Imagine you're a bank. The corporate sector isn't interested in borrowing, so you can't lend to it. So where do you go Well, mortgages. They pay a reasonable rate. They're seen as a safe investment. Load up on mortgage-backed securities.
More Quotes from Ethan Harris:
You don't want to force the new chairman to open his term by having to make a a 50 basis point rate hike.Ethan Harris
That's the big lingering risk factor sitting out there on the horizon. Will we have a gradual adjustment, where the trade deficit gradually improves, or will we have an accident along the way
Ethan Harris
They're voting with their wallets and they're spending. There's always a concern that people just don't like what they're seeing, but they are still buying.
Ethan Harris
When you get a new chairman in place you're going to have a more democratic and less predictable, less transparent Fed. The new chairman won't get the same automatic respect Greenspan has. It's not that (central bankers) will turn into a bunch of farm-yard animals, but there will be a more normal discussion going on.
Ethan Harris
I'm not sure I believe the Labor Department. On Friday, there must have been a below-normal number of people applying for benefits.
Ethan Harris
We are obviously experiencing slower growth and the payroll numbers don't really reflect that yet, which is why they will be an important indicator. Companies have been cutting back the number of hours their workers put in and in some cases cutting back their workforce altogether, and that is what people will be looking for in the numbers.
Ethan Harris
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