No QE3?

CaptHenway

Does this mean that QE3 is now less likely, and that the dollar will get stronger?

linky

roadrunner

They shouldn't read too much into the Dec +200K jobs and 8.5% unemployment rate. If seasonal factors are taken out (such as temp holiday hires) as well as
a shrinking job participation pool, those numbers could be well off. There's always a question of who is really buying these bonds.

It's also unusual for the COT commercial dollar net short position to remain at record levels such as the +50K currently seen. The big banks have 9.35 short ICE
future's contracts on the dollar for every long bet that they have. The ratio peaked on the 12/13/11 report at 9.8 as is slowly falling. Even during the Lehman failure of
September 2008 the highest this got was +35K net short and a ratio around 7.5 to 1. By late September 2008 those numbers fell off to <25K net short and a ratio .
These dollar futures ratios are unsustainable. The commercials seem to agree as they've been adding shorts and removing longs over the past 3 weeks. Yes, the dollar
is comparatively strong to the Euro. But the big banks are betting strongly against the recent trend continuing. QE continues regardless of what to currently call it. The only
debate among govt, FED and Treasury officials is whether to tell Joe Six Pack or not. So far, they've decided it's better not to tell him.

The FED and media haven't paid any attention to the 2011 M2 and MZM increases of better than 9%. Even M3 increased by >3%.

roadrunner

jmski52

Of course QE3 is being done. $62 Billion to Europe, for starters. And there's an election coming up. Big incentive for QE4, QE5 and some real stimulus, too.

cupronik

What I don't understand is how can the unemployment rate drop when the number of newly created jobs didn't rise substantially and the number of those who "quit looking for work" rose even higher; they're still capable of work and should not be figured as a lowering of the labor pool.

As David Stockman said (way back in Reagan's first term - 30 years ago), "Nobody knows whats going on with all these numbers." I might add, "Today's numbers are multitudes larger!"

mhammerman

"...how can the unemployment rate drop when the number of newly created jobs didn't rise substantially"

Well, I don't think that it is book cooking so much but it is very deceptive to the casual observer. It happens from time to time such as the census worker hires for the 2010 census, the McDonalds hire program, and the recent seasonal spike in delivery people/holiday workers to name a few. The recent job creating extravaganza was seasonal employment at low wages but...a job is a job. The stock market didn't bite though, it ignored the reported spike.

It will be interesting to see how the book keepers deal with it when the loss of the delivery/holiday jobs is blended in with the current and ongoing loss of jobs with benefits. Will unemployment rise to 9.2 again or will there be some kind of asterisk by the next jobs report, maybe something like Imputed Employment to keep that number around 8.6 or so? Now when that unemployment number is goosed downward with the 200,000 military jobs that are going to be lost and the civilian side of that component is lost as well, then what will we see reported? All these questions but one thing we do know and that is that the admin is going to spray sunshine where it can so the answer to Quantative Easing 3...YEAH BABY! QE described

It was peculiar last weekend. As I was shopping, I was suprised by the absence of shoppers at the normally packed venues like the supermarket and the Target store...barely a dribble of shoppers. The up close to the door parking spots were easy to come by after church on a Sunday, whodathunkit. Was the Thanksgiving/Christmas last gasp of the casual consumer and the end of the rope for their descretionary income...is it time to pay the bills now?

That is all. Please return to your regularly scheduled programming.

pf70collector

62 Billion to Europe? Probably more since they are issuing over $600 in Eurobonds that their banks are not lending out but instead are putting the money back into Eurobonds.

cohodk

<< <i>Of course QE3 is being done. $62 Billion to Europe, for starters. And there's an election coming up. Big incentive for QE4, QE5 and some real stimulus, too. >>




Europe has $62 Trillion in public and private debt. This "liquidity" represents 1/10th of 1 percent of outstanding debt. Yawn.

roadrunner

<< <i>62 Billion to Europe? Probably more since they are issuing over $600 in Eurobonds that their banks are not lending out but instead are putting the money back into Eurobonds. >>



What we're not seeing are the off-balance sheet currency swap lines that the FED is currently doing with the EU. Those are very significant, as are all the other behind-the-scenes
liquidity injections that we aren't allowed to see.

57loaded

<< <i>And there's an election coming up. Big incentive for QE4, QE5 and some real stimulus, too. >>



i think seeing that the stimulus has already done nothing, more of it (the QE I and II way) would only backfire for a re-election. all that matters in the white house is 4more years and NOTHING else. IMHO

mhammerman

"...and NOTHING else"

Exactamundo!

derryb

Yes, gotta stay one step ahead of the EU.