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Kathy Lien | October 21 2010 5:02 EDT
Over the past few weeks we have been focused on the question of whether the Fed will increase stimulus. Now that another round of QE is all but certain, the new question becomes how aggressive will the Fed be?
One Fed President has provided clues on what he thinks the Fed should do come November.
Fed President James Bullard has laid out his preferred stimulus plan. If you recall, Bullard was the Fed official that previously said “more easing is not obvious” but his latest comments show that he has joined the dove camp and will be supporting a very specific plan for boosting the U.S. economy. He wants the Fed to buy assets in $100 billion increments with no specific size after the November FOMC meeting. These increments are small but leaving it open ended would give the central bank the flexibility it needs to continue the program for as long as necessary. He sharply disagrees with the calls for “big bang” purchases. Most of the Fed officials who have called for large scale purchases are not voting members of the FOMC. Voting members such as Duke and Pianalto have been far more skeptical about the effectiveness. Bullard also indicated that he does not expect the FOMC to change the “extended period” language in the statement which would have been very bearish for the U.S. dollar. Based upon the market’s reaction, investors are not impressed by the second version of QE. There is a good chance that Bullard will be spot on because dissent within the central bank could lead to a compromise between the members of the FOMC that support more stimulus and those who oppose it. By leaving the purchases open ended and letting the market know that the size can be increased or decreased at anytime buys the Fed time and gives them the flexibility to adjust the size based upon the U.S. economy’s reaction.
Company : www.kathylien.com
Website : http://www.kathylien.com
About :
Kathy Lien is an Internationally Published Author and the Director of Currency Research of FX360.com and GFT. Her trading books include the following:
1) Second edition of the highly acclaimed, “Day Trading and Swing Trading the Currency Market: Technical and Fundamental Strategies to Profit form Market Swings (2008, Wiley).”
2) The internationally published, “Day Trading the Currency Market: Technical and Fundamental Strategies to Profit form Market Swings (2005, Wiley).”
3) Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game (2007, Wiley)
4) High Probability Trading Setups for the Currency Market E-Book (2006, Investopedia)
As Director of Currency Research, Kathy is responsible for providing research and analysis for GFT. She also runs an FX Signal Service BKForex Advisor, with Boris Schlossberg – one of the few investment advisory letters focusing strictly on the 3 Trillion/day FX market.
Kathy is a “Trader First, Analyst Second.” She publishes both technical and fundamental research reports, market commentaries and trading strategies. A seasoned FX analyst and trader, Kathy has direct interbank experience. Prior to joining GFT, Kathy was the Chief Strategist of DailyFX.com and worked in JPMorgan Chase’s Cross Markets and Foreign Exchange Trading groups using both technical and fundamental analysis to trade FX spot and options. She also has experience trading a number of products outside of FX, including interest rate derivatives, bonds, equities and futures. She has taught seminars around the world on day and swing trading the currency market.
Kathy is also one of the authors of Investopedia’s Forex Education section and has written for Tradingmarkets.com, the Asia Times Online, Stocks & Commodities Magazine, MarketWatch, ActiveTrader Magazine, Currency Trader, Futures Magazine and SFO. She is frequently quoted by Bloomberg, Reuters, the Wall street Journal, and the International Herald Tribune and has appeared on CNN, CNBC, CBS and Bloomberg Radio. She has also been on a few episodes of Wall Street Warriors, hosted trader chats on EliteTrader, eSignal and FXStreet, sharing her expertise in both technical and fundamental analysis.
Many people have asked how Kathy has managed to achieve so much at such a young age, but if you consider that she graduated New York University’s Stern School of Business at the age of 18 in 1999, she actually has a wealth of experience.
