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Guggenheim Partners CIO Scott Minerd argues the likelihood of QE3 has increased dramatically due to the rise in the unemployment rate.
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-- you rich -- in DC it's got miners says all this could lead to more stimulus is the chief investment officer Guggenheim partners who joins us.
Now and that's so one of things like Scott QE3 as it's called to think pretty much it a done deal what will the Fed -- Well -- I think.
The the likelihood of QE3 increased dramatically today.
And given the low inflation rate and the very.
High unemployment rate I think the Fed now is probably getting concerned about being criticized.
For failing in its dual mandate.
And -- I think that doctor Bernanke will react to this and at some point here in the near future we're going to see and a new program.
From the Fed to help stimulate the economy.
So they'll go and they'll buy more bonds or whatever the mechanism is -- -- -- but what will the effect be.
Some say it's too late to do this is it or will that have the walk or can they still have the intended effect after all this time.
Well Carl you know the the -- they're looking for is to see mortgage rates come down home sales draws.
And help -- get the financial system on clogged so -- work better.
But you know it may be too late.
To really use that as the primary driver.
I think ultimately the Fed is now going to have to look at the inflation rate and say.
You know may be inflation is -- -- and if we get the inflation rate up high enough of around three or 4%.
That will cause people to spend money rather than save it.
And as a result that will lead the stimulus and I believe that's the direction were ultimately gonna go -- -- -- or trying to force interest rates any law or is almost -- ridiculous when you get up today but we're below one and a half percent on the ten year treasury note.
For the first time -- or 146 or something like that right now main point what do you make of that.
Well you know it's certainly -- time in the republic.
-- never in the history of the united states -- we had interest rates this low.
On treasury securities.
And it's basically telling us that the Fed isn't a liquidity trap.
That it is getting harder and harder to stimulate the economy -- Reducing interest rates.
And they're going to have to come up with some novel new ways to encourage growth is there anything 'cause the old tools are not working -- There anything you could tell people Scott that are going to weekend saying this is just brutal and -- look at all the numbers and getting.
I guess more more depressed -- -- -- -- gas prices have come down maybe that's indoor or is there or they're just no silver linings out there.
One you know it's interesting -- the most overlooked part of the employment report today.
What is the the household survey.
You know is a lot of people don't understand that that the establishment -- -- where we get the payroll job number from.
And the household surveys -- -- get the unemployment rate from.
But the household survey also comes up with a number of new jobs created.
And 422000.
New jobs were created based on the household survey.
That is a leading indicator for employment in the staff bushman -- survey.
So I actually think that between that growth and employment we're seeing in the household survey.
Reduction in gasoline prices the the improved purchasing power of the dollar.
Are all bode well for the US economy and while we're not gonna have skyrocketing economic growth.
We're not likely to go into -- recession and probably the the second and third quarter -- gonna look better than we expected to okay.
-- and that's a key because a lot of people have started to use the recession word today Scott -- -- is now no recession thank you Scott have a good weekend and thanks for coming on -- always appreciate it.
Thank you Connell from Guggenheim partners.
