ZERVOS: Bernanke Is Still Mixing A Killer Cocktail

David Zervos

Photo: Bloomberg TV

Yesterday proved a huge day for talk of Treasurys, with 3 announcements from the Federal Reserve and investor commotion over whether or not the U.S. will see another round of quantitative easing in the next few months.But despite the hype and indications that FOMC committee members see a stronger recovery than previously, Jefferies economist David Zervos argued in a note yesterday that Ben Bernanke need only run to his cabinet to refresh his favourite cocktail: policy easing.

Zervos pointed to statements from the Chairman indicating that the Fed is “prepared to do more.”

It’s always good to know that there is more liquor in the cabinet!! We’ll take the put – I mean the potential “additional support” – and add to that a more upbeat projection for the U-rate, some higher PCE inflation expectations and a more front loaded GDP growth outlook. Its a fantastic cocktail – what should we call it – of course, “A Bazooka Ben”!!! ¬†We just mix 3 shots of QE, 1 shot of zero fed funds and a few words that express a desire for a long term commitment to low rates. Then we put our party hats on and head out to hunt more black swans!!! Boom, Squak, Thud!!! I’m feeling all warm and fuzzy already!

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