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Started By
Message
QE3
Posted on 9/13/12 at 11:35 am
Posted on 9/13/12 at 11:35 am
Lower coupon MBS purchases and extending low interest rate language to mid 2015.
Looks like my S&P ceiling call just got blown out of the window.
ETA: Just looked at the details, $40B a month till $500B. Pretty modest actually, market spiked than came back down.
Looks like my S&P ceiling call just got blown out of the window.
ETA: Just looked at the details, $40B a month till $500B. Pretty modest actually, market spiked than came back down.
This post was edited on 9/13/12 at 11:40 am
5
Posted on 9/13/12 at 11:39 am to BennyAndTheInkJets
Dammit. This will drive the dollar down and oil up.
Posted on 9/13/12 at 11:55 am to AUtigerNOLA
Not necessarily, even though the oil curve is in contango until April 2013 we could still see inventories build up, the white house could also hit the SPR with the election coming up.
The dollar will depend on what the ECB does as well, not just this announcement. The US is far from a closed economy. Its actually a non fact that the dollar has depreciated since the QEs started, its actually appreciated against other currencies.
The dollar will depend on what the ECB does as well, not just this announcement. The US is far from a closed economy. Its actually a non fact that the dollar has depreciated since the QEs started, its actually appreciated against other currencies.
Posted on 9/13/12 at 11:57 am to BennyAndTheInkJets
Soooooo, the FED isn't boxing itself in with $600B this time and have decided to basically move toward a policy of open ended asset purchases?
Posted on 9/13/12 at 11:59 am to BennyAndTheInkJets
quote:
Its actually a non fact that the dollar has depreciated since the QEs started, its actually appreciated against other currencies.
Is this due to the tallest midget in the room scenario? Meaning we are weak, but less weak compared to others?
Posted on 9/13/12 at 12:05 pm to BennyAndTheInkJets
So what exactly does "buying mortgages" mean?
Posted on 9/13/12 at 12:05 pm to BennyAndTheInkJets
What is the end game?
A while back I read something about the FED working a policy of opened ended asset purchases until either Unemployment drops below under 7% or Inflation moves above 3%.
A while back I read something about the FED working a policy of opened ended asset purchases until either Unemployment drops below under 7% or Inflation moves above 3%.
Posted on 9/13/12 at 12:31 pm to Interception
Bernanke rocks. I absolutely love this market.
Posted on 9/13/12 at 12:42 pm to Dr Rosenrosen
I have mixed feelings about this move. The price of energy, food and the essentials we all need are going through the roof. Cost of insurance is sky rocketing.
My question is will the MBS they purchase be based on FHA qualifications?
I know that locally in my area that KB Homes has been selling homes to buyers who would not normally qualify for more traditional financing. They are providing initial financing through a subsidiary in Dallas. Are some of these mortgages going to sold off to the FED?
My question is will the MBS they purchase be based on FHA qualifications?
I know that locally in my area that KB Homes has been selling homes to buyers who would not normally qualify for more traditional financing. They are providing initial financing through a subsidiary in Dallas. Are some of these mortgages going to sold off to the FED?
Posted on 9/13/12 at 12:46 pm to BennyAndTheInkJets
quote:
Its actually a non fact that the dollar has depreciated since the QEs started, its actually appreciated against other currencies.
I feel like it has appreciated against other currencies like the Euro(although the euro is worth more but has dropped considerably since last year) because of the Eurocrisis. I thought QE is artifically stimulating the economy. Are they not pumping more money in the economy? Because if so the dolllar goes down, as Im sure most on here know. The plan is for them to buy up $40 bill of mortgaged back securties. With what? Bonds?
This post was edited on 9/13/12 at 12:48 pm
Posted on 9/13/12 at 12:49 pm to OnTheBrink
quote:
So what exactly does "buying mortgages" mean?
Buying Fannie, Freddie, and Ginnie mortgage backed securities in the open market, probably from mortgage originators (the banks that package the mortgages into a security).
Posted on 9/13/12 at 12:50 pm to Blakely Bimbo
I hope they buy a bunch of the bullshite awful MBS which are stacked with loans required under the CRA
buy your own bullshite government, let the private market keep the loans with actually qualified buyers
buy your own bullshite government, let the private market keep the loans with actually qualified buyers
Posted on 9/13/12 at 12:53 pm to Blakely Bimbo
quote:Not necessarily, but if I was positioning a portfolio I would put a higher probability that these prices go up rather than down. Transmission mechanisms from the Fed are dynamic as well, most of the material price run-up after QE2 was just market speculation.
The price of energy, food and the essentials we all need are going through the roof.
quote:
My question is will the MBS they purchase be based on FHA qualifications?
Yep, only agency mortgages through originators. Don't know about the specfic homes you're talking about in Dallas.
Posted on 9/13/12 at 12:53 pm to BennyAndTheInkJets
quote:
Buying Fannie, Freddie, and Ginnie mortgage backed securities in the open market, probably from mortgage originators (the banks that package the mortgages into a security).
So that in turn does what? Bail out the homeowners?
Excuse my ignorance on this, just trying to undertsand.
Posted on 9/13/12 at 12:56 pm to AUtigerNOLA
quote:
Are they not pumping more money in the economy? Because if so the dolllar goes down, as Im sure most on here know. The plan is for them to buy up $40 bill of mortgaged back securties. With what? Bonds?
It's printing money, yes. But the world is in a global currency depreciation race as well. Also, most countries are very dependent on Europe and China which have more problems than the US. Its the "cleanest dirty shirt" scenario. We have problems but their relatively small compared to the rest of the world.
Posted on 9/13/12 at 12:57 pm to OnTheBrink
NO bail out - The fed is purchasing the mortgage from the banks (to hold as an investment), in turn providing the banks with additional funds to continue making loans.
Posted on 9/13/12 at 12:58 pm to OnTheBrink
quote:
So that in turn does what? Bail out the homeowners?
Raises MBS prices and lowers mortgage rates. The Fed's old transmission mechanism was buying mortgages, lowering the mortgage and financing rates, and in turn unemployment was lowered (there were several other steps but I'm simplifying).
That mechanism is broken, but still has some value.
Posted on 9/13/12 at 12:58 pm to hedgediver
quote:
in turn providing the banks with additional funds to continue making loans.
Which there may or may not be a demand for.
Posted on 9/13/12 at 1:02 pm to Shankopotomus
quote:
buy your own bullshite government, let the private market keep the loans with actually qualified buyers
The Fed =/= The Government
Bernanke is as disconnected from politics as a Fed President can possibly be, he didn't do this because its an election year. Bernanke is also the only real leader this country has had in over a decade.
Posted on 9/13/12 at 1:02 pm to Janky
To Benny, Hedge, Janky - 
I think I understand a little better now.
I think I understand a little better now.
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