This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

6 Tools Left in Bernanke's Toolbox as QE2 Ends

The verdict from analysts?

  • "It's clear that a couple of reserve members have already said enough is enough," says Robert Johnson, director of economic analysis at Morningstar, who doesn't think we'll see a QE3.
  • "Unlikely," says Blitz. "We've been down this road with QE2... Bernanke already stated that we are in a different position than we were in a year ago, given that unemployment is better and deflation risk is smaller."
  • "Buying different types of securities might capture people's attention because it's bizarre and new," says James Paulsen, chief investment strategist at Wells Capital Management. However, Paulsen says that because there is so much liquidity already, pumping in more is akin to dumping a bucket of water into the sea.
  • 3. Give guidance on the Fed's balance sheet

    The Fed could be more transparent in its plans for structuring the $3 trillion-worth of securities currently on its balance sheet. That might mean more clarity in the breakdown of long verses short term securities. This is similar to tool #2 in which the Fed would formally announce which securities it plans to buy.

    4. Set an inflation target

    Targeting a low inflation rate should help anchor expectation. Americans might feel more confident about spending and businesses might feel more willing to invest. However, the Fed might hit a roadblock in determining which measure of inflation to target. Energy and food inflation hit consumers the hardest but some of the inflation comes from factors abroad rather than domestic.

    The analysts were overwhelming negative on this one. Bernanke's answer in his last speech was lukewarm (it's "worth considering").

  • "We can't be that accurate in setting inflation," says Paulsen.
  • 2 of 3

    Select the service that is right for you!

    COMPARE ALL SERVICES
    Action Alerts PLUS
    Try it NOW

    Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

    Product Features:
    • $2.5+ million portfolio
    • Large-cap and dividend focus
    • Intraday trade alerts from Cramer
    • Weekly roundups
    TheStreet Quant Ratings
    Try it NOW
    Only $49.95/yr

    Access the tool that DOMINATES the Russell 2000 and the S&P 500.

    Product Features:
    • Buy, hold, or sell recommendations for over 4,300 stocks
    • Unlimited research reports on your favorite stocks
    • A custom stock screener
    • Upgrade/downgrade alerts
    Stocks Under $10
    Try it NOW

    David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

    Product Features:
    • Model portfolio
    • Stocks trading below $10
    • Intraday trade alerts
    • Weekly roundups
    Dividend Stock Advisor
    Try it NOW

    Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

    Product Features:
    • Diversified model portfolio of dividend stocks
    • Alerts when market news affect the portfolio
    • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
    Real Money Pro
    Try it NOW

    All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

    Product Features:
    • Real Money + Doug Kass Plus 15 more Wall Street Pros
    • Intraday commentary & news
    • Ultra-actionable trading ideas
    Options Profits
    Try it NOW

    Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

    Product Features:
    • 100+ monthly options trading ideas
    • Actionable options commentary & news
    • Real-time trading community
    • Options TV
    To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
    Submit an article to us!
    DOW 16,960.57 -123.23 -0.72%
    S&P 500 1,978.34 -9.64 -0.48%
    NASDAQ 4,449.5640 -22.5440 -0.50%

    Brokerage Partners

    Rates from Bankrate.com

    • Mortgage
    • Credit Cards
    • Auto

    Free Newsletters from TheStreet

    My Subscriptions:

    After the Bell

    Before the Bell

    Booyah! Newsletter

    Midday Bell

    TheStreet Top 10 Stories

    Winners & Losers

    Register for Newsletters
    Top Rated Stocks Top Rated Funds Top Rated ETFs