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Lord Abbett Fixed Income Strategist Zane Brown gives his opinion on the Fed’s indecision regarding quantitative easing.
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-- brown partner.
Fixed income strategist at -- -- -- what did you take from that statement or at least parts of the state but we've done a bomb -- from DC.
I think both the fixed income in the equity markets are likely to be disappointed.
I -- we are tired of the debate in Washington in congress the last thing we expected.
Is this level of intense debate within the Fed were used to more leadership from the Fed.
And now if they really can't collectively decide what they want to do especially.
In -- in that in the face of sequestration which is going to be more fiscal drag the 2% payroll tax which is fiscal drag.
You know you're really entering a period of great uncertainty in terms of economic growth he would have thought that they would at least.
Focused on that.
That and also.
And during the most recent meeting we got the announcement of a negative GDP for the fourth quarter you thought that all would that you would have thought that -- been formed the Fed to.
-- -- in the direction of providing more certainty of accommodation at least until some kind of economic threshold is approached.
Right I agree with you EU EU want these people to have a little bit more clarity -- what they're doing.
Because now it sounds like they don't know what to do.
And then you start to worry about the exit strategy right because that's a concern for everyone how to -- get out of this in unravel this without making a total mess.
Well that certainly is a concern it shouldn't be concerned probably in 2003 -- that's probably more in 2050.
That it is an extraordinary.
Concern because.
Always in the past whenever.
You had an -- -- change in fed policy he started with short rates going higher and you had an inverted yield curve.
We're likely in this scenario to have exactly the opposite because everybody knows how many long term securities the Fed has.
And -- when they approach time to change policy all of a sudden -- we're gonna say willow -- keep the away from long term treasuries and you could have a steepening -- the yield curve.
Not in new version.
But at least say we have some -- in -- that look we may end up winding down the purchases even in.
The unemployed unemployment situation hasn't improved significantly as the first time I've really heard that.
Do you think that's the case that we can't hang on for ever we can't have QE forever until this unemployment rate gets where they want to.
Well unfortunately I interpreter a little bit differently and it suggests to me that there -- -- give up on this before they actually make visual progress yeah yeah their stated objective of reducing unemployment so.
That's a little bit of a concern we certainly don't want the Fed to lose their battle to improve the economy and reduce unemployment but they're basically suggesting.
Now we might stop this before we actually see proof that we've actually made significant progress that's a concern.
I could argue that they haven't made that much given the amount of money that's been reported but anyway the same -- --
