Bernanke Says Fed Willing And Able To Act If Needed

November 3, 2011 01:09 AM

What Traders are Talking About:

* Bernanke addresses economy and potential Fed actions. Following are highlights of the statement following the two-day Federal Open Market Committee meeting and Fed Chairman Ben Bernanke's quarterly press conference: • Economic growth "strengthened somewhat" in the third quarter, but there's still weakness in the labor market. • Economic progress will likely remain "frustratingly slow." • "There are significant downside risks to the economic outlook, including strains in global financial markets." • The Fed will continue "Operation Twist" — extend the average maturity of its securities holdings. • GDP is now expected to average 1.65% in 2011 (2.8% previously); 2.7% in 2012 (3.5% previously); 3.25% in 2013 (3.85% previously); and 3.45% in 2014 (first forecast). Unemployment is expected to average 9.05% in 2011 (8.75% previously); 8.6% in 2012 (8.0% previously); 8.0% in 2013 (7.25% previously) and 7.25% in 2014 (first forecast). • The Fed will purchase mortgage-backed securities to boost the housing sector if conditions are "appropriate."

The long and short of it: The post-meeting statement and Bernanke's comments were generally well accepted as there are indications the Fed still has more "bullets" to fire and will use them if the situation warrants.

* Broad focus remains on Greece, EU. An emergency cabinet meeting is underway in Greece, in which Prime Minister George Papandreou may be asked to resign. Papandreou is losing support rapidly, with the most notable defection being his finance minister. The heads of Germany and France told Greek leaders yesterday the country would not get any more aid until it commits to the euro-zone. Reports out of Greece this morning signal there's likely to be some reworking of the debt deal agreed to last week if Papandreou steps down (or is voted down). There are reports Greece has enough cash to make it until mid-December without defaulting on debt obligations. Meanwhile, the European Central Bank holds its monthly monetary policy meeting today, the first under new president Mario Draghi.

The long and short of it: The situation in Greece and the euro-zone remains very fluid, which continues to fuel back-and-forth trade throughout the investment world.


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