Showing posts with label qe4. Show all posts
Showing posts with label qe4. Show all posts
9:53 PM
race to the bottom
Unknown
equities , income , interest rates , qe4
Expansionary monetary policy, which lowers interest rates and eases credit, can be used to fight unemployment and economic recession. Policy makers around the world have put this practice in place. The "race to the bottom" for global interest rates is on.
Low interest rates should help increase consumer spending. But lower rates could be translated as damage limitation rather than growth promotion. Balance sheets are strong and cash is piling up. Job creation has to come from the corporate sector. However corporations are not on a hiring binge.
Corporate hiring caution is coming from economic uncertainty. One item in that category is the fiscal cliff. Fed policy has pushed interest rates to all-time lows. Dividend yields are now very attractive. Dividend yields are now higher than treasuries for the first time in 50 years. Investors are looking at equities to provide income. They are extracting capital from share buybacks or dividends.
Policymakers need to look at the equity market's part in driving corporate behavior. Meaningful acceleration in the global economy isn't likely to come from the listed sector of corporations.
Low interest rates are contributing to the situation of corporations becoming capital distributors instead of investors. Rates should be allowed to rise so equity investors will become less income-obsessed. Interest rates however will remain low.
Link to the source story from Tyler Durden
Low interest rates should help increase consumer spending. But lower rates could be translated as damage limitation rather than growth promotion. Balance sheets are strong and cash is piling up. Job creation has to come from the corporate sector. However corporations are not on a hiring binge.
Corporate hiring caution is coming from economic uncertainty. One item in that category is the fiscal cliff. Fed policy has pushed interest rates to all-time lows. Dividend yields are now very attractive. Dividend yields are now higher than treasuries for the first time in 50 years. Investors are looking at equities to provide income. They are extracting capital from share buybacks or dividends.
Policymakers need to look at the equity market's part in driving corporate behavior. Meaningful acceleration in the global economy isn't likely to come from the listed sector of corporations.
Low interest rates are contributing to the situation of corporations becoming capital distributors instead of investors. Rates should be allowed to rise so equity investors will become less income-obsessed. Interest rates however will remain low.
Link to the source story from Tyler Durden
8:13 PM
The markets are broken. So says Chris Martenson of Peak Prosperity. Because they are not sending any clear signals anymore. Speculators are now the majority in the market. Not good. Sure has been a swing from the investor type. Mr. Martenson went on to write that nothing can be reasonably prices when the central banker misprices money and buys up everything related to bonds. Nothing can be reasonably priced.
What we have is a printing money out of thin air scenario. This might as well be called QE4. It is to act as both monetary and fiscal stimulus. The main goal is to provide economic activity, especially home building. The goal is to reduce the unemployment rate.
The Fed is now in the business of funding nearly 100% of all new government spending in 2013. As it does so another $1 trillion will be pumped into the economy. Inflation has to come into play with this mix.
Benanke said the Fed policy is tied to the unemployment rate. We could have a very long wait for the stimulus to end. The participation rate comes into play like it never has before. Conflicting numbers to be sure. As more people leave the labor force the participation rate goes down so does the unemployment rate. When more jobs are created the unemployment rate goes down too.
This latest QE effort will be with for 2 to 3 years according to Martenson. The Fed is likely to add another $3-4 trillion to its balance sheet. That's 300 - 400 % more money in the next year than was created in the first 200 years after the Declaration of Independence.
The one item to watch is inflation. Can the Fed keep it up? We'll see.
Link to the source story.
What we have is a printing money out of thin air scenario. This might as well be called QE4. It is to act as both monetary and fiscal stimulus. The main goal is to provide economic activity, especially home building. The goal is to reduce the unemployment rate.
The Fed is now in the business of funding nearly 100% of all new government spending in 2013. As it does so another $1 trillion will be pumped into the economy. Inflation has to come into play with this mix.
Benanke said the Fed policy is tied to the unemployment rate. We could have a very long wait for the stimulus to end. The participation rate comes into play like it never has before. Conflicting numbers to be sure. As more people leave the labor force the participation rate goes down so does the unemployment rate. When more jobs are created the unemployment rate goes down too.
This latest QE effort will be with for 2 to 3 years according to Martenson. The Fed is likely to add another $3-4 trillion to its balance sheet. That's 300 - 400 % more money in the next year than was created in the first 200 years after the Declaration of Independence.
The one item to watch is inflation. Can the Fed keep it up? We'll see.
Link to the source story.