Tags: Lieberman | Fed | rates | unemployment

Money Manager Lieberman: Fed 'Way Behind the Curve'

By    |   Thursday, 06 November 2014 12:59 PM

Strong gains in hiring will show the Federal Reserve is moving too slowly in its withdrawal of stimulus, says Charles Lieberman, chief investment officer at Advisors Capital Management.

The unemployment rate registered 5.8 percent in October, a six-year low. "The Fed has said the unemployment rate is going to 5.5 percent by the end of next year," he told Yahoo.

But the rate is "headed down at a pretty rapid clip, it's going to get there way ahead of the Fed, perhaps even in the spring of 2015."

The problem is that the Fed isn't expected to raise interest rates until mid-2015. Its federal funds rate target stand at a record low of zero to 0.25 percent.

"They've stopped buying bonds, but their policy is still extremely accommodative," he notes.

"What happens when the unemployment rate gets to 5.5 percent, and they are still close to zero?" Lieberman asks. "It shows they are way behind the curve, and so they will have to catch up. That's going to scare the market."

Economists expected a 240,000 payroll gain in the October jobs report due Friday. The rate came in at 214,000.

Meanwhile, Liz Ann Sonders, chief investment strategist at Charles Schwab, questions the effectiveness of the quantitative easing that the Fed halted last month.

"Although the early round or rounds of QE were absolutely justified — it was the shot of adrenaline to a patient in trauma — the latter rounds are a little more questionable," she said at a conference this week, CNBC reports.

The Fed has built up a $4.5 trillion balance sheet through QE, so the next big question is "can the Fed unwind this balance sheet in a manner that is not hugely disruptive to the markets?" Sonders asks.

© 2019 Newsmax Finance. All rights reserved.

   
1Like our page
2Share
Finance
Strong gains in hiring will show the Federal Reserve is moving too slowly in its withdrawal of stimulus, says Charles Lieberman, chief investment officer at Advisors Capital Management.
Lieberman, Fed, rates, unemployment
291
2014-59-06
Thursday, 06 November 2014 12:59 PM
Newsmax Media, Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
America's News Page
© Newsmax Media, Inc.
All Rights Reserved