We always enjoy the latest round of “Top Client Questions” from SocGen’s Michala Marcussen.Right now the biggest two:
- What’s next for Spain?
- Will QE3 proceed?
Her answer to both:
- On Spain: A long hard grind.
- On QE3: Yes!
As for the QE3 question, Marcussen’s answer is interesting:
The latest FOMC minutes made it clear that an April QE3 announcement is unlikely. The threshold for QE3 will increase substantially in the second half of the year with the US elections. As such, we see a narrow window of opportunity of June or never. In our opinion, a June QE3 announcement remains the most likely outcome as economic momentum fades. US expenditure data has been weak for some time and Friday’s employment report lends weight to our call that unemployment is likely to stall out. Furthermore, the coming months will test just how much the mild winter lifted the data. On
the international side, the new tremors in the euro area will be an additional source of concern
for the Fed. Finally, risks remain titled to the downside – something the Fed may want to
“June or never” — sounds like a good phrase to keep in mind these days.