With the latest existing homes sales data looking relatively strong and other economic data suggesting the US recovery is stable, many investors believe further Fed intervention is off the table.
But Goldman Sachs chief economist Jan Hatzius says not so.
Although he admits, “The Fed hasn’t made up its mind,” Hatzius believes if you list out the pros and cons - the scales are starting to tip in favor of further monetary easing and the Fed knows it.
“Given the financial conditions and given where we see the economy – the lost ground that needs to be made up – we think the case for additional monetary stimulus is still pretty good,” says Hatzius on CNBC’s Fast Money.
In a prior interview Htazius explained, that not only does the Fed wants to see the economy grow it wants to see acceleration.
And without that acceleration, he thinks the Fed acts.
And in addition, there’s another headwind facing the markets and by proxy the economy – the so-called fiscal cliff. “That is, the wave of tax hikes and spending cuts set to take effect in less than 6 months.”
Hatzius doesn’t think it’s likely there’s any resolution before the election and possibly not until early 2013. "It's a big issue, and a threat to the economy domestically," said Hatzius on CNBC in April.
All told, “We do think there will be more monetary stimulus,” he says.
What do you think? We want to know!
Posted by CNBC's Lee Brodie
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Trader disclosure: On May 22, 2012 , the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Keith McCullough is long GLD; Keith McCullough is long TLT; Joe Terranova is long VRTS; Joe Terranova is long MCD; Joe Terranova is long PNC; Joe Terranova is long SBUX; Joe Terranova is long SJM; Joe Terranova is long UPL; Joe Terranova is long AAPL; Joe Terranova is long CNX; Joe Terranova is long LQD; Tim Seymour is long BAC; Tim Seymour is long CSCO; Tim Seymour is long SBUX; Tim Seymour is long FB; Tim Seymour is long BTU; Steve Grasso is long ASTM; Steve Grasso is long BA; Steve Grasso is long D; Steve Grasso is long FRO; Steve Grasso is long LNG; Steve Grasso is long MHY; Steve Grasso is long MO; Steve Grasso is long PFE; Steve Grasso is long S; Steve Grasso is long XLU; Steve Grasso is long ZAZA; Mike Murphy is long TOL ; Mike Murphy is long PEP; Mike Murphy is short JPM
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