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And joining us now to help break down the latest comments from the Fed Chairman got Jeffrey Cleveland's Peyton regal senior economist.
And -- Morgan Lander of steeple Nicholas.
Chad yeah we just heard Bill Clinton say that Bernanke actually said one little -- -- bubble we might start pulling back some bond purchases at some point but it's certainly in the bottom in the markets at all why.
No because it's still a stimulus just because they modestly taper off -- asset purchase program they will be continuing to expand their balance sheet.
And they're going to be expanding their balance sheet well into 2014.
So market participants right now.
Know that the Federal Reserve is behind them and what they're looking for next is perhaps to transition from this liquidity driven rally.
Two more of an economic cycle and earnings driven rally of which we haven't seen as of yet.
You know Geoff but as we weren't looking -- that the Fed chairman's testimony is on the market like the fact that we're gonna get 85 billion dollars in bonds per month as long as we I guess needed Brinkley.
I don't want and he did kind of commit to hear -- and and acknowledge I guess I should say Jeff -- that.
-- seven and a half percent unemployment.
You know there's -- so much that monetary policy can do he did make that.
Concessions so jobs economy are you concerned.
No I I think get -- need the concession you made was the Fed can't solve all the world's problems.
But they're gonna continue doing what date they think they can't do and that's that 85 billion a month.
I think the market gets way too far ahead of itself.
Talking about tapering and what what pretty easily tell you today's they don't know whether -- taper it's gonna depend.
On the unemployment rate is gonna depend on the outlook for our prices for inflation and they just don't know yet.
That the question I cannot show that I thought was interest -- at one point in the Q&A was it could you taper before Labor Day in the markets in the really react to this.
When Bernanke said you know possibly.
But but all he really means there is if the employment situation improves as a sort of miraculously over the next couple of months then we could taper it's it seems unlikely to -- to get tapering.
Before the end of the year and Bob buying continues into 24 -- All right Chad what is the consensus expectation for when the Fed begins tapering vs what your forecast is for that.
-- consensus is probably around the beat the end of the year that they're gonna start tapering.
I'm looking for them to perhaps taper.
Perhaps Q1 of 2014.
Bought and 30 -- -- -- -- to 2014 twin fifteen consensus is by the year end of Tony thirteen.
Well well yeah -- XP consensus.
Is that there will taper.
Around the and -- 2013.
But that they'll continue to expand their balance sheet.
Well into 2014.
Our expectations that they'll continue to expand.
Perhaps that by June or July of next year.
OK so so certainly there's a there's that may be a difference of opinion here as -- what they're gonna start to taper off and and exactly what that amount might be especially the bond buying program.
The -- of the same time.
You know if you look at the city five billion dollars of what isn't -- for the stock market we're really have this in the full affecting the economy yet it seems like when it comes to housing jab that we've still got a little ways to go here.
Where you call a full.
Absolutely Cheryl the question that comes -- a lot from from clients is.
Is the stock market rally all due to fed easing is -- sort of fake.
Is it sort of cotton candy.
Sugar -- if you well.
Have I don't think that's the case if you look at the private sector there's about 66 and a half million more people employed today -- it was just three years ago the private sector.
But we need more of what you know we needed to see -- return -- -- what we're not there yet.
So you're right about that but we have made significant progress at.
I think that's what you see reflected.
In asset prices it shows that we've we've come a long way.
It's not fake it's it's not entirely fed induced rally.
And one thing I don't worry about is if they do taper -- they do you cut back from 85 billion to.
65 billion the wall is not going -- involved part helping equities will.
Pat -- go into a massive sell off base it looked.
We'll -- what do you think is the plan by the Fed here -- -- begin tapering until we see real economic growth thing we're nowhere near three and a half percent or 3%.
Dennis you -- completely is you completely correct about that okay with the Federal Reserve is really looking for is this fancy word that economists use public skate velocity.
Essentially that means that the economy is in full gallop and it's actually standing on its own merit.
We're far from that -- -- GDP growth rate of 2% is just not doing it and in regard to housing.
Like US than did previous question.
Housing right now is gradually improving like the US economy is gradually improving but it's far from.
Being -- -- -- self sustaining recovery so the Federal Reserve will continue to do what they're doing.
The market for that matter -- has been liquidity induced so it is highly caffeinated not only on the equity side -- but also on the fixed income side.
I think it's on steroids check -- let you must go let's check yes or no does it go for a third term.
I know he's not going to he's done courage equivalent.
Now let's go back to Princeton actual blowing them better -- connection where it goes to -- -- Jeffords Cleveland Delmon thank you so much -- adding that there.
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