EconoMonitor Highlights: Base Jumping

In the wake of a divisive U.S. election, factions within each party disagree on how to address the looming fiscal cliff, driven by a vocal base. Meanwhile, the eurozone periphery and core stumbled onward like two mismatched friends in a three-legged race, to place a new metaphor into currency. Ed Dolan argues for a more […]

QE3 Will Work if it Shifts Expectations That the Fed Will Tolerate More Inflation

Beyond the straightforward mechanics of QE3 (i.e., the Treasury and MBS purchases), the Fed’s impact on expectations is key. The guidance indicated that support would remain in place until the economy is well in their clear. By aggressively pushing on bond yields, and more importantly, promising to maintain that effort, Bernanke and Co. definitely had […]

QE3: Buoying the GCC

The Economonitor’s QE3 week is perfect timing as we’ve been thinking a lot about the effects of the latest bouts of global monetary stimulus on the Middle East and North Africa – as summarized in part of our omnibus MENA quarterly presentation. We argue there that even though EMs and to a lesser extent frontier […]

ZIRP and QE: Central Bankers’ Narcotics of Choice

Singer Robert Palmer was “addicted to love”. The world is now addicted to low interest rates. Central banks also display signs of acronym-o-mania, an addiction to acronyms: ZIRP (Zero Interest Rate Policy), QE (Quantitative Easing) etc. Following the global financial crisis, policy interest rates in the USA, Europe, UK and Japan were reduced sharply. The US Federal […]

DEMYSTIFYING QUANTITATIVE EASING

It is “QE Week” at EconoMonitor and here’s my contribution. No, we aren’t celebrating either the Monarch or the ship. We’re talking about the Fed’s Quantitative Easing. I’m going to discuss the basics of QE and explain why it’s Much Ado about almost Nothing.

Earnings Multiple Expansion, QE and the Fed

Source: Bloomberg Over the years, I have described secular bull and bear markets as long periods of earnings multiple expansion and compression (respectively). What is the impact of the Fed’s QE on the P/E compression that began when the market peaked in March 2000 or October 2007? Dave Wilson of Bloomberg points us to Gina Martin […]

Hard to be Easing

The United States Federal Reserve’s decision to undertake a third round of quantitative easing, or QE3, has raised three important questions. Will QE3 jump-start America’s anemic economic growth? Will it lead to a persistent increase in risky assets, especially in US and other global equity markets? Finally, will its effects on GDP growth and equity […]

How Long Can These Markets Run on QE ?

Today marks the end of the month and quarter. Hence, it is a good time to look over the key economic and market data, and try to assess where we are in the overall cycle. The data itself suggests several contradictory factors are driving markets. Durable goods orders — those big ticket items like autos, washers, and […]