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From The Desk Of Laura Wheeler

December 6th, 2010 10:24 AM

Fed Chief Bernanke took to the air waves last night on 60 minutes, not mincing words about the economy, employment, and inflation. His most sobering statement revolved around unemployment, which in his words may take 4 to 5 years to recover. He was not shy about the possibility of QE3, going beyond the 600 billion already on the table (QE2). Reading between the lines, the Fed Chief seems willing to do what he feels is necessary to get the economy growing again. In my opinion, the Fed is outside of their “box” only because our fearless leaders in Washington cannot lead. Fiscal policy to stimulate the economy is the recipe yet our leaders cannot even agree on continuation of the Bush tax cuts and/or unemployment benefits being extended. Go figure. No news today but I thought you might like to see Gail’s color. The article from Bloomberg on “your underwater mortgage, etc.” is worth a read. Technically, helicopter Ben taking about working the printing presses overtime has given bonds a boost and stocks a little egg on their face. 10 year note is up 16/32’s to yield 2.96%. Mortgage backs are plus 12 to 15/32’s, depending on the coupon. Not a bad way to start the week. Technically, the chart is forming a neutral inside day. This pattern indicates that a strong directional bias is not in the cards. At least not for the moment. That’s because Friday’s trade had no follow through this morning (bearish on Friday afternoon/bullish reversal today). With most studies leaning towards the bears, best bet is to use an rally to your advantage. Reason being is that as we have seen so many times before, mortgage back rallies are like dogs chasing cars, they just don’t last long.

Posted by Laura Hatcher on December 6th, 2010 10:24 AMPost a Comment (0)

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