Are central banks throwing a progressive party?
You know, the kind of party where folks travel from house to house feasting and drinking and enjoying the proffered hospitality. For years pundits have speculated about what will happen to the U.S. stock market party when the spiked punch bowl of quantitative easing is gone. Last week, they got an unexpected answer: Come on over to Japan’s house. (more…)
Late last year, McKinsey & Company released a report that took a closer look at “the distributional affects and risks” of quantitative easing (QE) and low interest rates. In other words, who was affected by QE and low rates and how? (more…)
2013 came to a close with the US Federal Reserve finally putting investment markets out of their misery.
When Ben Bernanke, the chairman of the US Federal Reserve, started talking about the tapering of quantitative easing (QE) last May, the markets reacted badly. It was not that anyone expected bond buying by the US central bank to carry on buying government and mortgage-backed bonds at the rate of $85bn a month for ever, it was just that there were serious doubts about what an end to QE would bring. May’s speech suggested the taper would start in September, but it was put on hold, allegedly because of concerns about the budgetary battles on Capitol Hill. That was another surprise, but not an unsettling one. (more…)
Really?!
Okay. Okay. If you’ve been trekking through Siberia or Patagonia for about a year, then maybe it surprised you to hear the minutes from the Federal Reserve Open Market Committee meeting showed it expects to begin tapering Quantitative Easing (QE) in the coming months.
Baseball great Yogi Berra once said, “In theory there is no difference between theory and practice. In practice there is.” He may have been on to something.
Last May, Fed Chairman Ben Bernanke introduced the idea the Fed’s economic stimulus program, known as Quantitative Easing (QE), might be ratcheted down sooner rather than later. The concept, that easy money – the Fed has injected about $2.75 trillion into financial markets during the past five years – could soon be behind us, threw global markets into a tizzy. (more…)
The past few weeks have seen markets react to apparently even the slightest hint that their current stimulant of choice might just start to be restricted in its supply in the USA. The Quantitative Easing (QE) programme has certainly been a catalyst to push more money into the equity markets and has provided a level of confidence that was definitely missing just three years ago. However, the market fears that any sudden withdrawal would erode all of this swiftly and we could return to those fretful and volatile markets of that period.
QE or not QE …. Make up your mind?
Last week, investors and traders obsessed about the U.S. Federal Reserve (Fed) and the possibility it might begin to end its quantitative easing (QE) program. The Fed began its first round of quantitative easing during the financial crisis in an effort to prop up the American economy. In general, quantitative easing helps increase money supply and promote lending and liquidity. Investors’ fears about what may happen when the program ends were apparent when, despite abundant positive economic news, major world stock markets lost value last week.
