FOMC part 2: FED did panic...... They are now doing 'open ended' bond buying

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From the Floor: Sterling at a crossroads, China in focus — #SaxoStrats

Foreign exchange markets continue to be characterised by low volatility, says Saxo Bank's John Hardy, but GBP is approaching an interesting inflection point at 0.90 versus EUR. Meanwhile, industrial metals are lower following a cautious speech by Chinese president Xi Jinping.

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Squawk / 13 September 2012 at 17:08 GMT

Steen Jakobsen

Chief Economist & CIO / Saxo Bank

Denmark

FOMC part 2: FED did panic......

They are now doing 'open ended' bond buying - no finite time or amount...hence this will go down as QE Extreme.

I remain of the view this is final phase...

I'm long stocks, gold, short us dollars next 24-48 hours but ..on the anniversary for LEHMAN... tonight could be the day where FED did too much.

Low yield and monetary policy stopped having an impact two years ago, tonight could be the night where after the rally low rates no longer impact stock and risky asset - the only cheap asset right now is: money ...every time this has been the case in history it has ended in bubble and tears.

My expectations for FOMC: http://www.tradingfloor.com/posts/fomc-will-do-more-not-less-211139245

Trade of the day for FOMC: http://www.tradingfloor.com/posts/trade-of-the-day-fomc-position---bought-gold-oct-2012-at-1825-319161083

Safe travels,

Steen

5y

bvlaerhoven

totally agree. This is the bridge too far. Maybe even the FED themselves know/acknowledge as 40bio monthly is not the blowoff amount they could have done.

5y

bvlaerhoven

On the other hand, buying MBS is the better way to do this. Best of the worst?

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