Sydney ACC 21:57 GMT October 11, 2014
QE and S&P
Your view may be too simplistic. The effect of artificially low interest rates generated by QE is much broader than just affecting US equity markets. At home for instance you have to consider the recent appreciation of property prices.
There are three points I would like to raise.
1. If the US economy continues to grow especially at a pace greater than the rest of the world and corporate profits rise there is no justification for a collapse in equity prices providing investors are rational.
2. As a consequence of low US interest rates money has leaked out of the US to other countries. Australia and NZ especially benefited from ultra low interest rates and still do. AUD now represents 1.8% of IMF reportable foreign currency reserves. Apart from this week exaggerated overnight movements in AUD over recent years have been constrained compared to those previously. Funds may be repatriated to the US.
3. Whereas USD became the funding currency of choice through QE that role may now pass to the euro therefore funds will flow to the USD from the euro. Remember we are still a long way from the euro's nadir against the USD recorded in 2001 of sub 84 cents.
dc CB 20:51 GMT October 11, 2014
QE and S&P
social-networking giant traded to a record high, COO Sheryl Sandberg sold 850,000 shares.
Buy Buy Buy the FDip
It's just another Opportunity to get on board the gravetrain.
Baroon's
dc CB 19:54 GMT October 11, 2014
Monday Monday
Reply
The top financial brass from the Treasuries and central banks of Britain and the US are to take part in a war game, behind closed doors in Washington on Monday, to test how they would handle another Lehman Brothers-style banking crisis .
The chancellor, George Osborne, and Mark Carney, the governor of the Bank of England, will stay on at the end of the annual meetings of the International Monetary Fund and World Bank to head the UK team in the exercise, which is to be held at the offices of the Federal Deposit Insurance Commission � the organisation that guarantees US bank deposits.
They will be joined by 11 others, including the chairman of the Federal Reserve, Janet Yellen, the US treasury secretary, Jack Lew, and regulators from Britain and America, for a test of how the authorities would respond to two possible scenarios � the collapse of an American bank with UK operations and the failure of a British bank with operations in the US
Six years after Lehman�s crash, US and UK play out next financial crisis
GVI Forex john 18:30 GMT October 11, 2014
QE and S&P
OK let's start at the beginning. Up until this year the Fed had been buying no less than $1tln a year in fixed income instruments, thereby injecting a net $1tln in cas into the economy each year.
This year they started to "taper" progressively the level of their net asset purchases at each FOMC meeting. On October 29 it is expected the monthly asset purchases will have been reduced to zero.
This massive injection of cash into the system has driven market interest rates to near zero. Those looking for yield have been driven into stocks. This correlation can clearly be sen on the chart.
So now what happens with the Fed asset purchasing program coming to a halt?
One problem is that all that cash that has been injected into the economy is going to stay there, Presumably at some point they will start to let their investments simply mature. Perhaps at some point they will start to absorb cash by selling their investments but that is not on the horizon yet.
Bottom-line, the asset purchase program has been fueling the equity bubble. Higher U.S, stocks has been USD positive. Equity support for equities has started to SLOW, but not end.
I am not turning bearish the USD because of this because it is not news, but I will be looking for signs of any impact from this change in policy.
Anybody think this matters?
I love the chart because it illustrates clearly what some have been saying about the Fed impact on stocks...
dc CB 18:05 GMT October 11, 2014
QE and S&P
"Okay, so who the hell is Edward Quince? This is the pseudonym Bernanke chose to use while emailing messages to his associates, including Geithner and other higher ups during the financial crisis in September 2008. Why would he choose to do this? As a cover to his backdoor bailouts of AIG and others so his name wouldn�t be associated with these activities. The dirty laundry is contained in this story posted at ZeroHedge."
Dave's Daily ETF Digest
Meet The World's First "Undercover, Super-Secret Central Banker"
GVI Forex john 17:09 GMT October 11, 2014
QE and S&P
Maybe you have one?
Mtl JP 16:58 GMT October 11, 2014
QE and S&P
GVI Forex john 16:37 so what is the trade ?
Dillon AL 16:01 GMT October 11, 2014
Fed's Daniel Tarullo (dove)
Possibly John but he has too many outside interests
EG he is heavily involved with the Council on Foreign Relations is is kinda a grandiose forum for global economists to spout off and he also serves on the editorial advisory board of The International Economy and the Advisory Committee of Transparency International.
My guess is he thinks he should be saying things as he is probably looking over his shoulder at his next job
IE FED Governor. After all his term as on the FED board does not expire until 2022. Note Janet's term ends in 2018
Guys like this should give up all external posts imho
GVI Forex 15:46 GMT October 11, 2014
Fed's Daniel Tarullo (dove)
Reply
-- Worried about growth around the world
-- More downside than upside risks
-- U.S. has momentum
GVI Forex 09:43 GMT October 11, 2014
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