11/03/10 ECONOMIST REPORT.

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Presentation transcript:

11/03/10 ECONOMIST REPORT

Economic Indicators Recap

Mid-Term Elections Generally, Republicans seen as more favorable to investors and business. So far, the GOP has gained 60 seats in the House and 6 seats in the Senate, with 11 and 2 open seats remaining, respectively. Some claim gridlocked political system will be beneficial to market, others say it could hurt the market. Republican win already priced into stocks.

QE2: Description What is quantitative easing? Benefits Risks FOMC decides to purchase Treasury securities. Billions pumped into system, increasing liquidity and inflation. Rarely used. Benefits Increases inflation rate. Lowers interest rates. Augments international exports. Risks Hyperinflation. Currency devaluation in global economy. Another bubble. Failure.

Dollar/Stock Correlation

QE2: Today’s Announcement Since 2008, the Federal Reserve has purchased $1.7 trillion worth of assets. Market expected announcement of $500 billion QE. Federal Reserve will purchase $75 billion of securities per month over the next 8 months, for a total of $600 billion. In addition, $300 billion from QE1 will continue. Volatile market fluctuations after announcement end at post recession high of 11215.13.

Looking Ahead… 11/04/10 : Employment Situation. 11/15/10 : Retail Sales. Watch how the market settles over the next two days as this week’s events are fully processed. Market will be looking for new catalysts to provide next bullish or bearish trend. Success or failure of QE2 could have profound impact on U.S. economy.