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Last week we introduced the idea of the fundamentalistas vs. the liquidistas.The basic split: The former group sees the market as being primarily driven by fundamentals in the economy and in corporations. The latter thinks the market is mostly a function of central bank action around the world.
Anyway, last week was a big week for fundamentals-watchers, as we got a boatload of data including the Non-Farm Payrolls report on Friday, which was a disappointment.
This week is for the liquidistas, who are obsessed with the question of whether we’ll have more QE, which to them answers the question: Which way will markets go?
There isn’t much data this week, just a lot of gabbing from Fed-heads.
From Deutsche Bank:
…a plethora of Fedspeak should clarify the Fed’s thinking on the economic outlook and perhaps the fate of Operation Twist following a lukewarm March jobs report. Chairman Bernanke speaks on Monday evening at a Fed conference; given the topic of his speech is “Fostering Financial Stability”, he may add remarks on the latest employment news. The docket for the rest of the week is crowded: Tuesday (Fisher, Kocherlakota and Lockhart), Wednesday (Lockhart, George, Rosengren, Bullard and Yellen), Thursday (Dudley, Lockhart, Plosser, Kocherlakota and Raskin) and Friday (Dudley and Bernanke). The minutes of the March FOMC meeting showed that policymakers were concerned that the economy could follow a similar profile in 2012 compared to the prior two years when activity trailed off following a solid start to the year. To be sure, the disappointing March payroll print will exacerbate these concerns.
So starting this evening with Bernanke’s speech, get set to look for every QE clue you can find.
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