operation twist extended, but no QE3?

[errolanderson]

FOMC decision just released . . . .

operation twist extended until year end,
meaning U.S. interest rates will remain
low for a long while.

but no money printing QE3 mentioned.

market reaction?
is there an impact?

[bduke]

Errol.... IMHO this extension is basically buying more time for the
economy to grow.

The impending US election is probably impeding any significant changes
re stimulus or austerity.

Regarding money printing QE3, quantitative easing is balance sheet
leverage, normally a tool to counter deflation.

The Fed can use its increased leverage to buy securities and thereby
keep interest rates low, but rates are already extremely low.

While QE increases leverage and debt numbers, it does not put money
into circulation. It is "electronic money" which is recapitalizing the banks
so they can lend.

Problem is the housing market is only slowly reviving, and the banks are
keeping the Fed money in reserves as insurance against further write
offs.

The new Basel regs are also increasing capital requirements, so the
banks are not stimulating as the Fed had hoped.

Ergo, I expect marginal effect in the market.

I also expect many corps are becoming more efficient and
technologically tooled, therefore employment increases will also be quite
slow.

I could be wrong.... Bill

[cottonpicken]

At this point in time he doesn't have to worry about
short term treasuries there is demand because of
europe and general weakness everywhere so luckily
he can sell the short term stuff and buy the long term
which has weak demand.

When people wake up to the fudged inflation
numbers,the worthless credit default swaps and the
realization the debt may not be paid back-the bubble
bursts.

[parsley]

The US economy is near-blinded by a derivative
cataract, soon ripe, and no surgeon with skills.

[errolanderson]

bill, cotton, pars . . . .

always enjoy your comments.

bill . . . you have described the
mechanics, cotton . . . the bomb and pars
. . . is preparing the medical team.

[wilagro]

And I think they're ALL full of beans.

[sumdumguy]

Just about when you think you have it figured
out, beware the kick in the a$$.

[errolanderson]

china's factory data was lowered again
last nite. this is the 8th straight
month of slowing activity. may pressure
the grains today.

ethanol is now in-collapse. crude broke
below $80 this morning. corn may be
affected despite the current u.s. heat
wave.

errol