CNBC has a crazy article today saying that Central Bankers around the world are thinking of buying stocks. Not now, but maybe in five years.
The Fed is NEVER going to end its QE bond buying program. It simply can't. You see the Federal government's budget deficit is so big now that there are not enough people in the world to buy enough bonds every month to finance it so the Fed is stepping in with QE to bridge the gap.
The Fed is boxed in. It must print money in order to finance the federal government's budget deficit. Since 2009 half the US government debt has been bought by the Federal Reserve. It's never going to stop QE.
The Fed has promised to print money now every month for the next few years to try to stimulate the economy. I really don't know how more debt and inflation will force companies to hire more people, especially in view of the fact that we have been doing this now for three years already and can't see any impact. It's not just me that's skeptical. Last week a Fed governor came out and basically admitted that the Fed doesn't know what it is doing and is now just hoping its action will mean something.
"The truth, however, is that nobody on the committee, nor on our staffs at the Board of Governors and the 12 Banks, really knows what is holding back the economy. Nobody really knows what will work to get the economy back on course. And nobody—in fact, no central bank anywhere on the planet—has the experience of successfully navigating a return home from the place in which we now find ourselves. No central bank—not, at least, the Federal Reserve—has ever been on this cruise before."
I just did this podcast with Dave Skarica of addictedtoprofits.net.
In this interview we talked about the Fed's new program for unlimited money printing and what it means for the stock market. We talk about the 9/1 up volume today and last week and what it means. Of course gold and Europe too!
All they talked about yesterday on CNBC was predictions for another Fed money debt printing operation today. Many people expect the Fed to announce that it will print money and buy bonds when it meets today. I don't know if they will or not. According to Reuters 65% of economists expect the Fed to make the plunge into bond buying today.
They say the Fed will do it because of the poor unemployment report of last month.
Last week several CNBC talking heads practically swore that the Fed will announce a massive quantitative easing money pump today when it releases its 2:15 PM FOMC statement.
Now people aren't so sure.
CNBC itself has this to say in its morning market update:
"Fed Chairman Ben Bernanke is likely to do little more than keep the door open to more easing when the Fed winds up its meeting Wednesday afternoon."
Hey did you know it is still earnings season? LOL!!! CNBC isn't talking that much about earnings reports and hyping them up anymore, because they are now focused on central bank action. I bet you haven't thought that much about earnings either, because now everyone is obsessed with tomorrow's 2:15 PM Federal Reserve announcement and wondering if Ben Bernanke is going to announce a new $500 billion dollar quantitative easing money printing bond buying operation.
Ron Insana said he would on CNBC. Steve Liesman loves the idea. So I guess that makes it true.
Yesterday the Federal Reserve issued an FOMC announcement and stated that it did not intend to make any changes in interest rate policy right now. In the statement they upgraded their economic forecast for this year saying that they now expect the economy to grow between 2.4% and 2.9%, which is better than the estimate they gave back in January for growth in the 2.2% and 2.7%.
Even if the economy were to grow at 2.9% though that wouldn't be enough to spur a huge improvement in the unemployment rate or make people really feel better.
This Wednesday (29 February), Federal Reserve Chairman Ben Bernanke is scheduled to deliver his semi-annual monetary policy report to the House Financial Services Committee. Last month, the central bank said that it would likely keep U.S. benchmark interest rates near zero until at least late 2014.
The United States Federal Reserve last held its Federal Open Market Committee (FOMC) meeting on 13 December 2011. (The next meeting will be held on 24 – 25 January 2012.) The key points of the last meeting were as follows.
•The FOMC’s overall assessment of the economic outlook has not changed greatly since the previous meeting.
•The FOMC expects the economy to expand at a moderate rate, with a gradual decline of the unemployment rate from the current level of 8.6%.
•Inflation is likely to hover around levels consistent with the longer-run mandate-consistent rate.
A few weeks ago the Federal Reserve Board changed its stance on predictions for U.S. economic growth in 2012, saying the economy should expand between 2 percent to 2.5 percent rather than as much as 2.9 percent.
Back on Nov. 2, the FRB raised projections for unemployment through 2012, and said the European debt crisis also poses a significant risk for the U.S. economy going forward.
The Federal Reserve is scheduled to announce its decision on monetary policy in a few hours at its 2:15 EST Federal Open Market Committee meeting. This has been one of the most widely anticipated Fed meetings I've ever seen because the Fed is expected to announce historic quantitative easing measures. There is speculation all over the map to how many billions of treasury and mortgage bonds the Fed will plan to buy.
I really am not expecting any big changes in the stock market this week. We had a big rally in the market that began in the first few days of September bring all of the major market averages into a very overbought condition by the start of the third quarter earnings season - and they have all remained this way last week.
Overbought conditions are resolved by the market either peaking and entering a new downtrend, having a sharp correction that shakes out weak hands and usually lasts 2-3 weeks, or by simply going sideways for a long-enough time to make the impatient sell out.