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My expectation is that they got exactly what they wanted from QE2 talk. Now it is time to execute and they will miss market expectations on the amount. However, there will be more lanugage to string along the market something along the lines of "additional QE may occur if required". This way they get a "real" increase in the economy without having to execute on it. As long as the net effect is positive they will continue this cycle.
What positive effect? markets != economy
With retail investors jumping ship on stocks, it is not like consumers have assets that they feel can back purchases. All that is happening is banks are making money, which is useless on its own.
"All that is happening is banks are making money, which is useless on its own."
That's an odd pronouncement! Is Ford a 'bank?"
Seems they're also making money. Along with CAT and the rest of them. A lot of money is being made by other than just banks, no?
Yes, the QE 2.0 talk was exactly that, get people to believe with their whole hearts that is will be coming in a big way on Nov. 3. Everyone puts their money in the markets expecting the Blackhawk armada to appear over the banks. Well, it is not going to appear this soon. Market crash first, then let the printing begin next spring.
You mean a crash like May 6? All the intervention has completely messed up everyones thinking. If we get a repeat of May 6, everyone will just stampede right back into the market within minutes fearing they`ll miss another buying opportunity.
Good point. Based on what has happened over the last 2 years, anything is possible going forward and we all know now that they will indeed pull the trigger in a big way if neccesary. Maybe they just implement a POMO like strategy and "string everyone along" for now as you said instead of a full on shock and awe campaign which could fizzle out? Seems to be working for the markets, right? No one wants to sell/short or even trade this market anymore. Everyone that is long is a happy camper. Pretty soon they won't even have to execute POMOs anymore as merely hinting at the possiblity of doing this alone may be enough to draw in buyers trying to front run the Fed. At this point, they can turn their attention to buying something else every other day. Perhaps we should all go out and buy homes before the Fed soaks up all the excess inventory? Lord knows, if all we can get is a lousy 0.3 pt uptick in consumer conf after the monster market rally in Sept/Oct then certainly something else needs to be done.
If the numbers come in above expectation stocks go up because the outlook is better. If the numbers come in worse, stocks go up because it means more QE. Easy game to play, just buy stocks are relax, the Fed's got your back !
Did anyone really take those numbers seriously? I know of no one who has more confidence today then they did a year ago (except foreclosure lawyers). Funny how a very easy to manipulate number comes out 15mins before POMO.
Seeing that Consumer Confidence number was definitely a WTF?? moment.
I am expecting a downward surprise in the GDP "estimate" on Friday. Should come in at about 1.25%, and will eventually be revised down to near zero. The revision will take years to get to the true number, but we are headed into negative territory again.
QE2 will be another "lite" version which has "worked" well in keeping the market pumped up. They will just keep pumping 5-10 billion in each week to make sure interest rates stay put, and they will try to keep the market from dropping to under 10K. POMO to infinity and beyond.
Confidence UP, Wages UP, Cap Utilization UP,
Prices Paid UP, New Orders UP, Shipments UP
Pardon me but I have a POMO to get to !
Hard to imagine why this isn't good news around here. I am happy to see things are getting better.
the horror! the stock market goes higher on bad economic news, because that supports low interest rates. the stock market is antithetical to small business, which is a leading indicator of economic growth. Wall Street hates small business, because sb takes money away from the corporate profits, (the financial crisis was engineered for this reason) when people shop at mom and pop, they don't shop at Walmart. (long long road down for sb here, and finally the corporate run banks just closed off credit to SBs, to help their corporate cousins, and government helped too -wonder they can't help SB, they don't want to- and there is the problem with the wealth effect. As stocks go higher, people have more money to spend (famous Greenspan axiom), but as the economy begins to grow, money that is locked up in stocks must be freed for real investment, not the eternal paper chase. Wall Street is the enemy of economic growth. Now you see when these numbers pop up, all talk of QEII is pushed back, but I for one expect Bernanke to simply throw gasoline on the inflationary fire, and stimulate even while things are improving. QEII and economic growth, really what's wrong with that? Well hyperinflation for one thing. Capital constraints, not enough money to go around, suddenly. And when Wall Street takes a hit, the wealth effect wanes, and consumers don't consume.
Psy Ops ...
Using behavioral conditioning to "nudge" markets and the economy.
Nudge: Improving Decisions About Health, Wealth, and Happiness by Richard H. Thaler and Cass R. Sunstein
Is there a dumber market measure than consumer confidence?
Only dumb when it beats. Great when it falls and doesn't beat. That's pretty much how it works around here. Same with things like ECRI. When it's falling, great, post it every time. When it's not, it's like it never existed or mattered to begin with.
Like Ford's earnings:
I'm still looking for Tyler's take on this news. I really don't see how things can be that bad with Ford sales @ $29B on an average price >$30K. No cash for clunkers as far as I can tell.
Maybe Ben is buying up the Expeditions via the PDs as well?
you must remember that Ford has much less competition now so it is not suprising that it is doing ok
The Fed has succeeded in transforming our capital markets into a soap opera/casino simulator. These weekly economic data points that everyone hangs on are largely meaningless noise, even moreso when the inevitable revisions are factored in.
So (day) trade on ZHers. You're in the mix with Goldman, JPM, and a slew of well-connected hedgies, but hey, deep down you know you're waaay smarter than they are -- you read ZH.
What a frikkin' zoo.
Watch the fed surprise... with no QE in november, but merely talk of it (which would be. of course, the right thing to do...i.e. nothing). Are you positioned for it?!!!
It's dead in the water in the UK after decent growth numbers (and rightly so when you have CPI running at 3.1%!).
DOW weekly chart shows the rising wedge contained within the megaphone pattern. This remains a very bearish picture and we shouldget a breakout soon.
QE2 will happen. Why? Because the banks can use the cash right about now!
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