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Art Cashin On QE2 As A Religulous Experience - "If You Have Faith, It Will Happen"
In a country rules by Hopium, is it any surprise that capital markets are now governed by faith (in the destruction of the country by one Ben Bernanke). Art Cashin spots the irony of investing in anticipation of religulous rapture:
The prospect of the Fed embarking on another large asset buying program drove stocks and most commodities sharply higher Wednesday.
They roared out of the gate at the opening bell and never looked back.
While the list of skeptics on either the efficacy or beneficial effects of a new QE2 seemed to grow by the minute, it retained enough true believers to raise the prices of lots of assets. Some compared the belief in the beneficial effects to come from QE 2 to a religious experience. Others saw it as either hypnotic or narcotic. If you have faith – it will happen.
It was all about faith; after all, since the Fed had not only not begun the process, they haven’t formally confirmed that there will be a QE 2. Talk about the power of jaw-boning.
And as we highlighted earlier, those against QE2 are not just normal people who don't stand to benefit from endless cheap money (read: bankers, one pane removed from the Discount Window and POMO monetizations), but the Fed itself.
As we just noted, the list of those skeptical of the beneficial impact of QE 2 has grown in recent days. Steven Roach of Morgan Stanley, Niall Ferguson of Harvard, Kocherlakota of the Minneapolis Fed and even the St. Louis Fed’s newsletter. While these skeptics proved it was okay to doubt the Fed, the market indicated it was suicidal to fight the Fed.
The asset inflation from a looming QE 2 wasn’t confined to the stock market. Gold, oil, copper and a long list of commodities all jumped higher.
In the afternoon, the rally in stocks slowed. The 10 year auction, while not as bad as Tuesday’s 3 year auction was mediocre at best. Treasury bonds began to slip lower.
For the next hour, the S&P struggled against resistance at 1182/1185. About 2:15, they topped out at 1184. Stocks began to drift lower led by the banks as concerns about the rat’s nest in foreclosures intensified.
By the bell, they had given back 30% of their earlier gains. Nonetheless, it was the fourth straight gain for stocks putting the averages at five month highs. The bulls remain on a roll.
What the Fed will end up doing on November 3, probably only Bill Gross knows. Yet one thing is certain - if at 2:15pm the FOMC statement headline scanning robots do no see confirmation of QE2, the market will plunge so fast it will force people to look back at the flash crash with nostalgia.
h/t London Dude Trader
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1,200 DOW points and 150 S&P points baked into Q/E2 which will never happen.
How can QE2 not happen? Bernanke is like Barney Fife, he only has one bullet, and he's eager to use it.
Further proof that perception is reality and that the placebo effect is real and utilized by the Powers That Be on a daily basis.
http://en.wikipedia.org/wiki/Placebo
http://www.scientificamerican.com/article.cfm?id=placebo-effect-a-cure-in-the-mind
Sounds like Mr. Cashin is spending some time on Dr. Cog's couch? Or just marinating the ice cubes and finally reading your work?
Neither. Just getting near retirement, thus feeling closer to the escape hatch of "free" speech unencumbered by all those nasty conficts of interest aka making a killing on the Street while supposedly working in the clients' best interest.
While Cashin spouts quaint little sayings and truly does have a unique perspective, when it all comes down to brass tacks, he, like all those who work on the street (myself semi-included, though I don't actually work "on the street", thus my free pass to throw stones at windows) know who they really work for. And no, it's not for the client.
Cashin has simply found an interesting way to quell the inner voices of Cognitive Dissonance. We should all be so lucky. Art has found the pot of Gold at the end of his rainbow, the proverbial way to eat his cake and have it to.
Be still my beating heart.
cogent diffidence perhaps then. i mean "the guy has missed the whole move." sometimes it really isn't about "the game" anymore. "faith" is good place to start in all matters such as these.
It's called capitulation
Yes, if QE2 doesn't happen, you will see a mad dash for the exits until....CNBC tells everyone this is actually good news because the Fed is saying we don't need QE2. Rally commences on feverish dip buying.
With more POMO announced yesterday bringing the total to somewhere in $100+B range (I may be way off here - I heard someone mention the total last night but I was in a sleepy haze), aren't we seeing back door QE2 as we speak? Hasn't it been happening?
I've been quite sure QE2 would happen, until yesterday with the new POMO announced. Makes me think, as I'm sure others, this is QE2 and will continue for some time.
This does not sound like a man about to do QE2
Bernanke's Warning to the Annual Meeting of the Rhode Island Public Expenditure Council.
"The budgetary position of the federal government has deteriorated substantially during the past two fiscal years..."
"Our fiscal challenges are especially daunting because they are mostly the product of powerful underlying trends, not short-term or temporary factors."
“The threat to our economy is real and growing,” Bernanke said. “The sooner a plan is established, the longer affected individuals will have to prepare for the necessary changes.”
http://federalreserve.gov/newsevents/speech/bernanke20101004a.htm
The past few weeks has been a perfect example of if you repeat something often enough people begin to believe...nobody knows what QE will or will not happen but caution has been thrown to the wind and everyone is a risk believer again...when the dollar catches a break from the oversold conditions this low-volume rally of prices gaps will be retracing quickly.
Mish has posted a number of articles in the past 2 years showing a 20 year graph of the Nikkei (in collapse) and the points at which Japan did their various stimulus and QE...and this was during a time when the rest of the world was booming and Japan was a major exporter
Mish has posted a number of articles in the past 2 years showing a 20 year graph of the Nikkei (in collapse) and the points at which Japan did their various stimulus and QE...and this was during a time when the rest of the world was booming and Japan was a major exporter
The Great OZ has spoken, and pay no attention to the man behind the curtain. COnfidence and coercion are complementary terms, like carrot and stick. Bernanke is riding us like a rented mule, time to stop.
"Full FAITH and CREDIT". Indeed!
+1,000,000,000,000
ehem.. the pump starts tomorrow. He couldn't even wait until November. Ben can't stop. http://www.zerohedge.com/article/why-qe2-qe-lite-may-mean-fed-will-purchase-almost-3-trillion-treasurys-and-set-stage-monetar
QE2 is happening. No announcements neccessary.
Fed buys paper, price of paper is stable or goes up. Simple.
They're neither putting a time line on it, nor will they disclose how much.
Controlled demolition is the goal, not a rapid recovery. QE2 will most likely not happen.
dup. post
Perhaps we can get Art Cashin and Alan Greenspan to share a room in a convalescent home.
It would be interesting to hear them talk.
i'm-a so happy, my shorts will be too! for sure!
What the Fed will end up doing on November 3, probably only Bill Gross knows
Might I suggest a quiet conversation with Mort Zuckerman and John Paulson
Chart: Dollar
Ain't going to happen.
http://99ercharts.blogspot.com/2010/10/dollar_271.html
Wow....
Dollar down stocks down, blood dripping from HFT servers.
How do you add images to comments?
By being a contributor.. Write an article, submit it and see.
When is Miles gonna join the contributor club? Tyler would be a fool to turn you down.
Thank you CD.
Soon I think. JAFO's corner perhaps ... Although I am not as optimistic that my work would be picked up here at ZH as you are.
Someone here lit a fire in my imagination a few months ago and now that my micro imperatives are more in balance perhaps my writing will be as well. However, I am sure some here would wonder at the wisdom of giving me the power to post images as well as links. :D
Meanwhile, I encourage you to continue your efforts..
Soyez réalistes, demandez l'impossible
Best -
P.S. I can only aspire to learn the craft and its tools as well as he.
http://www.youtube.com/watch?v=QzIT67dBkSc
i like the idea that its the Fed job to bailout every company in the S&P 500. They were part of the 500, right?
Eat it Charley
WFC -4.5%
didn't he say "suck it up"?!!!!
Tomorrow is stock options expiration. Must keep QE2 doubt alive.
There won't be any robo-crashes any longer. All the trading robots have been upgraded and recommissioned to perform document signing.
And this time around, the signatures will be faked properly, as opposed to half-assed jobs that we just saw.
CBU believes that the FOMC chief [as accusatory and vile an insult as can be mustered] is perched precariously betwixt an economy and a fed space; to wit, he is confronted by the banker's paradox: he must manipulate an economy which is so contrived that he is no longer able to lift it. on the one hand he MUST continue with QE∞, lest his precious markets collapse; on the other he MUST NOT continue with QE∞, lest commodity-price-inflation overwhelm the revolving-credit-capacity of the serfs. truly this is a vile and well-deserved conundrum he has created and now is impotent to resolve.
indeed ;)
indeed :(
i'm wondering which bank/individuals are going to be singled out to take the fall for the foreclosure mess.
the public wants blood, and they want to know the govt will do something about it...for the well being of the public...of course.
No doubt; the jawboning already bought at least 100 handles on the SnP. Not to mention collaborating lies out of Trichet.
They have run out of outlet valves though. Japanese, Germans, Aussies, and Swiss eating deflation, big time. Let's see how far they can push it.
Pardon me Mr. Proprietor - do you still accept Federal Reserve Notes in exchange for merchandise?
As an experiment that tragically failed, over a year ago I began to ask every person I did business with (post office, grocery store, shoe store, Lowe's, the phone company etc) over a weeks time if they would accept "Federal Reserve Notes" as payment. Granted most of them were clerks, but not all of them. In several cases, I asked to speak to the manager.
You of course know the results. I was refused every time from tendering legal tender. Until that is they were told it was "money" I was trying to pass and not gas. Except for the shoe store, whose manager believed I was a counterfeiter and refused my cash. Thankfully he accepted my plastic.
Now if I could just break in these shoes? :>)
lol, this is depressing.Well, at least it won't be our full spectrum comprehension of fiat currency that will be our undoing...
CD, I had a friend in high school that used to play the same "FRN" joke on clerks. We were juniors at the time and he just loved to see the puzzled, then angry look on the faces of those in the service sector. It ranked right up there with prank phone calls.
If it's like May 6th crash then gold to the moon.
If it's like Oct 2008 crash then dollar to the moon.
I'm betting on gold vs. dollar based on May 6th
fresh faces. love it!
The dollar is at support.
Open Interest on UUP Jan 11 CALL 24 is over 136K.
buying stocks betting on a QE II is equivalent to playing buyout arbitrage before the deal is publicly announced. A losers game that chasing rumor thingy. JMHO
Hopium...love it I am going to "sample" that word!
What no historic trivia today?
Even if they do QE2, there will arrive a moment down the road some months when there is a sudden realization that QE2 failed even more catastrophically than QE1, but by then, we'll be even worse off at that point! We'll be in even deeper debt!
I keep thinking that "the bigger they are, the harder they fall". The higher the current bubble inflates, the more money we can make when reality finally hits!
Really this is a great post from an expert and thank you very much for sharing this valuable information with us.
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