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kenny1703 (< 20)

To QE or Not to QE

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March 14, 2012 – Comments (0)

There is a one-day FOMC meeting tomorrow where the #1 topic of discussion will be “to QE or not to QE.” Should the FOMC print more counterfeit money out of thin air? The answer certainly lies in how badly the banksters want it, and if inflation is creeping up. The good thing for the Fed is that as it watches inflationary pressure – it doesn’t bother to count prices that go up.

In anticipation of Tuesday’s meeting, JP Morgan says the following:

We expect a relatively uneventful outcome following tomorrow's FOMC meeting. We do not expect any balance sheet actions, nor do we anticipate any strong signaling that such actions are likely to occur at a subsequent meeting. Because tomorrow's meeting is a one-day meeting there will be no new economic projections or funds rate projections, nor will there be a post-meeting press conference. To the extent there is any news it is likely to come from changes in the wording of the FOMC statement. We believe there will be only a few minor tweaks to the statement. Perhaps the most significant is a change to the wording of the inflation discussion, to acknowledge that headline inflation has been pushed higher by energy prices. (My editorial comment: the Fed doesn’t count energy prices because they are always & forever “transitory.”) There could be some fairly small adjustments to the growth description: a little more cautious about consumer spending and maybe a touch more upbeat on the labor market, while still noting that the unemployment rate remains elevated. We expect no change to the late 2014 rate guidance. Lacker dissented at the last meeting and will probably do so again tomorrow. A case could be made that Williams will cast a dovish dissent, or even Raskin or Tarullo for that matter; though we think it's more likely that we see no dovish dissents tomorrow.

There “may” be some action in the morning; however, the late morning into the afternoon should be very slow. If anything unexpected is said in the statement, the market could be wild for 10-15 minutes after the release. If not, it will be as slow as the last FOMC statement.

Trade well and follow the trend, not the so-called “experts.”

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Larry Levin
Founder & President - TradingAdvantage

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