When can bad news be good news? Apparently when that bad news indicates the Fed will kickoff QE Part Deux!
The loser jobs report from Friday has respondents to a new CNBC survey nearly certain that the Fed is going to step up to the plate in a big way come November.
Following Friday’s disappointing jobs report, market participants are now virtually certain that the Federal Reserve will announce that it will resume buying assets at the conclusion of its November meeting and do so in a sizeable way, according to an exclusive CNBC Fed Survey.
Nearly 93 percent of the 70 respondents, including economists, fund managers and traders, believe the Fed will boost the size of its portfolio, up from 69 percent in the survey two weeks ago.
Of those who expect the Fed to move, 86 percent look for an announcement in November, up from 38 percent in the last survey.
Market participants forecast that the Fed will announce plans to purchase $500 billion in assets at the conclusion of the upcoming meeting, the first time the question has been asked.
Despite the $500 billion average, expectations for the November announcement span a range from $100 billion to as high as $1.5 trillion.
Survey says? QE2!
You can read the full article, and survey results, here.
With most market observants convinced the Fed will do something come November, contrarian-minded investors and traders may want to consider the possibility that the Fed either does not act in November, or does not act with the magnitude that the market is expecting.
Guest author Sy Harding raised this point today when he wondered aloud if traders should “buy the rumor, sell the news” with regards to QE2.