 |
| Click for a larger version, honey! |
13-SEP
FOMC Statement – Calculated
Risk
QE3 $40 Billion per Month, Extend Guidance to
mid-2015
Redacted Version of the September 2012 FOMC
Statement – The
Aleph Blog
QE3 is on! – Wonkblog
/ WP
QE3 – A Brief Analysis – PragCap
The Fed Announces Additional Easing – Economist’s
View
FOMC Projections and Bernanke Press Conference – Calculated
Risk
Longer-term inflation expectations spike in
reaction to the Fed
– Sober
Look
QE3: Fed to buy bonds until the economy
recovers – Nordea
Fed launches aggressive easing – Danske
Bank (pdf)
When a central banker almost says that bubble
is good – ASA
The Fed will buy over half of all new agency
MBS – Sober
Look
A Quick Note on the Fed – Krugman
/ NYT
14-SEP
The day after: lingering thoughts and questions
about QE3 – alphaville
/ FT
The Fed’s QE3: No Exit – naked capitalism
Everything you need to know about the Fed’s big
move – Wonkblog
/ WP
(audio
17min) BizDaily: US Quantitative Easing
– BBC
(mp3)
The Fed is feeding again - 40 billion freshly
minted dollars every month, for as long as it takes to get Americans back to
work. But will Ben Bernanke's big bazooka really do the trick?
15-SEP
QE market reaction – Thomson
Reuters
table of
historical asset class price changes after QE
Fed's selling volatility into the market will force
mispricing of risk
– Sober
Look
Buying mortgages results in a direct sale of
volatility (prepayment risk) to the public. Extending the rate guidance to “mid
2015” represents an implicit sale of volatility – the Fed is giving up the
option to hike
On Bernanke's Voyage To The End Of The Monetary
Policy World – ZH
Morgan Stanley:
If the Fed has not acted consistently
over the past few meetings, how will market participants infer future action?
Has it adapted a hierarchal mandate in which it will work first to reduce
unemployment until it reaches some barrier of distaste on inflation? Or was the
phrase “in the context of price stability” snuck in to trump policy activism?
BofA Sees Fed Assets Surpassing $5 Trillion By
End Of 2014... Leading To $3350 Gold And $190 Crude – ZH
QE3: How long before the Fed’s stimulus helps
the real economy? About six months. – Wonkblog
/ WP
More Fedding – Krugman / NYT
The Fed asserts its independence – Free
exchange / The Economist
The Fed May Be Pumped Up – Mark Grant / ZH
Agency MBS spreads collapse, durations shorten,
swap spreads follow, and fundamental valuations go out the window – Sober
Look
Michael Woodford: ‘I personally would have gone
further but what [the Fed] did is definitely a step in the right direction.’ – Wonkblog
/ WP
How Could QE Work? – Krugman /
NYT
we actually can hope that the Fed’s new policy
will boost housing as well as operating through other channels, and therefore
that it can act more like conventional monetary policy in fostering recovery.
Where the Fed Stands on Monetary Policy – Atlantic
17-SEP
Now We Wait – Tim Duy’s Fed Watch
17-SEP
Now We Wait – Tim Duy’s Fed Watch
I would like to say that the Fed acted in time
to prevent a broader slowdown, but the manufacturing data gives me pause. While
I certainly see nothing that convinces me that further slowing is inevitable,
the ongoing global weakness and the fiscal cliff provide me with plenty of
uncertainty heading into the final months of 2012.
How much will lower mortgage rates help the US economy? – Sober
Look
It is quite clear that even though lower
mortgage rates are helpful to economic growth, another 50bp (or even larger)
reduction in rates will have only a marginal impact on hiring and growth.
Draining duration from the markets – Sober Look
Who cares if the market's overall duration is
shortened? The answer is that ultimately it is the institutional investors such
as corporate and state pensions who will get hurt the most by this process.
These investors have long-term liabilities and will now be increasingly
struggling with the so-called "duration mismatch". They also have a
return hurdle.
Q&A – The Answers – PragCap
Hating on Ben Bernanke – Krugman
/ NYT
QED: QE3 – voxeu.org
As the Fed announces a third round of
quantitative easing, this column argues that it is unlikely to work. Investment
and hiring are held back by huge uncertainty over the long-term outlook and the
stimulus provides a monetary bridge over the election gap but little more.
The Fed Has Failed, Failed, Failed – of
two minds
Bernanke knows QE3 will fail, but he doesn't
really care. His job is to protect the Fed's political power and the banking
sector's wealth. He is doing an excellent job at his "real" job while
failing catastrophically at his PR job of reviving the real economy and
employment.
Kotok on QE: The Bible says… – Kotok /
The Big Picture
Let me be very clear. I disagree with this Fed
policy move. It was not my first choice. I think the Fed is now playing with
fire. But our job is to manage portfolios and not to make policy. If the Fed is
now in QE infinity and if the Fed is now buying duration from the market at a
rate faster than the market is creating it, then we want to be on the bullish
side of that trade.
Does the August Inflation Spike Mean QE3 was a
Mistake? – EconoMonitor
Can The Fed Kill Two Birds With One Stone? – EconoMonitor
The Weekly T Report: Heart, Head, Gut – TF
Market Advisors
The QE3 Announcement * Will Stocks Respond the
Same Way as they did to QE2? * Treasuries? * Commodities? * Volatility? * Final
Answer
QE to Infinity does its work on our market
stress indicators –
Saxo
Bank
This week's installment of Stress Indicators
shows the lowest stress levels seen in its history and probably since the debt
crisis started…inflation expectations are back on the rise.
Effects of QE3 – Econbrowser
The One Chart To Explain The Real Effect Of QE3 – ZH
Barclays: bad economic news may not seem so horrible,
if it is perceived to raise the probability of a market-friendly monetary
policy response…But now that the monetary policy responses to economic weakness
are in place, markets have had the good news.
Is QE3 Yet Another Stealth Bank Bailout? – naked
capitalism
So the Fed looks to be completely on board with
this sort of rent-seeking. Perhaps the central bank believes its charges need
more in the way of earnings to strengthen their balance sheets, even though
history shows they prioritize executive bonuses over building their equity
levels. Or maybe Bernanke was being completely truthful when he said QE3 was
targeting employment. After all, fatter bank margins will preserve their
staffing levels.
Getting Off the Zero Bound – Tim
Duy’s Fed Watch
I am thinking it would be very bad to be still
at the zero bound when that recession hits.
A few more QE3 thoughts – Free
exchange / The Economist
QE Extreme - When the Fed really put its neck
on the line – Saxo
Bank
What are the limitations of the Fed’s power? – Fabius
Maximus
They are independent only so long as they
retain the confidence of a majority in Congress. The Fed’s leadership has
to worry about institutional legitimacy of the Fed should they adopt radical
new policies that earn the enmity of one of the two major parties. That’s
the ultimate limitation on their actions.
Diminishing market reactions to unconventional
monetary policy – ASA
What's More Important - Growth Or Policy? – ZH
Morgan
Stanley: while monetary policy can
provide a temporary boost to valuations, in fact over medium-term horizons, it
is in fact growth that dominates the drivers of equity performance.
Central bank nostalgia and an equilibrium – alphaville
/ FT
JP Morgan: It is excess rather than gross money supply
that generates upward pressure on asset prices or prices of goods and services
in the economy.
Barclays: Investors seem to misremember history;
monetary policy was not the only driver of the rallies following QE2 and
Operation Twist. (good charts)
Winners and Losers from Monetary Policy – FED
/ The Big Picture
The Fed seeks to support the economy as a
whole, but some redistributional effects are unavoidable.
QE3 and OMT: No panacea but window of
opportunity! – Saxo
Bank
Three big
open issues: Fiscal cliff, US financial regulation, Eurozone
When Money Dies – ZH
Bob Janjuah
/ RBS: The Fed and the ECB are directing
and attempting to orchestrate the grossest misallocation and mispricing of
capital in the history of mankind.
19-SEP
A Flaw in the QE Expectational Transmission
Mechanism? – PragCap
The Three Costs of QE3 – The Reformed
Broker
The QE Aftermath: What it Means and How it’s
(not) Different – CFA
Institute
Do the benefits of an open-ended QE program,
which looks like it could be massively mispricing risky assets, justify such a
dramatic action by the Fed? I am personally not convinced either way, but I am
sure it will be a case study in many ways going forward. For now, I am
optimistic that positive news in the housing market, modest job improvement,
and strong corporate balance sheets will continue to build momentum with the
aid of QE.
Seasons of the Bernanke – EconoMonitor
This is the third summer in a row that we have
watched commodity specific sectors make a mid-summer bet that a Central Bank
somewhere would intervene to attempt a “jump start” to the world economy.
Could QE3 Cause the Fed to Go Broke? – EconoMonitor
Don’t call it a target: Fed buys wiggle room
with qualitative goals – MacroScope
/ Reuters
No Pretense – The Big Picture
Since 2007 our analysis has suggested the
likelihood of economic outcomes that most have considered unlikely: significant
and ongoing monetary inflation, policy-administered currency devaluation,
substantial global price inflation, and an eventual change in how the forty
year old global monetary system is structured. Most observers have viewed such
outlooks as tail events – highly unlikely, unworthy of serious consideration or
a long way off. We remain resolute, and believe last week’s movements in Frankfurt and Washington towards perpetual
quantitative easing confirmed and accelerated the validity of our outlook.
The Fed’s Best Rationale for QE3 – BB
Hawks Are Marginalized – Tim
Duy’s Fed Watch
Fed hawks are largely marginalized. Their views have not and will not have a
significant impact on policy making.
They will only appear to have an impact on policy if the data signals
that a policy shift is needed. Given the
current set of policymakers on the Fed, the hawks will only have a voice if
Bernanke is replaced with one of their own.
And that is when it would get interesting, as I am not sure that the
moderates would follow a hawkish Chairman.