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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: THE ANT who wrote (91625)	6/18/2012 10:08:11 AM
From: John Vosilla	Respond to of 217830

My sense is that nominal GDP must show realistic signs of stabilizing near 4% before the Fed would be willing to risk raising rates. The current embedded cost of U.S. debt markets is close to 6% and nominal GDP must grow within reach of that level if policymakers are to avoid continuing debt deflation in corporate and household balance sheets. While the U.S. economy will likely approach 4% nominal growth in 2009’s second half, the ability to sustain those levels once inventory rebalancing and fiscal pump-priming effects wear off is debatable. The Fed will likely require 12–18 months of 4%+ nominal growth before abandoning the 0% benchmark. Fed has kept rates this low longer than Gross expected understanding too much slack and overcapacity near term that out of control inflation isn't a risk anytime soon? .Bernanke also playing off our reserve currency status and productivity gains in his perceived 'risk free bet'. I bet he is targeting jobs growth first and obviously that is lagging everything else. In most markets in the US where prices have corrected to fair value or even overshot I'd bet we have another round of shadow inventory needed to be absorbed and that will be over in two years... There is too much capital floating around desperate for yield. Higher end overvalued RE in select markets probably goes another wave down with higher interest rates and a sustained period of capital loss in the financial markets IMHO...