Where do you think we are going?
The question of where our economy is heading is, of course, a broad one that cannot be summed up in a short blog post. Moreover, I do not even expect the same answer to be given by each commenter. However, as we approach the Fed's September 17-18 policy meeting that includes cutting back the QE (bond buy-back programs) on their agenda, I thought it would be engaging to view the opinions of our monkeys here on WSO.
One of the main topics that I am sure many of our monkeys have been following recently is the performance of the labor market. One of QE's whole point was to maintain a low interest rate to boost investments that would lead to a falling domino of consequential effects on the other parts of the economy including the labor market. This past Friday, the highly anticipated results of unemployment rates were released to the general public. The unemployment rate of 7.3%, on a brief glimpse, seems like promising news to the American economy. However, in scrutiny, we notice that the unemployment rate's fall was largely due to not people finding jobs, but the reduction in size of the labor force. With creation of approximately 74,000 jobs less than expected, the prospect seems discouraging.
In addition, the Syrian crisis has been creating large volumes of heavy trading since two weeks ago. With US readjusting their attack plan on the eve of the Senate full-voting, we can only wonder where we will be heading with this "justice-filled" attack against Assad, if it actually happens.
With so many factors to consider, the Fed will be making a difficult decision this upcoming policy meeting. Hell. Cutting QE might even be pushed back again.
What do you think?
Will they be cutting back on the QE? Currencies of developing nations are going to get pounded and some of them are getting crushed anyway.
I think they will cut back, but it will be a VERY VERY light cutback, like $10BN less...= nominal.
What will be interesting as currency wars unfold, is which countries start experiencing hyperinflation first, and what the response is.
Honestly it's all a very big convoluted mess, as usual :-)
In your opinion, who would you guess would be hit hard on currency first? one or many
Kinda want to see your thought process behind it, because im lost
I have no clue...just based on what I've read and the weaker than expected jobs #, I'd anticipate that the FED will try not to rock the boat too much with tapering QE....
As far as currencies are concerned, your guess is as good as mine...it probably depends on a combination of 1. which economy starts gaining any semblance of traction first and 2. how fast their respective central banks are to tighten.
Hopefully they cut back very lightly and just say "5B reduction a month until QE ends." Then it will eventually just fade away. I don't want it to be a 15B cutback, followed by everyone anticipating the next "cut" or "increase." I feel that's where a lot of the anxiety is coming from.
And keep in mind, the entire global market is following this.
I agree there will not be a big cutback in the near future.
http://www.reuters.com/article/2013/09/06/us-usa-fed-george-idUSBRE9850…
Some people are angling for a 15 Bn cutback.
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