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Is QE3 Coming Soon?

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  • Description

    RBC Capital markets chief U.S. economist Tom Porcelli argues QE3 will happen during the second half of the year.

  • Duration 4:16
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It's while the call for more fed stimulus is getting louder and our reserve vice chair Janet Yellen who fed presidents.

Came forward saying they could support more quantitative easing our next guest believes QE3 will become.

A reality -- selling is RBC capital.

Chief US economist Tom.

After what we heard today in really kind of tell us about was gonna happen are you changing your position.

On these split 5050 of QE3.

No we still believe QE3 will happen in the second half the year.

It was pretty obvious though from Bernanke's discussion that it's probably not going to happen at the June meeting we think here instead it was the August meeting at play.

I think -- when you've just look at those sort of all of what Bernanke said today.

It's eating start a very different tone than what we saw on his post FOMC press conference so.

I think we were not the least bit surprised from that perspective -- but I think what got people excited over the prospects to see some discussion on QE from the chairman today.

The fact that you have as you mentioned you had a number of fed officials including yelling we would consider a core member of the Fed.

She was out last night in and made some very I would he was extremely dovish comments so I think that got the market pretty excited about a but I think what you have to keep in mind is.

You know he's the chairman of a committee he cannot come out and unilaterally say we're gonna do QE -- -- this would not be the form for that.

Okay but here's the thing and you know and Janet Yellen those comments that she may have lesson of the Boston economic I mean she's got his ear.

And she's a gun that was making the comments and being very bullish about it as well as if Lockhart -- so that tells me that we could see something in -- -- -- that we're gonna get some -- even a change of language.

Was in the markets -- top.

Oh I think you could get some sort of change in the -- for sure but I think in terms of actual asset purchases it seems unlikely -- will get that in June -- -- That's not why not.

2% unemployment -- -- -- Yet a lot I can aiming -- to that list that not only do you have the just job growth that has completely just gotten crushed over the last few months of inflation that's rolled over Europe is an absolute -- so those in the three hurdle for you can check off but there's one hurdle that remains -- equity market.

The equity market at thirteen twenty you cannot sell QE3.

With the equity market hovering around here just remember after.

-- if you actually have yet the S&P was up 12100.

I'm not suggesting that -- -- -- it began to you but.

If we market holding up around thirteen funny -- environment where the the chairman the Fed in general wants to start -- -- get into the data QE.

Iliescu of this -- you look back sued the days of President Carter.

When you have a lot of stimulus going into the economy then you have a Ronald Reagan came in office an amazing amount of inflation I remember mortgage.

Mortgages were thirteen 1415%.

Do you think that we can be heading in that same direction.

Now considering that -- -- to be talking about -- more money more money more printing.

Yeah I think -- nothing conversation to have for another day you know that's the stuff probably -- three to five year out of not further -- conversation.

It's different part of the conversation that but what the world -- I think is interesting is -- Bernanke I think just before he wrapped up today made the comment that.

You know he thinks it's sort of interesting that.

A lot of the market believes it'll be difficult for an exit out of this I think it's interesting that he thinks -- -- we're crazy for thinking that.

You have a balance sheet that's exploded you have in -- tools at best to try to absorb those excess reserves.

I think is a completely fair idea to worry about -- so sort of amused and eighty befuddled by the chairman's comments.

-- before I let you go I do wanna ask you this -- Treasury Secretary Geithner or Ben Bernanke were to somehow get more involved in some kind of financial away with -- -- problems what would they do when your opinion it.

I don't think -- I that's to me is I'm a conversation should happen I don't think that there's much more they can do them -- to.

Already been done and that's extending swap lines -- the Fed put in place.

So in terms I know there's been some chatter about you know the Fed may be buying European debt I think that that's not a conversation that is.

Even going to pass through the lives of any reasonable fed member.

All right top or -- thank you very much homicide -- -- talked his best known as we hear from Bernanke himself thank you thank.

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