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A Hard Look in the Mirror

October 9, 2012

 

The optimism that infused markets after QE3’s announcement continues, but the doubters are already getting louder.
-Jason Pride, director of investment strategy, Glenmede

  •  The optimism that infused markets after QE3’s announcement continues, but the doubters are already getting louder. How much impact QE3 will have? Are the unintended consequences for savers (and pension plans) just too large? Even emerging market central bankers are criticizing the Fed’s latest stimulus. We are believers that monetary policy has a net positive impact, but we also believe each round of QE is less effective than the last.

  • While it is likely still quite early to measure the impact of QE3, the focus has begun to turn to the hard economic and earnings data. Both the manufacturing and services ISM surveys were higher in September. Earnings season now picks up in earnest, but will still likely reflect the ambiguity of Q3.
  •  Unemployment fell to 7.8%,a multi-year low. Nonfarm payrolls added 114,000 with 86,000 in additional revisions for previous months, but both reports drew questions of credibility. Some pointed to the surge in part-time workers that wanted to be full-time, others pointed to the oddly large surge of government employees, and others attempted to make accusations of manipulation. The question of whether this employment number is a statistical aberration will only be settled in the November report.

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