It Will Be Relatively Boring Fed Day: Ryding

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April 30 (Bloomberg) -- RDQ Economics Co-Founder John Ryding discusses Fe monetary policy on Bloomberg Television’s “Bloomberg Surveillance.” (Source: Bloomberg)

Boring fed day.

We don't have a press conference . as a consequence, we are not going to have any clarification at the timetable.

I would look for some better language on the economy.

We are rebounding from the harsh winter weather.

Not much else different than what we had -- no new forecasts and no new press conference.

Nothing the fed would want to make a major change on.

Maybe the fed should go to press conferences after every effort.

You and i have been through so much of this -- i was sitting with you when we learned about bernie made off.

I remember that very clearly.

There is a chart which shows the distortion of this federal reserve.

The balance sheet -- i sent it out on radio.

How distorted is this institution as janet yellen?

The balance sheet is very upside.

It would take many years in the economy to absorb the amount of excess reserve -- even if the fed stopped buying and did not sell a lot of portfolio to run off the currency demand, it would take more than a decade to absorb that balance sheet.

Will have tremendous amounts of liquidity.

Can that liquidity be warehouse as the fed eventually switches to tightening policy in the first half?

I like your idea of the putting green.

Used to go, where are we and where is the putting green?

We are not even on the golf course not.

It's completely uncharted.

Is what you just highlighted the only solution here that the fed has to hold all of its paper to maturity?

I think the fed should actually contemplate selling assets at some point.

The fed seems to have ruled that out at this stage in terms of its extra energy.

If you are not going to sell, you have to warehouse and you have to pay interest.

Thanks -- banks are a politically charged issue.

Imagine what's going to happen if the fed keeps two $.5 trillion of excess reserves and is paying the banks for percent -- four percent.

The fed is losing money, so it's not paying anything to the treasury.

Imagine that political faux pas.

It's not just monetary economics.

It's political economics.

I would like you to tie in all of this would put -- all of this with what you see in the stock market.

The s&p is 12 points way from its record close.

What can the fed do or say that would change your outlook on equity?

I think very little at this stage.

The equity markets supported by the level of profits -- a level of profit growth has to be relatively slow because the economy is pretty much maxed out.

Macroeconomic profit margins aren't very wide levels.

Profits can only grow with normal gdp, around five percent over the next year.

Equity is overvalued.

This text has been automatically generated. It may not be 100% accurate.


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