The slower pace of job destruction is good news,says Paul McCulley,Managing Director at PIMCO,but the rate north of 10 bakes in the cake that the Federal Reserve is gonna be friendly for a very extended period of time,which is very good for price-to-earnings values.The recent employment data reinforce the idea that the recovery will be slow.
We're gonna see the extension of various government programs,Mr.McCulley predicts,not a mega-package.If the unemployment rate continues to go up,however,we will see a mega-package in the next 6-12 months.The Fed can be incredibly patient and nurturing of this economy.It is being responsible in being accommodating.Money is being horded,given the 10% unemployment rate,which prevents inflation.
Bonds have had an amazing run,Mr.McCulley observed.Investors should start harvesting gains.The train has not only left the station;it's at the next station,in Paul McCulley's opinion.
The stock market surged this morning,apparently as comfortable with Federal Reserve policy as Mr.McCulley.
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