Fox Business
Expand
Browse All Video
Watch Live

You're watching...

Will Fed Start Slowing Purchases?

Details

  • Description

    Vining Sparks Economist Craig Dismuke weighs in on whether the Fed will slow purchases of bonds.

  • Duration 2:36
  • Date

Clips

Also in this playlist...

Latest Video

Auto-advance: ON

Auto-advance
View All

Transcript

This transcript is automatically generated

What we said earlier the hold sequester thing is going to be the big story that we get it will be but the other thing to watch is the Fed Chairman Ben Bernanke with some testimony on Capitol Hill beginning tomorrow and it's really starting to look like.

Not everybody is getting along and its Federal Open Market Committee so we bring credit got this new -- chief economic strategist and fox sports and say that because the Fed minutes.

Last week I guess -- some disagreement on when the party ends in the Fed.

-- gets rid of this so Boeing trade policy.

What do you make it because this could really be the big question for the markets here the next few months.

Absolutely and -- -- -- this afternoon.

You know there's we look at the minutes that were released last week it looks like there's four to five.

Of of the FOMC members are getting concerned.

And think that they -- need to slow purchases and there's there's several reasons why there's several ancillary -- reasons but one was.

Asset bubbles or to how they get out of out of this big portfolio they're creating.

And number three is this future caustic -- and this is something that's Anderson if you think about it.

If if interest rates start to go what it's going to be a double whammy for the federal government the first -- is they have a higher debt expense on on the outstanding debt.

The second is with the Fed know that when they're -- a lot of long long bonds what they no longer have interest income coming in -- that.

They can't pay it to the federal government that's gonna exacerbate.

The deaths each -- and we it interest rates go up to 2% for example right this.

The that expense would go up 25300.

Billion dollars a year we can't even cut 85 billion dollars apparently without bringing the country to its knees.

Diplomats this week's story then you have this on the sideline of that you also risk in the stock markets at thirteen nine and the Dow the fact that you know if again.

-- if the Federal Reserve slows those purchases of bonds are you referring to that.

If the stock market really pulls back and that takes away from people's confidence so putting all of that together group with with what you already said.

What -- think's gonna happen.

Well you know.

The stock -- get -- -- almost as excited about asset purchases that they Aegon does about NASCAR's Daytona 500.

It's we've seen as the Fed's gonna involve bonds each month we tend to see that the the multiple on the stock on stock indices trade higher.

When they're buying bonds and a big way we consider what we'll go up to fifteen to sixteen when they're not we see good on -- -- right so if they do continue to buy bonds and yeah I would expect to see stocks go -- result that if they don't expect some sort of started -- down.

We're still -- it's up for debate what's more strange getting excited about the asset purchase program -- the Daytona 500 but with that we thank credit -- you for your time today coming.

Load More