QE-3

[ejman]

Interesting to see at least one member of the Fed say he expects interest rates to start rising sooner than the more commonly quoted 2014 or 2015.

For the rest of the world, more QE will be seen as weakening the USD and pushing up inflation. It will be interesting in a balance sheet enhancing way to see if the Asian stock markets get a pop today.

So far a nice pop in the Asian markets. What are the balance sheet enhancing conclusions you derive?

 

[traineeinvestor]

So far a nice pop in the Asian markets. What are the balance sheet enhancing conclusions you derive?

Very nice pop indeed.

QE is good for my personal balance sheet - shares are up, precious metals are up, interest rates on my mortages will stay down and property values are supported. Of course, the downside is that I will have to either pay more for any new investments or sit on cash which is depreciating due to inflation.

 

[FUEGO]

All I have to say is "ugg". Just pulled the trigger last night to invest my nice little five figure lump sum payout from my former employer's ESOP retirement plan. Unfortunately I am receiving today (Thursday's) close of business pricing, after the 1.5-2% price jump.

Although the rest of the portfolio is looking pretty nice right now...

 

[67walkon]

Can't speak for all small business but the small business I'm retiring from isn't going to borrow money to grow for 2 reasons: concerns about the economy going forward & the fear that borrowed principal has to be repaid with taxable income in a business environment that we believe will see rising corporate tax rates. We fear the double whammy-less profit because of the economy & higher taxes whether the economy improves or not. So even if interest goes to 0, the people running small businesses like ours may be afraid to borrow. It might be too conservative but it's the way a lot of folks think.

 

[eytonxav]

Can't speak for all small business but the small business I'm retiring from isn't going to borrow money to grow for 2 reasons: concerns about the economy going forward & the fear that borrowed principal has to be repaid with taxable income in a business environment that we believe will see rising corporate tax rates. We fear the double whammy-less profit because of the economy & higher taxes whether the economy improves or not. So even if interest goes to 0, the people running small businesses like ours may be afraid to borrow. It might be too conservative but it's the way a lot of folks think.

+1 nothing will fix the economy until there is clarity on taxes.

 

[Cut-Throat]

+1 nothing will fix the economy until there is clarity on taxes.

The only thing that will fix the economy is demand. Demand is created by consumers. The average consumer's wages have been falling over the last 30 years.....It may take just as long to fix it...There are no 'quickie' solutions.

If taxes drove anything, we would be awash in jobs and in a booming economy...We have steadily cut taxes for the last 10 years. It hasn't worked, because the average consumer (Lower middle class) does not benefit that much from tax cuts.

 

[Fermion]

All I know is it is party time! DOW 20,000 here we come!

QE to infinity and beyond!

 

[ziggy29]

I think this is just going to exacerbate the current biflationary environment. It's not going to create demand in the discretionary stuff people aren't buying, but it will help fuel the commodity inflation that's already baked into the overall picture.

That Congress refuses to do anything about the budget other than kick the can is less than helpful, too.

 

[eytonxav]

The only thing that will fix the economy is demand. Demand is created by consumers. The average consumer's wages have been falling over the last 30 years.....It may take just as long to fix it...There are no 'quickie' solutions.

If taxes drove anything, we would be awash in jobs and in a booming economy...We have steadily cut taxes for the last 10 years. It hasn't worked, because the average consumer (Lower middle class) does not benefit that much from tax cuts.

And you will not see demand grow until there is clarity with respect to our messed up tax structure, unless the next really big thing comes along as a game changer.

 

[FinanceDude]

I think this is just going to exacerbate the current biflationary environment. It's not going to create demand in the discretionary stuff people aren't buying, but it will help fuel the commodity inflation that's already baked into the overall picture.

That Congress refuses to do anything about the budget other than kick the can is less than helpful, too.

+1 A lot of people are excited about it, but I would say be careful what you wish for.........

 

[FinanceDude]

The only thing that will fix the economy is demand. Demand is created by consumers. The average consumer's wages have been falling over the last 30 years.....It may take just as long to fix it...There are no 'quickie' solutions.

If taxes drove anything, we would be awash in jobs and in a booming economy...We have steadily cut taxes for the last 10 years. It hasn't worked, because the average consumer (Lower middle class) does not benefit that much from tax cuts.

Is this really THE famous "Cut-throat" from years ago, the legend? If so, welcome back!

 

[MichaelB]

An interesting interview with Ray Dalio, a successful hedge fund manager CEO Speaker Series: A Conversation with Ray Dalio - Council on Foreign Relations

The developed world has too much debt. The Central Bankers are not trying to fix that, just lessen the pain and avoid a repeat of '30. We have a long, difficult trudge ahead.

 

[Cut-Throat]

And you will not see demand grow until there is clarity with respect to our messed up tax structure, unless the next really big thing comes along as a game changer.

I disagree, the average consumer (Median income is around $50K per household) does not consider tax structure when spending...They spend what's in their pockets...Their pockets have been thinning.

Is this really THE famous "Cut-throat" from years ago, the legend? If so, welcome back!

Thanks!

 

[ziggy29]

I disagree, the average consumer (Median income is around $50K per household) does not consider tax structure when spending...They spend what's in their pockets...Their pockets have been thinning.

The average consumer is more concerned about whether or not they will keep their job, and whether they can keep up with inflation in the essentials like food, energy and health care even if they do. That's not an environment conducive to freely spending some of their excess cash flow.

 

[donheff]

Is this really THE famous "Cut-throat" from years ago, the legend? If so, welcome back!

Yeah, welcome back CT.

 

[eytonxav]

I disagree, the average consumer (Median income is around $50K per household) does not consider tax structure when spending...They spend what's in their pockets...Their pockets have been thinning.



Thanks!

And what's holding down wages and job growth. To me, the answer is uncertainty (taxes/deficit/regulations) and I'll throw in the fed as well.

 

[ziggy29]

And what's holding down wages and job growth. To me, the answer is uncertainty (taxes/deficit/regulations) and I'll throw in the fed as well.

Avoiding specific politics here, this is what really frustrates me about how both parties in Congress are addressing this. They seem to think the other side's plan to regain budgetary sanity is damaging to the nation and the economy, but neither side seems to understand or accept that the ongoing uncertainty created by their perpetual intransigence and can-kicking might be *more* damaging to the employment picture, to consumer confidence, to investor confidence and to the nation's credit rating.

(Not looking for a political argument about who is wrong or right -- just saying that I think a refusal to meet in the middle somewhere and put *everything* on the table is really harming us.)

 

[eytonxav]

Avoiding specific politics here, this is what really frustrates me about how both parties in Congress are addressing this. They seem to think the other side's plan to regain budgetary sanity is damaging to the nation and the economy, but neither side seems to understand or accept that the ongoing uncertainty created by their perpetual intransigence and can-kicking might be *more* damaging to the employment picture, to consumer confidence, to investor confidence and to the nation's credit rating.

(Not looking for a political argument about who is wrong or right -- just saying that I think a refusal to meet in the middle somewhere and put *everything* on the table is really harming us.)

Yep, its infuriating

 

[Bimmerbill]

So, how do we take advantage of the QE3? Refinance mortages or other consumer loans? Like someone mentioned, can mortgage rates go down further?

Borrow money cheap and invest?

 

[nbw888]

So, how do we take advantage of the QE3? Refinance mortages or other consumer loans? Like someone mentioned, can mortgage rates go down further?

Borrow money cheap and invest?

Invest in precious metals and metal miners. Bernanke basically indicated that they will do whatever it takes to keep the economy afloat. Real interest rates are negative, and will be until at least 2015. It is now RISK ON for commodities. Don't miss one of the biggest run ups (and one day the next insane bubble) in history.

 

[FinanceDude]

So, how do we take advantage of the QE3? Refinance mortages or other consumer loans? Like someone mentioned, can mortgage rates go down further?

Borrow money cheap and invest?

Refi if you can or need to. I still think real estate is depressed value-wise. Low interest rates and depressed real estate values could make for opportunity.

The Fed can print all the money they want, eventually they will have to "pay the Piper". They are kicking the can down the road like Congress is doing. I think at some point we will have inflate our way out of all this, and that will be ugly. Food and gas prices will remain high.......

 

[Texas Proud]

So, how do we take advantage of the QE3? Refinance mortages or other consumer loans? Like someone mentioned, can mortgage rates go down further?

Borrow money cheap and invest?

I hope mtg rates go down further.... I did not refi a month or two ago when they were down... my wife was out of town and I delayed... hoping it pays off...

 

[MichaelB]

I hope mtg rates go down further.... I did not refi a month or two ago when they were down... my wife was out of town and I delayed... hoping it pays off...

With the new Fed announcement it is unlikely rates are going up soon.

 

[ziggy29]

With the new Fed announcement it is unlikely rates are going up soon.

One potential side-effect of this on employment: It could actually make the unemployment situation worse as some retirees who hoped they could "tread water" with terrible rates on savings for a little while may have to throw in the towel and look for a j*b until they get more than 1% on savings and CDs again.

 

[Fermion]

Invest in precious metals and metal miners. Bernanke basically indicated that they will do whatever it takes to keep the economy afloat. Real interest rates are negative, and will be until at least 2015. It is now RISK ON for commodities. Don't miss one of the biggest run ups (and one day the next insane bubble) in history.

I just noticed this today. The one stock I have that is not an index fund is FCX (a copper and gold mining company). I bought it earlier this year at around $32 and today it is $43. Can you say "Thanks Ben!"