Chillin' out till it needs to be funded
A “humbling” of a President and an almost perfectly timed QE2 announcement from Bernanke asking for just $600 million till Q2 2011 at less than $75 million a month definitely means that the American Chug chug will now try and run an even pace without big government, in fact with gridlock here’s looking forward to some “ungovernable” intervals like the 10 month long healthcare debate which Obamacare could not get public approval of.
However on the financial commentary, firstly it is an admission by the FED that it cannot reasonably have any idea what to do and also that there is considerably less leeway for any bank to not use the resulting monies for credit or for churning in the Economic cycle as sooner “it may not be enough” than “we have exceeded our inflation targets”. However it is hardly likely to upturn the Greenback’s fortunes or brake the surge of gold. Oil in fact does become an immediate worry for everyone around the globe which G-20 may thank Bernanke for not going all the way.In our opinion an higher amount would have obviated that possibility of OIL prices going haywire but now that becomes a tactical worry for most oil importers esp as China is also clamping down on rare earths around the same time.
Back on the US economy, no nothing you would notice. Just normal lives would breathe easier and stats would show better growth instead of the monthly “hunchback photo ops” on the Jobs and retail sales numbers. Housing of course will be the most sensitive topic with even the GOP experienced in state bankruptcies in California and the rest.
Of course the GM IPO for $10 bln is definitely up and away now as also the treasury sale remaining on Citi, no changes brought about by the topic and the Dow has a healthier “fat cat” target for 2011. If the Fed hasn’t moved towards finding a higher fed rate, I think its ill advised.