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Strategies & Market Trends : The Residential Real Estate Post-Crash Index-Moderated -- Ignore unavailable to you. Want to Upgrade?

To: Horgad who wrote (17569)	4/19/2011 9:48:36 AM
From: Les H	Read Replies (1) \| Respond to of 119360

That downgrade of US credit also scared some doves: McTeer wants to raise interest rates blogs.forbes.com Bullard: not too late to end QE2 early nasdaq.com --------------------------------------------------------------- Macquarie Sec to Fed: Wrap up QE2, run miles away from QE3 Below is a verbatim transcript of his interview with CNBC-TV18’s Udayan Mukherjee and Mitali Mukherjee. For the complete details watch the accompanying videos. Q: What were your takeaways from what the Standard & Poor’s (S&P) had to say about the US and what ramifications it may have on liquidity for EMs like ours? A: There are two watch words out there now for global markets - the first one is inflation and the risk on that side have been ratcheted up in the last week and the other one is of course debt. That is what S&P’s statement really focused on last night. I suppose aroused that sensitivity in relation to investors particularly in EMs about debt weightings and the potential for the US to face an even higher interest bill, debt servicing bill on its stock of debt in the event of a downgrading. A negative credit watch doesn’t necessarily mean that a downgrading will follow. I have defended a couple of them successfully in the past against downgrades. I am not sure I want to be defending this one though, this is tough. Given the argy bargy about the lifting of the debt ceiling for July 1, it is going to add to those sensitivities as we move forward. There will be a very mixed outcome for EMs with both of these concerns, on one hand inflation and the other debt. Q: The S&P warning comes at a time when the Fed is going to make up its mind on whether they want to do a QE3 or not as QE2 expires. Given the already fragile and precarious state of the US balance sheet, do you think they will persevere or go ahead with QE3, given that the S&P is already issuing a warning? A: I would be running 100 yards or million miles away from QE3. I would be trying to wrap up QE2 quick smart now. They need to get that exit strategy happening sooner rather than later. The very big risk for the US Fed is that they get caught with concerns about debt on one hand and on the other inflation and inflation pressures start to see yield’s rising in an unwieldy way and as they try to actually sell stocks or securities back into the market. We shouldn’t be talking about QE3; it should be stopping or ending QE2 and the exit strategy beginning. moneycontrol.com