Opinion: Fed certain to act in November in a big way

October 11, 2010 by · Leave a Comment
Filed under: Opinion 

This is more information support a recovery that has lost its steam and the risk of a double-dip recession is increasing from possible to probable.  With the survey having a significant number of the respondents expecting more that $600 billion in asset purchase means we are going to see the U.S. currency debauch further.  We are facing deflation so they feel this inflation is a good thing until investors sniff out how much money we have in the system and price rise accordingly to adjust for the devaluation of the Dollar.

How long are we going to delay the pain in higher taxes and reduced spending across the board to get our house in order.  The more we delay it, the bigger the hole we have to dig ourselves out of.  Or the alternative is that we destroy confidence in our currency and all the pensions and savers in the country get the ultimate burn.   That means all your mutual funds, retirements accounts and the lot.  This is not going to end well.

CNBC – Following Friday’s disappointing jobs report, market participants are now virtually certain that the Federal Reserve will announce that it will resume buying assets at the conclusion of its November meeting and do so in a sizeable way, according to an exclusive CNBC Fed Survey.

Nearly 93 percent of the 70 respondents, including economists, fund managers and traders, believe the Fed will boost the size of its portfolio, up from 69 percent in the survey two weeks ago.

Of those who expect the Fed to move, 86 percent look for an announcement in November, up from 38 percent in the last survey.

Market participants forecast that the Fed will announce plans to purchase $500 billion in assets at the conclusion of the upcoming meeting, the first time the question has been asked.

Despite the $500 billion average, expectations for the November announcement span a range from $100 billion to as high as $1.5 trillion.

But the larger numbers are outliers, with 83 percent of respondents saying they expect the Fed to announce incremental targets for its portfolio size on a monthly or quarterly basis, rather than a single, so-called “shock and awe” strategy as it did in 2009.

In addition to a lackluster jobs report, the results follow comments from Fed Chairman Ben Bernanke and New York Fed President Bill Dudley last week widely interpreted as signaling that the Fed was likely to purchase additional assets. However, some regional Fed bank presidents have openly spoken out against the move.

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