Agoracom Blog

CNBC Reporting No QE3 … I Doubt It … The Real Danger Is A Delay In QE3

Posted by AGORACOM at 9:10 AM on Wednesday, March 30th, 2011

This CNBC guest and all the talking heads are making the case for no QE3. You should watch the video to understand their arguments and factor them into your decisions.

I personally find it hard to believe QE is coming to an end. Why? American small business continues to have no access to gazillions sitting in vaults of big banks, US housing is crashing (new home sales and existing home sales) and US consumer confidence is sitting at a 3-month low. If interest rates begin to rise from the lack of US bond purchases, things could get out of control pretty quickly.


The threat I do see comes from a delay in QE3. As things stand on the surface, Bernanke is going to find it difficult to get support for QE3 amongst other Fed Presidents. After all, the stock market is up and the White House is talking up a healthy jobs environment (bull). Moreover, inflation is on the rise even by a manipulated CPI view … how can Ben justify QE3?

He may not be able to. If not, look for the following effects:

  • Climbing interest rates
  • Stronger US Dollar
  • Plunging Stock Market
  • Plunging Exports
  • Plunging Real Estate
  • Plunging Consumer Confidence
  • Plunging Gold
  • …. QE3

Make no mistake about it, this is a real threat, unless you believe the true US economy (not the propaganda statistics) is ready to stand on its own two feet. I don’t see it.

QE2 comes to end on June 30th. The signals on QE3 will come loud and clear in the preceding two months, so be ready to act and adjust your portfolio accordingly.

UPDATE: This David Rosenberg Quote Via ZeroHedge Demonstrates Both The Risk Of A Delay AND Just How Fast The Markets Could Pull Back If QE3 Didn’t Materialize:


Portfolio managers as a group are running their funds overweight equities by an average of 67% relative to their typical benchmarks. And polls show that one-third of them believe QE3 is coming this summer. We already know that this Bernanke-led Fed is willing to be extremely aggressive, but as we saw in 2010, the hurdle is high for quantitative easing. We need (i) signs of a double-dip, (ii) a stock market correction of at least 15%, and (iii) deflation, not inflation. How on earth will the Fed be able to do anything at all by then if headline inflation is running north of 4% and the other central banks of the world are either snuggling policy or moving in that direction ? unless the central bank really wants to trash the dollar. We are certainly not inflationists and still see deflation in credit, real wages and housing

8 Responses to “CNBC Reporting No QE3 … I Doubt It … The Real Danger Is A Delay In QE3”

  1. […] position on QE3 hasn’t changed since I made my March 30th call that QE3 would be delayed … but would inevitably come.  A few hours ago, I received yet another boost of support from Nouriel Roubini, via CNBC, who […]

  2. jcwillis says:

    QE3 is alive and well. Stealth Bond buying by the Fed. Just will never be formally announced.

  3. AGORACOM says:

    JustSaying, thanks for chiming in. Theoretically, QE1, 2, 3, … can be UNDONE via a recovered economy that is increasing GDP, creating jobs and generating tax revenue sufficient to pay off debts. Theoretically.

    I don’t think any of us believe the US economy can ever get that done. The true debt is sitting at $75 Trillion. Old people will have to starve to death, sick people will have to die in their homes and the US will have to defend itself with nothing more than slingshots to chop that number down … and that is not going to happen …. so Americans will have to deal with eroding services and living for decades.

    The good news is that most of them are so focused on Jersey Shore, Paris Hilton and Brangelina that they won’t notice their lives wilting away.

    Reality TV is morphine for American masses.


  4. […] require the financial pain I have outlined above in order to politically justify it … but as I posted on March 30th, QE3 Will Be Delayed, Not Terminated.  At that point, the game plan resumes.  Higher stock markets, much higher gold/silver, much […]

  5. JustSaying says:

    QE3, QE4. .. want to clue us in on to how you UNDO them?

    The stark reality is that we were in a 20 year bubble. And we never once digested any of the excesses (thanks in large part to the many mistakes of Alan Greenspan).

    Remember this .. when a balloon breaks you can’t reinflate it. And that is all QE is trying to do

  6. AGORACOM says:

    Harlon … you do realize that I am actually calling for QE3 and that CNBC is the one calling NO QE3?

    I don’t see how America functions without QE3 …. but I do see the real possibility of a delay.


  7. What planted are you from? What has changed in the last 3yrs? Yes the market is up, thank to Q2. Unemployment has not changed. In 2010 we had over a millon foreclouser,and without Q3 we will have more then we had in 2010. in 2007 we had 26 millon people on food stamp. In 2010 we had 45 millon. 43% of American have 8,000 dollars or more charged on there credit cards. We are not ready to go it alone, We need Q3.

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