21, 2013
The Fed Will Still Provide Massive QE in 2014 - But / Interest-Rates / Quantitative Easing
By: Sy_Harding
The Federal Reserve announced this week that it will provide $75 billion of quantitative easing (QE) in January, a massive amount, and will provide large though diminishing amounts of additional stimulus for months thereafter.
Yes, that is what it said, even though the headline news was that it will begin tapering back QE in January, by providing $75 billion rather than the $85 billion it has been providing monthly this year. If it continues to taper at the same pace it will provide an additional $65 billion of stimulus in February, $55 billion in March, and so on.
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Saturday, December 21, 2013
The Great QE Taper Caper / Interest-Rates / Quantitative Easing
By: Andy_Sutton
Let’s do a little flashback this week and then look at some things and try to make some sense of what happened yesterday as the Great Taper Caper unfolds. We go back to March 3rd, 2009. Ben Bernanke was in front of Congress. He was allegedly under oath. He was asked directly by Senator Bernie Sanders this important question: “Will you tell the American people to whom you lent $2.2 trillion of their dollars?” Bernanke gave a one-word answer – “No”.
There are a couple of problems with all this obviously, but let’s get the more subtle ones first. This is yet another golden opportunity to point out who really runs the show from a monetary perspective. Those ‘dollars’ aren’t even dollars. That is the first problem. They are ‘not-so-USFed’ notes. They are debt. They don’t belong to the people, rather they hang like a millstone around the collective neck of We the People. Second problem, why was Bernanke allowed to leave that hearing without being charged, at a minimum with obstruction? Because the banksters run the show, that’s why. Those hearings everyone pays such rapt attention to are theater.
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Friday, December 20, 2013
Ben Bernanke Tapers, Tinkers and then Leaves / Interest-Rates / Quantitative Easing
By: Ashraf_Laidi
Fed Chairman Bernanke tapers by $10 bln, tinkers with forward guidance and leaves Janet Yellen with the possibility of an inflation target.
By reducing monthly purchases of agency mortgage-backed securities and long term treasuries by $10 bn, the Federal Reserve has successfully integrated the price stability component of its dual Forward Guidance into traders' psyche by further delinking tapering of asset purchases from tightening conditions in the bond market.
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Wednesday, December 18, 2013
If Money Printing Failed in Japan, Why Would It Work in the U.S.? / Economics / Quantitative Easing
By: Profit_Confidential
What the Federal Reserve is doing in the U.S.—its effort to get the economy going via its money printing program—has already been tried by the second-largest economy in the world: Japan.Unfortunately, the easy monetary policy implemented by the Bank of Japan didn’t spur the Japanese economy. So why would it work for the U.S. economy?
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