It seems that the Federal Reserve's quantitative easing won't be as smooth as we have previously thought. Jamie Dimon, the CEO of JP Morgan Chase warned the "more disruptive than people think."
The Fed, which has been slowly raising interest rates for about a year and a half, announced last month that it soon would reverse course on another easy-money policy and start selling some its $4.5 trillion or so of bonds.The Fed has amassed more than $3.5 trillion since the financial crisis in Treasury and mortgage bonds in a bid to keep rates low and markets stable.
Dimon, who was speaking at a conference in Paris, said that markets could be in for a shock — simply because a sale of this scale has never happened before.
It seems as if there will be bumpy markets ahead.
“My takeaway wasn’t, ‘No one knows and it could be bad,’” David Bianco, chief investment officer at Deutsche Bank Asset Management, said during a Q&A with reporters. “It was like, ‘No one knows, and let’s not be confident on estimating the sensitivity.’”
What do you guys think of this? Is this yet another simple scare or is this something we should be looking out for. What might be the best possible outcome and what might be the worst possible outcome?
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