Santelli: The Fed Is Making This Equity Market Rally And We Shouldn't Be Proud Of It

CNBC spoke to its own Rick Santelli and David Zervos of Jefferies. The two got into a bit of a spat about QE2.

  • 0:45 Zervos says ignore the Fed’s purchase of Treasuries, pay attention to the inflation language. An easy way to get out of this crisis is to generate inflation, as people’s balance sheets are underwater.
  • 2:20 Santelli is pleased that politicians are now going after the Fed (noting the WSJ Op-ED). Time to shed light on their decision-making.
  • 3:25 Zervos: The long end of the bond market will face difficulty. The reflation policy will make it difficult on foreign holders. By being the reserve currency, we can deal with this problem, unlike developing markets.
  • 4:20 Santelli: Talks about the fact that these subsidies are messing with the market. Government purchases are fuzzing how the market should work.
  • 6:00 Zervos: The measure of success for the Fed will be the long end of the bond market pricing in the inflation the Fed wants.
  • 6:30 Santelli: A fantastic rally would be if the fundamentals warranted it. Is it something to be proud of, asset prices going up, because we’re printing money to buy them?


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