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And thank you very much.
So the Fed keeping rates it considerably.
Low levels effectively 0% and extending Operation Twist.
Is economic weakness ahead or will that help the situation.
It is time for a 352 guys two different opinions Carle worked on donuts is more bullish than most economists he is the senior US economist at Deutsche Bank.
Tom personality is the chief US economist RBC capital markets and is -- -- -- Carl let me start with you because.
I I get it from my notes anyway that you actually thought they were going to end Operation Twist today -- first of all you surprised.
That they didn't and secondly are you surprised at all of the way the market react because.
-- one would think if you thought that they were gonna an Operation -- the market would be up today -- -- wasn't.
Well I I like the analogy in the first segment about Christmas morning and that not quite getting to get you wanted.
I think a lot of investors were looking for -- quantitative easing.
Outright quantitative easing your balance sheet expansion from the Fed and that they certainly didn't get that today -- that could explain some of that debt.
I disappointment trade we were looking for them to -- -- -- twist program.
It seems from public comments over the last few weeks that that policy makers we're going to what.
Try to see if they could just hold policy neutral.
-- rather than an additional accommodation and -- they there that seems to have been a change in -- from their public comments from what happened that that today's meeting.
Now this -- is a relatively small dosage of medicine so it's not going to change.
How might economic forecasts have very materially.
I think -- which is bullish fire -- you say just that you save the economy you've come down a little bit.
All -- from 3% to 2.4 percent which is still pretty bullish.
Right 2.4 percent so that that is bullish relative to a lot of other forecasters including the forecast that the Fed published today but that is certainly not bullish compared to a typical economic cycle.
This is a very sluggish economic Recovery Act and that's reflected in our forecast.
-- OK look the Fed decision adds another -- -- 267.
Billion to what has already been about a 2.3 trillion in asset purchases.
It is what it is.
This is what the markets I hesitate to say stop quit because since this large scale asset purchase plan had actually begun along with zero interest rate plan.
We seen the market's only do better and better so is it a mistake simply to say hello.
-- economy so -- that's why they're doing it instead of saying well this must mean that equities are going to look a little bit better.
I think we have to recognize first starting -- why the Fed would even think that QE he would would or even twist.
-- have any positive bearing on the economic backdrop we we really haven't seen that play out in truth.
It's true that rates are historically low not not just because of the actions of the Fed -- -- So has been quite a flight to quality flying around but even with already historically low rates.
-- really making much of a positive dent on economic activity in other words economic activities are gaining a lot of momentum.
And for -- I think that's why we continue to come back to this very same idea.
You can announced twister if you leave -- the end of the day it's not a question of low rate stated I don't think we need rates to be much lower.
Other already historically low -- -- -- that the real problem of course is just an utter lack of demand and that's part of the deleveraging process and that's why we continue to think that.
Economic activity generally speaking we'll be.
Very we're very much on the low side.
We're looking in the second half of the year probably for closer to one and a half percent growth that's due confluence of factors but the bottom line for us is QE or twist.
Doesn't impact that you don't change fundamentals.
Carl -- did you try to change Tom's mind.
I think we're somewhat in agreement here -- obviously low rates help the economy fell lower rates should help but even more.
But the problem is that it's really not just sensitivity to interest rates at this point in time it's really this focus on what's happening with Europe and also the fiscal cliff sell off on the margin yes interest rates help but we really have to do something about the fiscal cliff.
-- hopefully reach some sort of agreement before we get to 2013.
I'd love to see something ahead of the election but I really don't think that's in the cards.
And certainly Europe is an ongoing problem to now the direct.
Linkage between Europe and the US in terms of export demand that's not that's significant.
-- but what we see the stock market swooning.
As a result of new information coming out of Europe whether it's Greek elections that are Spanish bank bailouts or whatnot.
All of that death certainly does weigh on economic confidence.
Among both households and businesses thing that economic confidence is low then now folks don't want to go up by big ticket items go -- or hire new employees.
People are still pineapple our cats cuts -- big ticket items thank thank you so much for joining us.
-- in the -- us -- we'll see you next time -- on the import sellers.