PIMCO’s Tony Crescenzi outlines why it is “likely that the Fed will hint at rather than decide on QE3 when it meets again on April 25th.”
He outlines a number of negative factors worth following:
- An unwinding of the inventory buildup in the fourth quarter of last year
- Payback from economic strength in the warm winter weather that borrowed from future months
- Wealth destruction: $8 trillion of lost household wealth has yet to be recouped
- A lack of mortgage credit availability
- Slow income growth: wages are gaining at a 2% pace rather than the normal 3% pace
- A massive fiscal cliff: over $500 billion of tax increases and spending cuts slated for January 1st
- Uncertainty over the U.S. election
- Slower global growth, particularly in (but not confined to) Europe
