1. Fed will buy $40 billion of MBS a month (for how long?)

  2. Fed funds to be “near zero” until mid-2015

  3. Operation twist continues

  4. Other policy tools “as appropriate”

Bernanke is committed to stimulative policy for a long time, and he is willing to do weird unconventional stuff to encourage growth. SPX up about 0.4% on the announcement.

I know there are some Ron Paul supporters around here…

Good lord. Dow is spiking up 100 pts now… congratulations to long specs. But they better take their profits.


Frankie, how long do you feel low interest rates should persist after a credit bubble pop? I’m thinking about buying a mREIT.

Why are rates higher? Am I missing something here?

Inflation in the years soon to come. The bond market knows it’s a bad move by fed

Yay for more money from nowhere. Dollar declining, oil up, gold up.

Dollar actually went up, although inflation swap rates are higher.

How much did the tips spread change?

I’m not too knowledgeable about inflation securities, but just looking at “Inflation Swap” rates. The definition of Inflation Swap is “the Zero Coupon fixed rate leg necessary to build a par swap agains a leg on Zero Coupon CPI appreciation”. So it’s like a market rate for expected inflation. For 3-year, it was about 2.15% before the Fed. Now it’s about 2.2%.

You can find this on BB: USSWIT3 Index.

You can probably find the implied TIPS rate from these, but you will need to incorporate the Treasury rates.

This is repulsive. Okay, long equities are happy, the wealthy with sizable equity portfolios are happy.

But this has no impact on job creation. Unless people sell their portfolios and start spending.

The TIP ETF just zig zagged, to unchanged.

People on steroids end up with atrophy and decay. Just like this economy.

Well, nobody really expected the Fed to have a strong impact on the real economy anyways

Gee. At least my Bank of America stock is almost back to breakeven. Thanks Bernanke. I could sell a few shares and take a date to the Olive Garden.

How the CNBC app thought this isn’t important breaking news is beyond me, damnit.

John Deere Stock: 8/17/12 misses top line, surprise lowers full year guidance… plummets, and now look where it is again… what a joke. The Fed has got to put money is the ‘Consumer’s Pocket’.

Seriously, can anyone paint the ‘trickle down’ or the ‘linkage’ to QE3 and how it relates to actually creates real jobs?

[original post removed]

Uh…it’s not supposed to “create real jobs”, it’s to encourage deleveraging, refinancing, and stability of the monetary system.

From the Wires: on QE3

Bernanke: Goal is for better job market

Bernanke: Fed has a ‘Main Street’ policy to create more jobs

Bernanke: QE3 is a policy to help ‘main street’

Gee thanks, Ben, maybe I can sell my BAC shares for a couple lap dances. That’ll stimulate the economy.

Buying mortgage securities will stimulate the housing market, which will help reduces foreclosures. A low Fed Funds rate will keep bank borrowing costs low, which means businesses can borrow for low interest rates. All of this helps “main street” people.

It gets a little bit worrisome when the Fed does so much at once. This seems pretty unprecedented. Asset prices might get inflated and options for future stimulus are greatly diminished. However, it’s erroneous to say that monetary policy does not affect normal people.

He can say what he wants to but reality is the reasons Fed continues the policies are for the reasons I mentioned. We need to keep interest rates low until the economy recovers. Don’t expect obvious tangible benefits for the nest 2-3 years.

no idea how long.

but you should model it in immediately to see what happens.

US REITs should be in good shape though. thats my intuition. never looked into US REITs just Canadian, and I don’t like what I see despite Canadian REITs being a leading performer.