This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers, click the "Reprints" link at the top of any article.
What the Fed's Action May Mean: Another Round of QE?
One of my AdvisorOne blogs on Monday after the market freefall mentioned three specific strategies the Federal Reserve might employ to support the economy. Based on Tuesday’s announcement, they are going for Option 1: allowing the dollar to devalue in an attempt to stimulate exports.
The decision of the Fed to follow this path was unusual due to the significant dissension among its board. Three Fed governors voted against the plan, which is highly unusual. Bernanke’s open-ended verbiage—basically, that the Fed has a number of tools at its disposal and will use them when needed—was very similar to what he said months before QE II was initiated. It seems likely another round of Fed purchases will follow.
We were fortunate to be included in a conference call yesterday with Assistant Secretary of the Treasury Mary John Miller. She clearly stated Treasury’s view of “growth before austerity.” Time will tell if the markets take that message to heart; in the meantime, valuations could get even more compelling.
About the Author
Ben Warwick, Quantitative Equity Strategies
Veteran investment strategist Ben Warwick brings 20 years of investment management expertise to AdvisorOne.com in his blog, Searching for Alpha. His market and economic insights provide readers with an insider’s view on generating alpha through asset allocation, the use of strategic portfolio “tilts” and alternative investments.
Ben Warwick founded Quantitative Equity Strategies (QES) in 2002 as a platform for implementing his quantitative investment strategies. The firm manages assets with traditional long-only equity and fixed income, private equity, managed futures and alternative investment mandates. QES has developed an industry leading expertise in building investment programs that can replicate alternative returns, while offering daily liquidity and transparency. These products include the HFRq, a hedge fund replication strategy developed in concert with Hedge Fund Research in Chicago; the Managed Futures Beta Index, with Aspen Partners; and the Nomura QES Modeled Private Equity Returns Index (PERI), which was developed with Nomura Bank and Preqin, the leading source of information in the private equity industry.
He is the author of several books, including "Searching for Alpha: The Quest for Exceptional Investment Performance," (Wiley, 2000) and "The Handbook of Managed Futures," with Carl Peters, (McGraw-Hill, 1996). He can be reached at ben@qesinvest.com.
Comments
