Don't expect QE3 this Thursday: Schaeffer's Investment

The Federal Reserve's begins its two-day policy meeting today. In an interview to CNBC-TV18, Ryan Detrick of Schaeffer's Investment says there probably will not be a QE3 this Thursday.

Get the best expert advice for queries on investments in equity, debt, gold, mutual funds, real estate here. Below is the edited transcript of his interview on CNBC-TV18. Q: What is the US market telling you now? A: Things continue to look good. Smallcaps are getting higher. They perhaps suggest that risk-on trade is there, people continue to have the appetite for risk. That’s a good sign. Q: Is that appetite for risk in sense building up to expectations or because of expectations that a QE3 is around the corner, if not in this meet then the next time around? Is that what the markets are expecting from Thursday? A: We are of the camp that there probably will not be a QE3 this Thursday. But that could very well be next time. M&A activity, in the US, has been very strong. That’s shows that there is still some confidence coming in. We are worried jobs aren’t doing great, consumer confidence is not good, but credit markets look good, housing market should probably continue to lead the economy a little bit higher as we work our way into the end of the year. Q: You are saying that any further quantitative easing by the Fed is potentially going to come only in November, after the Presidential elections are done? A: That’s what we think. We just do not think that we are going to have a QE3, when operation Twist is not officially over yet. We will see on Thursday what happens as lots of people are expecting it. We think maybe the other easing is out there. The US might not have to do anything quite yet, maybe can pull off a little bit more, maybe the economy works its way. Q: Do you expect that a negative verdict from the German Constitutional Court on the validity of the ESM could unhinge these markets substantially? A: That’s the wildcard there. We worked on that a bit. Definitely it could unhinge things into the realm of the uncertainty that we have been forced and facing most of this summer.