Here is the latest Street$marts:
It’s not often that I am part of an interview where guests yell and I do to!
Here is the video from the CNBC segment the other day on the Fed’s QE Unlimited.
The next Street$marts will be out shortly with a long article on the Fed, ECB and BoJ’s money printing experiments.
Ben Bernanke & Co. delivered QE3 yesterday by announcing a plan to purchase mortgage backed securities (mortgages) for at least the next two months at roughly $40 billion per month. And the markets were delighted! The best analogy I can offer is that the markets are like crack addicts now and need their steady and regular fix of stimulus. As time goes on, a drug addict usually needs more and more drugs and that’s exactly how the markets are behaving.
I listened to Ben’s press conference and was really bothered that the Fed’s hope is that by buying mortgages, they will force mortgage rates even lower than the all time lows they are now, as if the problem with the economy is a 3.625% 30 year mortgage rate. And in the Fed’s mind, housing prices will increase and people will believe they have more money, which will in turn, make them spend more.
Am I missing something?
If the average consumer is strapped for cash and can’t get even get a low rate mortgage, how will they spend what they don’t even have?
Here is the piece I did last Friday after the putrid jobs report. While the headline number may have indicated an increase of almost 100,000 net new jobs, the underlying data was awful. Additionally, while the unemployment rate may have fallen to 8.1% from 8.3%, it was primarily due to people leaving the workforce than people being hired.
The latest Street$marts is here…
New Street$marts is out chock full of tidbits with Paul Ryan, the Fed, ECB and stocks on their way to new 2012 highs!
Here is the link from Friday’s segment:
Nothing has changed regarding the outlook for stocks. I think we are in a generally benign period for equities that has been following the typical presidential election year pattern of a Q1 rally, a springtime low and summer rally to a peak. If that continues to hold true, we should see another good bottom in September or October and then rally into year-end. I am sure the market will throw some doubt into that along the way!
Over the coming month or so, we should hear from the Chinese that they are going to stimulate their economy a bit more. The Fed has their annual retreat in Jackson Hole in two weeks followed by a very important meeting on September 12 and 13 where more stimulus should be announced. September 12 is also the date when the German courts will rule on the constitutionality of using funds for bailouts. And of course, the markets are waiting on the ECB to unveil another round of bond buying to help Spain.
So there’s lots on the calendar before we even get to the November elections!
After the stock market declines and potentially world ending news during the summers of 2011, 2010, 2008, 2007 and 2006, it’s a welcome change that this summer has been without significant volatility. As we head into September, that should change a bit, but nothing extreme.
I am going to be on CNBC’s Closing Bell with Tyler and Maria at 3pm est today. The discussion will likely focus on the very anemic and sub par economic recovery, but certainly not unexpected. As I have written about many times before, this is your typical post financial crisis recovery. It’s frustrating and uneven with little major progress. But this too will come to an end.
Earlier this week, we heard from two non voting members of the FOMC (Federal Open Market Committee), Richard Fisher and Eric Rosengren. The latter made headlines calling for the Fed to embark on an open ended bond buying program until the economy grows more and employment improves, while the former (an inflation hawk) thinks the Fed has done enough and questioned whether more stimulus would really work.
So you have two experts with very differing opinions! One thing is certain and that is the uniform belief that the US needs to get its fiscal house in order. And that starts with Congress who are enjoying a month long vacation!
Getting back to the Fed, Fisher has always been a hawk and has no problem dissenting, along with Plosser. He was one of the guys who stubbornly refused to cut rates in mid 2007 when the financial crisis was in its infancy!
Rosengren’s salvo is all the more interesting as the Fed’s annual retreat in Jackson Hole Wyoming is a few short weeks away and we all know that Bernanke & Co. aren’t done printing money. Big Ben’s speech in WY should reveal much about the Fed’s intent this fall.
The open ended bond buying program is controversial for sure and is something we should be hearing about from the Fed’s counterparts in Europe first. What I would give to be a fly on the wall when Germany and the ECB (European Central Bank) discuss what to do about Spain! Eventually, Germany is going to throw in the towel and allow an out money printing assault, but that day is not close yet.
It has been a very quiet week for the stock market and that’s likely to change next week!
Have a great summer weekend! Our family has a packed weekend with my buddy Rocket Ron Weiss’ magical 50th birthday party on the beach in New York along with family BBQ’s with some of our closest and favorite friends. Great food, great drinks and great friends! What else could you ask for? Maybe a little PGA Championship?
The latest Street$marts is out.
I am going to be on CNBC’s Closing Bell with Bill & Maria today at 3pm discussing the less than positive jobs report as well as the harsh market reaction and the potential response from Bernanke & Co.
As soon as I finish wrapping up my quarterly report to clients, I will publish the next Street$marts with some comments on the European Central Bank’s recent action and what the Supreme Court’s ruling on ObamaCare means for the economy and markets.
Have a great weekend!