Ashraf Laidi on CNBC on the GDP, FOMC & Summers/Yellen - Jul 30, 2013
Jul 30, 2013 17:25
Ashraf discusses the reasons for tapering, the upcoming GDP, FOMC releases and on the race for Fed Chariman by Larry Summers and Janet Yellen.
6 reasons the Fed will/must taper in September
1. Record highs in US equities
2. 6-year highs in US consumer sentiment
3. Longest streak of +100K NFP in 12 years
4. 6-year lows in unemployment rate
5. Bernanke is highly unlikely to leave this year depart without a tweek in the asset purchasing program. Failing to do so would label him as Greenspan Bubble Master #2, starting the QE bubble without a plan to end it or even scaling it down.
6. Cannot afford a new round of USD weakness at expense of strengthening currencies of weaker economies.
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As gold regains $2000/oz for the third time over the past three years, it's important to distinguish the fundamental and intermarket dynamics for each of these three occasions ($2000/oz) before assessing the road ahead. There are endless combinations of metrics to be used in comparing August 2020, March 2022 and today. I will use the DXY, gold/silver ratio, Fed Funds rate and the Fed's Balance Sheet.