Why QE3 is more likely

What is the Fed’s mandate again? “To promote effectively the goals of maximum employment, stable prices and moderate long-term interest rates.”

Well, following today’s disappointing job data, it is now more likely a 3 rd round of stimulus will be unveiled before the end of this month. The chances of getting QE3 have increased dramatically thanks to dismal employment numbers, a total of 0 jobs were created in August. (Theoretically, had the Verizon workers not gone on strike, the total would have been 48k which is still depressing)

Why is the market holding up relatively well following disastrous news? Because the worse the news the better the odds of monetary easing (at least until the next meeting in September). The US needs 150-200k jobs created every month in order to chip away at the unemployment rate and that’s not happening.

The upcoming speech by President Obama next Thursday better be a good one. Not that I expect economic problems to be dealt with in speeches. Do you want to create thousands of jobs overnight Mr. President? Here are 3 ideas:

Approve Keystone XL, encourage drilling to reduce dependency on foreign oil and accelerate the development of LNG export facilities.

Economic Roundup:

Asia to Add 1.66 Million Millionaires by 2015

Fed Debated QE3 at August Meeting

Regulator to sue major banks over mortgages

Wealthy shy away from gold holdings

Blog Roundup

What My Dysfunctional Aunt Taught Me About Wealth and Finances (Invest it Wisely)

Dividend Income Update: Bye-bye, LIQuor Stores (101 Centavos)

Why I drive an 11-year-old car (My Own Advisor)

My Investing Strategy for the Next Decade (Cash Flow Mantra)

3 Hidden Truths about Market Crashes – Why They Crash When They Are Handled By Professionals (Dividend Guy Blog)

Following Buffett Blindly Can Be Injurious To Your Wealth (Money Cone)

Calculating Fuel Economy (Canadian Finance Blog)

The Corporate Stability Myth (Wealth Artisan)

Effectively Managing A Capital Loss (Wealthy Canadian)

Have a Great Weekend!

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