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This Is The Big Picture For Markets After The Fed Meeting
On the heels of the Fed expanding Operation Twist by $267 billion, investors around the world are wondering which direction markets will head next, so today King World News interviewed 25 year veteran Caesar Bryan. Gabelli & Company has over $31 billion under management and Caesar Bryan has managed the gold fund since its inception in 1994. Here is what Ceasar had to say regarding the big picture after the Fed meeting: “Clearly markets are in a bit of a holding pattern, although market operatives took the opportunity to take gold down this morning. We have some activity on both sides of the Atlantic because not only is there the meeting with the Fed, but there is also a meeting of some European leaders on Thursday.”
Caesar Bryan continues:
“Taking a step back, we have a bit of a global slowdown. The European economy appears to be at or near recession. If you look at some of the news yesterday, from the economic survey in Germany, it revealed a bit of a slowdown as well.
We also saw that confidence in the manufacturing industry in France notched lower in June. Dannon and a couple of other corporates in Europe have spoken about slowing activity, especially in Southern Europe....
Continue reading the Caesar Bryan interview below...
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“Here in the United States we are experiencing a slowdown, and clearly the other economic powerhouse, China, is also experiencing a weakening of their economy. So we are obviously in a struggling global economy.
When you couple that with the very high debt levels in the developed nations across the globe, there is pressure on central banks to dig into their toolbox and make something happen. The Federal Reserve probably won’t do anything dramatic today, even though the expectation is in place that they will try to stimulate the sagging economy.
Regardless, looking past the Fed meeting, the Fed is focused on trying to lift asset prices in an attempt to encourage economic activity. Right now the Fed isn’t thinking about what’s going on in five years time, they are thinking about the next few months.
Over in Europe, there is just going to be a steady drumbeat of pressure from financial markets to encourage the European central planners to take more action. I believe they will. The French, Italians, and Spanish are going to try to have either the European Central Bank or the two bailout facilities (the ESM and the ESFS), try to buy sovereign bonds.
Clearly the sovereigns and the banking sector are inextricably linked in Europe, and that remains a problem. The $100 billion loan to the Spanish government was for them to inject into their banks. This will end up being the first of a number of such arrangements. It will probably require at least 500 billion euros, and we’re not even half way there yet. So expect more bad news from the banking sector in Spain.
Meanwhile, in the UK, the Governor of the Bank of England was outvoted by his Monetary Policy Committee with regards to his suggestion to have a further round of QE in the United Kingdom. So right now there is a fascinating battle going on at the central banks. Quite frankly the battle is between those who feel we need more stimulation and those who don’t.”
Caesar also added: “In this environment, gold is fine to buy anywhere near these levels. The long-term story for gold remains absolutely intact. We have a lack of confidence in the economic management and in that environment gold is ‘King.’
It is also encouraging that gold equities seem to have ended their underperformance relative to gold. This is an encouraging sign. One should not worry about these short-term moves down in the price of gold. This happens virtually every time a central banker is speaking. In the end it just creates a buying opportunity.”
© 2012 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. However, linking directly to the blog page is permitted and encouraged.
The interviews with John Mauldin and Egon von Greyerz are available now. Also, be sure to listen to this week’s line-up of other KWN interviews which include Gerald Celente, John Embry, Bill Fleckenstein, MEP Nigel Farage, and Michael Pento by CLICKING HERE.
Eric King
© 2012 by King World News®. All Rights Reserved. This material may not be published, broadcast,
rewritten, or redistributed. However, linking directly to the blog page is permitted and encouraged.
June 20, 2012
