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What Will Bernanke Do Next – To QE3 Not To QE3?

September 12, 2012
QE or no QE

Bernanke is at a crossroad of sorts, at least that’s what a poll conducted by CNNMoney shows, that out of 13,000 respondents, over 52% don’t think QE3 is coming…   Other analysts, such as PIMCO’s El-Erian and Gross, both stated that Fed is likely to extend the forward guidance to 2015 instead of an all-out QE3, with Gross being a bit more optimistic and points to a potential “strong hint” of QE3 program in the future.  As a matter of fact, Gross stated that: Fed will shift low rate pledge to 2015 and QE3 purchase amounts will not be disclosed to keep the market guess… ...

Upcoming: German Constitutional Court Ruling On ESM

September 10, 2012
The Euro bunch

(DE) German Finance Ministry official: Reiterates confidence in pending High Court ruling on ESM this Wednesday, Sept 12th; Believes ESM does not breach German constitution. (DE) Lawyers of the Bundestag have warned that the permanent euro rescue fund (ESM) could violate the parliament’s budget – German Press- Says possible direct and indeterminate liability for the debts of other countries violates the budgetary powers of Germany’s parliament – The comments come ahead of Wed’s (Sept 12) expected German Constitutional Court ruling on the ESM. (DE) Morgan Stanley comments on upcoming German Constitutional Court Ruling on Sept 12th: Sees 40% chance that ...

Nonfarm Payroll Is Not Too Cold, Not Too Hot, And Not Just Right Either…

September 7, 2012
bernanke NFP

Today’s Nonfarm Payroll  (NFP) release came in just shy of 100K, or below the critical “line-of-sand” level that was rumored to be the determining factor for further stimulus by the Fed. Of course, 96K is darn close to 100K and when you look at the figures year to date for 2012, average jobs created monthly is at 136K; but when you look at just the last 6 months, you’ll realize that the economy barely met the expectation of 100K, at an average of 104K of new jobs created 6 months ending in August.  A closer look at today’s number reveals ...

Outright Monetary Transactions (OMT): ECB’s New Tool Against Crisis…

September 6, 2012

(EU) ECB’s Draghi: ECB has decided to undertake bond purchases in secondary markets, new OMT program has conditions; Fears of the reversibility of the euro are unfounded Bond purchases will help reduce the severe distortions in government bond markets, ECB is acting strictly within its mandate to protect price stability. (EU) ECB’s Draghi on OMT: No quantitative limits to OMT bond buying program, purchases will be fully sterilized, strict conditionality is a necessary condition, IMF will be involved, EFSF/ESM will undertake primary bond market purchases Breakdown of purchases by country will be broken down on a monthly basis, amounts of ...

US Nonfarm Payroll Employment (NFP) To Beat Expectation In August

September 6, 2012
US NFP Employment - Obama

US Nonfarm Payroll Employment figure is expected to beat expectation tomorrow, according to the slew of positive indicators ahead of the release: (US) INITIAL JOBLESS CLAIMS: 365K V 370KE; CONTINUING CLAIMS: 3.322M V 3.315ME Prior Initial Jobless Claims revised higher from 374K to 377K. 4-week average claims: 371.25K v 371K w/w (US) AUG ISM NON-MANUFACTURING: 53.7 V 52.5E (highest since May 2012) Prices Paid: 64.3 v 54.9 prior (highest since Feb 2012) New Orders: 53.7 v 54.3 prior Employment: 53.8 v 49.3 prior (highest since April 2012) Inventories: 52.5 v 54.5 prior (US) AUG ADP EMPLOYMENT CHANGE: +201K V +140KE ...

Central Banks Joint Action Probability Heats Up

September 5, 2012
Central Banks Joint Action

With major speculations flying wild in the market today on the potential of a bond buying program announcement tomorrow during the ECB Interest Rate Press Conference, market is now speculating a potential central banks joint action tomorrow involving the PBoC, the BOJ, the ECB, and of course the BOE.  The Feds are probably going to chime in as well if other central banks participate in this event, along with SNB and BOC, although the probability for this to take place is not high, one cannot rule it out. At the very least, if we look at what happened during the ...

ECB Bond Buying Program: To Be Announced Shortly…

September 4, 2012
ECB Bond Buying Program

(EU) ECB’s Draghi: ECB Bond Buying will help ECB fulfil its mandate, ECB must buy bonds in order to ensure the survival of the euro ECB could buy bond maturities of up to three years. ECB policy transmission is only functioning in one or two euro zone nations, ECB cannot ensure stable prices in a fragmented euro area. Economic situation is fragile, inflation risks remain balanced. Lending to private sector is still sluggish. (EU) ECB’s Asmussen: ECB President Draghi will be able to comment on new ECB bond buying program at the next ECB rate decision on Sept 6th Must ...

Post Bernanke Jackson Hole Speech Analysis

August 31, 2012
Post Bernanke Speech

(US) IMF’s Lipton: Fed Chairman Bernanke’s remarks show that the Fed is prepared to do its part- Fed has room to maneuver if things worsen. (US) FED CHAIRMAN BERNANKE: WOULD NOT RULE OUT FURTHER ASSET PURCHASES, MORE ACCOMODATION TO BE OFFERED AS NEEDED TO AID GROWTH; GAUGING IMPACT OF QE ON THE US ECONOMY IS DIFFICULT – JACKSON HOLE SPEECH Must not lose sight of the daunting economic challenges facing the economy, situation in the economy is far from satisfactory. Cannot rule out more use of non-traditional policies, negative risks of more stimulus are manageable. Fed bond purchases to date ...

Fed Bernanke Jackson Hole Speech To Disappoint

August 30, 2012
Bernanke Jackson Hole

Fed Bernanke Jackson Hole speech is poised to disappoint the market, as most analysts agree that it is highly unlikely for Bernanke to break out the heavy artillery at this junction in time.  Furthermore, the very title of the scheduled speech (10:00am EST) on Friday is ”Monetary Policy Since the Crisis,” which suggests Bernanke might take a closer look at policy responses since the launch of QE2 and Operation Twist,  rather than lay out potential policy directions for the rest of the year… Looking at the potential scenarios, there are three possibilities: Bernanke decides to announce QE3. This is an unlikely scenario, but because of last week’s ...

Spanish Bailout Is Just Weeks Away…

August 29, 2012
Spain bailout soon

(ES) Spain region of Catalonia said to be asking for €5.023B, tapping liquidity facility – financial press (ES) Spain offical: Valencia region needs over €3.5B from the regional fund- To negoiate aid amount within weeks – Needs to fund past years’ spending (ES) Spain Fin Min de Guindos: Spain would only tap about €60B from a €100B banking rescue fund from the EU  Confident that the ECB would take action in the secondary bond market to lower Spain’s borrowing costs Spain would likely “give reassurance to the ECB” that it would continue with its fiscal consolidation effort Whether Spain will ...