Out of bullets, indeed.
http://finance.yahoo.com/blogs/breakout/markets-awaiting-fed-qe3-matter-153811266.html
Markets Awaiting the Fed: Would QE3 Matter?<cite class="byline vcard"></cite>By Jeff Macke (http://finance.yahoo.com/blogs/author/jeff-macke/) | Breakout (http://finance.yahoo.com/blogs/breakout/) – <abbr title="2011-08-09T15:38:11Z">14 minutes ago</abbr>
The Federal Open Market Committee will release its statement at 2:15pm et today. Given the uncertain condition of every market in the world, this figures to be the most important Fed announcement since the dark days of last summer, if not the financial crisis of 2008.
Fed Chairman Ben Bernanke will not make a statement nor hold a press conference after today's meeting. There will merely be four or five poorly worded paragraphs posted to the Fed's website (http://www.federalreserve.gov/newsevents/press/monetary/20110622a.htm) and released to news wires at or around 2:15. Those words will be studied by traders as fervently as Talmudic scholars pour over the Old Testament.
Anyone who tells you they know what the Fed is going to say is lying. The question isn't what the Fed will say, but rather what can the Fed or anyone else can do to soothe the markets. To help, Breakout welcomed John Lewis, the Managing Director of New Albany Capital Partners.
No speculation regarding the Fed's battle plan can be had these days without addressing the elephant in the markets: Is the Fed going to start QE3 and what would it mean for markets?
Lewis thinks any additional Quantitative Easing would be pointless at best, and damaging at worst. We don't "need help getting a flatter yield curve," notes Lewis, suggesting that more QE would be met with skepticism. Not all of the quantitative easing in the world would create jobs.
The jobs observation and pointless nature of more stimulus is the essence of the "Fed in a Box" concept. The Fed has the option of doing whatever they want but their ability to control what truly ails the economy, specifically unemployment, is limited. Artificial or not, rates are historically low and seem to care not a whit about ratings agency downgrades. Corporations are up to their gills in cash and potential employees are waiting. The shovels are ready but the jobs are not. Why? Confidence...
Note the implication that treasuries being 'safe' has been influenced somewhat by the government buying them the previous 2 times...