The Fed started off a bit slowly in providing its promised $600 bil. of additional funds to the
financial system. It added only $11 bil. in the month of Jan. and is now well behind a sensible
straight line funding approach to meeting the $600 bil. target by 6/30/11. The Fed may simply
have followed a traditional pattern of either freezing or draining liquidity after the holiday
season, but if they are not planning to welch on the deal, I doubt there is a good reason for
holding off on stepping up the funding process straightaway. Otherwise, further delay could
add unnecessary volatility to the commodities, forex and capital markets. For example, further
delay in program execution could invite the major dealers to buy bonds and short stocks etc.,
only to reverse these trades when the Fed steps up to the plate again. With the global markets
now nervous about Egypt and oil transport security, it would be wise for the Fed to step in
this week with a significant round of Treasuries purchases.
I have ended full text posting. Instead, I post investment and related notes in brief, cryptic form. The notes are not intended as advice, but are just notes to myself.
About Me
- Peter Richardson
- Retired chief investment officer and former NYSE firm partner with 50 plus years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!
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