Fed Mulls Ending Mortgage-Backed Securities Program

" No doubt. That the Fed believe interest rates as they are instead he says they -- will be whether it continues its program to buy mortgage backed securities -- PNC's chief. Investment strategist morning bill concealed. The warning banks grabbed me. Still -- it's interesting I couldn't agree with you more bill and basically an after -- to what you're saying is it's more about. What did they used to either continue to liquefied capital markets or suggest that -- slowly unwind. Some of that quantitative easing and that's what we're looking forward today."

" I think you hit it right on the head it's really all about the exit strategies in the first part of the exit strategies is those liquidity programs. And the secondary part is really think the interest in your most interesting new thing to watch for this afternoon. Is what they see regarding the mortgage backed securities so. That program of buying mortgage backed securities had a little bit less than 400 billion left to buy and exposed to ended December. The thought is that maybe they stretch that out because the problem or at least the concern in the markets is that. The Fed is currently buying about 80% of all new issues. In that market so the worry is that they just pull out completely in December. Back because really thinks the slide back where we really don't want them to go because when you think about things. What started this what was that the center was housing so what are you most concerned about that."

" Would probably be it you know it's interesting because we're talking to a tally yesterday about the very same issue want to point to drew blood up is he said. It's not just the mortgage backed security market -- the treasury market as well and if you look at the second quarter data alone. In the US government represented 50% of treasury purchase says they've only got ten billion of the 300 billion last. Are they going to continue to participate and if in fact the money's running out. Maybe that's a good thing that we need to let the free market -- on her own."

" Well I think on the treasury side I don't think they'll extend that the they took that that's supposed to run out the end of October that treasury purchases. And Agassi in the what I really think is that the market wouldn't take it well if them if the Fed decided to buy more treasuries because they be worried that we were. Debasing the dollar you know that's already kind of a concern out there and worried about inflation so. I think that would be taken really poorly sides don't either going to touch that -- that is going to say they're going to let."

" That roll off. -- so -- right so if we know that it leased the from perhaps some mortgage backed securities they've got some ammunition left in on the initial under. Treasuries perhaps they're running added that ammunition. What we -- what other Peary Ares I -- of the market does the Fed have to keep a close focus on his one of those commercial real estate. "

" Certainly they they I'm sure they have their eyes and part of it I know they'll point to it directly they may in the statement. But part of that reason is why they may keep score well I should they will in my opinion today keep very slow and may continue to have that statement that -- be for an extended time. I think that they know that that's still weakened area of the economy."

" We look at they weekly mortgage applications data I believe me UBS thirty year fixed rate mortgage was at four point 97%. This week. That's pretty terrific. Are we getting enough bang for the buck in -- five activity for consumers to feel a little bit more confident about the economy."

" Oh well I know that refund number came in this morning and a member of the top my head but I think it was may be up 18%. I know always in the high teens so in that sense that yes and that's he's more good news say you know we've kind of point is that for some time. That that was the great well one of the great parts about the low mortgage rates one was just housing affordability to trying. Get some of that inventory of the market for the second is you it's like attacks. Cut relief for consumers if you're able to -- into a lower. Payment."

" Eat eat well I can hear in the equity market through a lot of people focused on the fixed income markets because that's where the Fed. And has had a real substantial impact but in the equity markets they've run so far so quickly. And people are afraid to dip their toe in the water right now we quickly backs."

" You know we still would say and I agreed to run a long way -- it's hard to argue that we're not may be overbought. The only problem with that argument is you know I think a lot of overseas the flip side of you know how many times those -- here when we were us so oversold that you that you couldn't believe it. But that being said we still believe the kind of more cyclical sectors of the police to be because. The recovery is in place I think it's it's happening. Third quarter GDP will be up. We think probably at least 3% in May be even higher so I think you are going to start to see some better news on that side or to continue I should say to some better --"

" It's just -- like to go when you said you're interested in cyclical sector isn't means just it tell people what that looks like which which means."

" Well I would say you know on the retail side we're probably I'd say that's more around affordable luxury -- humanity pushing it too far but you know names like Kohl's. Ross Stores where they're still able to -- brand names. You know some industrials like 3 AM technology like eBay. Apple that type of thing aren't ever small town."

" I'm going to Iowa and I'm gonna market performance and they'll attack. The PNC's chief investment strategist as always great seeing it yet thank you bags."