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The Jackson Hole Thread - Qe3 Or No Qe3 ?

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Let's face it, this is the only show in town at the moment.

Here is what El-Erian has to say about it

Bernanke must not push QE3 at Jackson Hole (or google the title if you are not a FT subscriber)

Compared with August 2010, inflation is higher, structural impediments to job creation are deeper, the global environment is less co-operative, and the independence and credibility of the Fed are under greater pressure. Moreover, judging from the fleeting impact on risk sentiment of last week’s Federal Open Market Committee statement on interest rates, markets seem less sensitive to Fed shock therapy.

All this serves to tilt Mr Bernanke’s policy equation towards greater costs and risks. Accordingly, rather than embark on another policy initiative (“QE3”) with questionable net benefits, it would be better for Mr Bernanke to use his Jackson Hole speech to reframe the national policy debate and, in the process, set the stage for President Barack Obama’s key economic announcements on September 5.

Personally, I tend to agree with this view: the risks are much greater than last year, hence I don't think Ben will "telegraph" QE3 tomorrow.

We'll find out in less than 24 hours.

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No more QE in its original format for me, its over...............Inflation is out there, its done its job..............now comes the real sqeeze, high interest rates would bring house prices down, we will not see high interest rates, the sqeeze in peoples budgets, rising costs at 5% +........... 2.6% wage increments for the next decade, a long slow sqeeze, a long slow fall in house values, welcome to the lost decade, the decade where the rich will get richer by hoarding wealth, and the working class will work harder and longer for less.

The rich are rich, maintaining their wealth is their key, the working class will lose their wealth through rising costs, falling salaries, falling asset values, and and debt remaining high in serviceability costs due to stagnant wages..................................................

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I cannot see QE3 until announced until October or November and only providing that economic data is pretty bad. But probably once QE3 comes and if it comes it will be in a different shape than QE2, Fed may decide to buy different type of assets to limit the inflationary impact on commodities.

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Let's face it, this is the only show in town at the moment.

Here is what El-Erian has to say about it

Bernanke must not push QE3 at Jackson Hole (or google the title if you are not a FT subscriber)

Personally, I tend to agree with this view: the risks are much greater than last year, hence I don't think Ben will "telegraph" QE3 tomorrow.

We'll find out in less than 24 hours.

No chance of QE3 tomorrow, QE3 will arrive eventually though, the global economic outlook is pretty awful.

Another "2008" style bust with its epicentre in Europe seems pretty certain. QE3 will come after this event takes place.

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I cannot see QE3 until announced until October or November and only providing that economic data is pretty bad. But probably once QE3 comes and if it comes it will be in a different shape than QE2, Fed may decide to buy different type of assets to limit the inflationary impact on commodities.

Yes, that's quite possible, here is a link with a few possible alternatives

Fantasy Fed options

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We already know their biases, so it's only really a matter of guessing their strike price.

But do you? I think, and IK at FTAV has suggested, that the FEDs actions have been first and foremost about avoiding negative nominal yields on treasuries.

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Not at all, or all out QE, of a greater numerical value and higher frequency.

Are we to keep the pound or to print community labour/capital scripts.

Move to a township where you can produce, rather than try to skim on transactions in the city!

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Why are you talking about QE3? It has already been rubber stamped QE4 and QE5 are where it is at.

+1

They've already spent a pile of the QE3 (the QE with no name) anyway.

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Why are you talking about QE3? It has already been rubber stamped QE4 and QE5 are where it is at.

They'll do it, but not announce it

I'm sure that this is happening already

The bonds market is no longer a real market - nationalised banks and central banks being the main buyers of bonds paid for via 'liquidity' provided by central banks

The ECB has been buying PIIGS bonds this last month - with what?

Have taxes in the PIIGS gone up to pay for this?

Nah, just print

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They'll do it, but not announce it

I'm sure that this is happening already

The bonds market is no longer a real market - nationalised banks and central banks being the main buyers of bonds paid for via 'liquidity' provided by central banks

The ECB has been buying PIIGS bonds this last month - with what?

Have taxes in the PIIGS gone up to pay for this?

Nah, just print

The market seems to react very differently to "stealth" QE (ECB) and "official" QE (FED, BOJ and BOE).

Just look at the EUR/USD exchange rate for proof.

That's why Ben's wording today will be watched very closely by all market participants.

Not long now.

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The market seems to react very differently to "stealth" QE (ECB) and "official" QE (FED, BOJ and BOE).

Just look at the EUR/USD exchange rate for proof.

That's why Ben's wording today will be watched very closely by all market participants.

Not long now.

One or the Other?

If he prints, what are the chances that we see $2000 gold by tonight?

If he doesnt print, what are the chances that we see a 10% fall in the Dow by tonight?

Is there a middle way?

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I cannot see QE3 until announced until October or November and only providing that economic data is pretty bad. But probably once QE3 comes and if it comes it will be in a different shape than QE2, Fed may decide to buy different type of assets to limit the inflationary impact on commodities.

I think I agree with most of the above, but I don't think that buying different asset classes will make much difference, printing money is printing money. It will just take a little more time to leech through to commodities. Much in the same way as the house price boom worked it's way into the credit system.

Edited by Noginthenog

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Just read the speech on ZH.

If I understand it, no QE. That might change, but not until September.

He is basically saying, we have done all we can, and now it is up to government.

Thats what my skimming told me, blurbs on about headwinds as usual and weak recovery which is gaining strength but (paraphrasing) he's ripping off merves vigilance. Result, gold going up shares falling.

http://www.federalreserve.gov/newsevents/speech/bernanke20110826a.htm

Edited by zebbedee

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Thats what my skimming told me, blurbs on about headwinds as usual and weak recovery which is gaining strength but (paraphrasing) he's ripping off merves vigilance. Result, gold going up shares falling.

http://www.federalreserve.gov/newsevents/speech/bernanke20110826a.htm

I am a bit surprised by the market's response. I bet BB wants to QE, but from stuff I have been reading about dissent within the Fed, I bet he doesnt feel he has enough power to do so.

Thing is, if he cant weaken the US dollar, then that means that gold shouldnt be able to rise as much, so I cant see how it is truly positive for gold. Bad for shares though, yes very bad. If he cant print and give free money to the banks, many of them might just go pop.

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Sky is saying that he said nothing.

So I guess it will be more QE but down covertly in the coming months. Or, he is just going to wait for Obama to make his big speech in Sept? That would seem more likely.

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Just read the speech on ZH.

If I understand it, no QE. That might change, but not until September.

He is basically saying, we have done all we can, and now it is up to government.

Passing the buck basically.

"There's a murderer at my door, I've got a gun. If he comes any nearer I'll use it!"

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I am a bit surprised by the market's response. I bet BB wants to QE, but from stuff I have been reading about dissent within the Fed, I bet he doesnt feel he has enough power to do so.

Thing is, if he cant weaken the US dollar, then that means that gold shouldnt be able to rise as much, so I cant see how it is truly positive for gold. Bad for shares though, yes very bad. If he cant print and give free money to the banks, many of them might just go pop.

The markets response if sensible, no QE or other form of stimulus and the money isn't there to support the companies balance sheets and profitability, hence a dash from them to standard safe assets-yellow metal. Had they QE'd then stocks would have risen and the yellow metal also as the dollar devalued further.

Edit, you're right though, gold will fall off assuming the money leaving stocks heads elsewhere later

Edited by zebbedee

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  • 338 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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