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Ben Bernanke defending the -- -- money policies today.
In a semiannual testimony to congress saying it'd help boost the housing and auto sectors dining out with economic outlook -- -- -- -- a senior US economist at Deutsche Bank securities tropics you get.
Humphrey Hawkins testimony right why why they use that term that they like citation name for whatever reason I get the something -- aren't around allocate their employer -- -- curious but Don usually this is a non event that a lot more people were focused in on.
Bernanke today -- that's.
Dissension if you will among voting members of the FOMC about this -- asset purchase program.
-- -- -- come to reports he was quantitative.
Easing especially because of what -- -- the stock market welcome back right.
Absolutely so was that the Fed has said -- firing with both barrels in terms of purchasing 85 billion dollars of securities.
-- month some treasuries some are mortgage securities.
And we thought everything was continuing in that direction -- -- the last two fed meetings December.
In January how we thought we learned that this camp with the merging -- hawkish camp.
Of folks out where voters on the committee who were not comfortable with the program.
And showing some signs that that -- that we could be backing away from QE.
That that the market's not buying it Brittany came in every one today earnings day today yes.
Definitely show that he's that towing the line in -- that the hawkish contingent which is really the core of the committee it's the chairman Bernanke vice chairperson yellen.
Also the New York fed president that -- and that's the core of the committee and they are showing that that they are nowhere near.
That the point where they're ready to us are backing away from -- if you look at -- graph parallel of the stock market performance vs the Fed activity buying these assets these.
Mortgage back securities treasuries just over the mr.
quantitative eating easing in -- latest cycle and you didn't have virtual.
Parallel holiday that you can see I mean the stock market has benefited as he said tremendously.
Has the Fed's.
Policy benefited anything else I know we had some good economic data points -- -- stocks clearly in the Q and what we had the hint that maybe there'd be less QE.
Stocks -- in response.
Also the housing market likes QE.
We generally helps financial assets up by driving down interest rates so -- got to refinance your home.
Mortgage or Iran at lower the interest rate on that alone or credit card you benefited from quantitative ease at some point as the other -- half to -- rock.
But I'm getting at is your outlook for inflation how the risk -- this with all of this money printing at some point -- Short if lucky and I -- any easing forever.
Then certainly we can lead to an inflation problem to this point.
We haven't had an inflation -- so that the tricky part will be.
It's like that eating candy right.
More is better until you get the stomach ache.
And so that the delicate balancing act will be for the Fed to know when the time is right to start pulling back -- -- -- that that the punch policy analogy -- and the Fed has.
Given us the indication it's watching unemployment -- -- target when unemployment falls to what six and a half percent.
What do you think what kind of timeframe does that equate.
Well I think six and a half percent on the unemployment rates going to be a long ways off I don't think it's the 2013 story -- the 2014 stories so I think they'll start.
Backing away on -- but not stop the program later this year we could look for termination may -- -- your -- I -- finalists -- stubbornly high.
We -- -- at I don't know I should say great a positive believe -- that an economic data points -- new home sales soaring 16%.
The Case Shiller Index.
Year over year six point 4% gain in prices that's the consumer confidence rebounded more than expected in February.
Can credit the -- for these things well the Fed is part of the story low interest rates are helping the housing recovery.
-- without a doubt.
In -- those home for that recovery in home prices that that adds up in consumers' pocketbooks so.
Housing on a national basis is about seventeen trillion dollars so home prices are not only recovering but accelerating right.
That has a very real impact on the company -- as dual mandate as they call for the -- price control and full employment.
Hanging in there doing a great job with keeping inflation in check and -- getting back this problem of unemployment.
Is that -- out of -- wolf I mean is it hot and we know Bernanke's been very vocal.
What Washington Bernanke -- -- that other non out of tools and they can as long as they continue this purchase program than they are further easing monetary policy.
Okay let's talk about the sequester Bernanke today warning it could create a significant headwind for economic recovery shaving about a half a point off of growth in him but -- -- -- -- should rebound by the latter half of -- here so.
Really does that put -- perspective that we shouldn't be so concerned about.
Especially given the magnitude of the cuts minuscule cuts right by comparison to the broad budget compared to the I have absolutely compared to the broad -- -- compared to the tax increases we saw the beginning of the year of the sequestration is much smaller.
That being said this economy is only chugging forward -- -- very slow pace so.
But you know.
Every little bit ways it down furtherance of the sequestration.
Will again further slow economic growth of how much weight how many start asking -- put on the camel's back until finally break extent us sort out do you think Republicans are NO.
Went out not -- any tax increases.
I Democrat you know it it's a -- politicking going on sift through it sorry -- look under the but for me.
If you look for short so that your total impact this year is about 45 billion dollars yeah they tell -- 85 but really it's about half that.
Much I think what will happen is on March 1 it will begin to kick in but those federal employees need a one month notice before they can be furloughed so that will.
That will be slow to kick in.
By the end of the month congress passed the sit down and figure out how to fund the government.
From march through the -- the fiscal hear what legacy are which has without them they -- -- out resolution absolutely and so I think through that continuing resolution.
They will somewhat watered down the sequester -- We shall see Robert not a great conversation thanks for coming tonight thank you -- --
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