Out Fox The $treet

Basically in line with expectations. Adding together of reinvestments and the numbers come in at the high side around $900B and $110B per month. All in all, it means higher inflation and higher stock prices. Market may selloff some on the news, but any dips should be bought. Market remains cheap trading at only 13x 2011 EPS estimates of $90+. Statement from New York Fed : On November 3, 2010, the Federal Open Market Committee (FOMC) decided to expand the Federal Reserve’s holdings of securities in the System Open Market Account (SOMA) to promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate. In particular, the FOMC directed the Open Market Trading Desk (the Desk) at the Federal Reserve Bank of New York to purchase an additional $600 billion of longer-term Treasury securities by the end of the second quarter of 2011. The FOMC also directed the Desk to continue to reinvest principal payments from agency ...

Anybody following the markets know that everybody thinks the chances of a double dip recession has increased dramatically of late. Incredible considering double dips have only happened 3 times in the last 100 some years. Notable doom and gloom expert Roubini upped his estimate to 40% via a tweet yesterday. Why is there so much gloom considering the best indicator of all time signals that odds are nearly 0%? The Yield Curve has always been the best indicator of booms and busts yet they seem to get ignored all the time. During a boom, negative yield curves get brushed aside. During rough patches, they are assumed not useful this time based on the particular crisis of the time. The New York Fed produced these charts showing the predictive ability of the spread between the 10 year Treasury bond and the 3 month T-bill. The very positive yield curve predicts a virtually impossible chance of a double dip this time around. Notice how the chances of a double dip in the early '80s was n...