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Bernanke will scuttle QE3 at first sign of inflation

Future-Proof: Navigate Threats, Seize Opportunities at ICNY 2018 | Jan 22-26 at the Marriott Marquis, Times Square, New York

Financial markets are still trying to digest the Fed's QE3 announcement (and the prospect of intervention by other central banks around the world), as well as newly arriving economic reports. The big stuff is due next week (ISMs and jobs), but some jigsaw pieces this week were useful. Orders for durable goods crashed hard, down 13.2 percent in August, but only 1.6 percent excluding volatile transportation orders -- and the index itself is volatile. Household incomes rose only 0.1 percent in August, consistent with flat wages. Housing data continue to improve. One of the best indicators has been the Fannie-Freddie combined "serious delinquency" rate, loans 90+ days late or in foreclosure. From a normal level way below 1 percent (of 29,000,000 loans, $5.2 trillion) this category rose to 4.93 percent in Q1 2010. Down to 4.02 percent by Q1 2011, and in the most recent data to 3.50 percent in Q2 2012. Slow, but very good news. Right-wing propaganda notwithstanding, the serious...