All it took were a few poor earnings reports and a 2.3% slide (repeat, a 2.3% slide) in the...

All it took were a few poor earnings reports and a 2.3% slide (repeat, a 2.3% slide) in the S&P since QE∞ was announced for all 21 primary dealers to expect an expansion in the asset purchase program by year's end. Look for the Fed to add Treasurys to the $40B/month of MBS purchases, they say.

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Comments (10)
  • dctodd27
    , contributor
    Comments (119) | Send Message
    I remember reading an excellent piece not that long ago (cant remember the author, sorry) comparing the markets today to the US Forestry Service's Zero-Tolerance policy on Forest fires for the better part of last century. Basically the point was, by trying to prevent ANY forest fire, the government ensured even more catastrophic forest fires later on. I get the same sense here - if the Fed gets people to expect them to prevent ANY decline, when one does show up it will be bigger and more destructive than most expect.
    22 Oct 2012, 09:17 AM Reply Like
  • youngman442002
    , contributor
    Comments (5123) | Send Message
    Disgusting...this is sick....the Primary dealers want more and more and know they make a cut every time they buy and sell back to the Fed....what a joke the world economy has become....
    22 Oct 2012, 09:23 AM Reply Like
  • dieuwer
    , contributor
    Comments (2975) | Send Message
    If you can't beat them, join them!
    22 Oct 2012, 10:06 AM Reply Like
  • Moon Kil Woong
    , contributor
    Comments (13618) | Send Message
    The primary dealers are forced to buy this stuff and clearly they are issuing more than demand at lower rates than is appealing. The problem is that an increase in rates leads to only temporary demand increases but not permanent increases in demand which the US needs since its deficit constantly rises. When rates rise interest rates almost surely follow. If not, a collapse occurs as money expansion is curbed. The banks no longer take any risk. If the Fed rates rise a half a percent expect the banks to raise most borrowing 1% or more. Banks cease to become a solution this way. They are a problem.
    22 Oct 2012, 10:56 AM Reply Like
  • mweaver
    , contributor
    Comments (199) | Send Message
    2 percent mortgages?
    22 Oct 2012, 11:11 AM Reply Like
  • Whitehawk
    , contributor
    Comments (3121) | Send Message
    This is not a surprise: on announcing QE-insanity the Fed made it clear that its purchases would be "unlimited." The Fed must buy Treasuries (and the dealers and traders front-running the buying) - just as it has always followed. Nothing new here - move along.
    22 Oct 2012, 11:46 AM Reply Like
  • divinecomedy
    , contributor
    Comments (465) | Send Message
    And they call gold holders crazy........


    Show hand time is approaching.
    22 Oct 2012, 12:19 PM Reply Like
  • Paulo Santos
    , contributor
    Comments (36172) | Send Message
    There it goes, trying to find a vein again.
    22 Oct 2012, 02:52 PM Reply Like
  • Dirtydozen011
    , contributor
    Comments (63) | Send Message
    Throughout the year, they have been helping Obama get reelected with everything they have.
    It's no surprise such a thing would be published just 10 days before elections.
    What a lot these guys are....
    22 Oct 2012, 03:12 PM Reply Like
  • winningtrader
    , contributor
    Comments (2459) | Send Message
    Yes baby, bring it on ... the FED will be printing about $1 trillion per year, if they do that, which more or less will fund the budget deficit.
    22 Oct 2012, 03:18 PM Reply Like
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