Thursday, October 21, 2010

Guggenheim Partners: All the Crumbs Point to Quantitative Easing

Scott Minred, Chief Investment Officer at Guggenheim Partners is out with a report detailing why Quantitative Easing 2 is coming, despite some who think there are conflicts between various board members. He has even had his staff put together a timeline of the increasingly obvious hints from the Fed that QE2 is coming. He calls it following the crumbs.

Minred notes that the November 3 FOMC meeting is before the all important Christmas season. In Keynesian manner,he argues that it is important to give consumers a boost of confidence. This really isn't what grows an economy, investment does, but Bernanke could very well be thinking like Minred here. Thus, another reason the Fed is likely to launch QE2 at the November meeting.

Minred believes that rates on the ten year Treasury will decline because of the Fed entering the market there. This make occur on a very short term basis, but not likely for any extended period of time because inflation is likely to kick up and push rates higher even in the face of QE2. It is very dangerous to hold long maturity paper. And it is wise that Minred is advising clients to sell into any Treasury strength.

Further, he knows the inflation is coming as he is bullish on gold, silver, copper, lead. nickel and the agricultural commodities.

You can read Minred's entire report here (PdF).



  1. Meanwhile, Ray Dalio, object of EPJ skepticism here, is today's best performing macro hedge fund maven of the year-to-date with his strategy of investing in the debt of government's that can print their way out of a crisis. What the hell is THAT about?!

  2. That would be Conant skepticism not EPJ.