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David Rosenberg On QE3 ETA

Tyler Durden's picture




 

As we wave goodbye to David Rosenberg, with his last free Breakfast with Dave issue coming out today, we present his most recent free thoughts on QE3.

QE3 WILL COME BUT NOT AS EARLY AS MR. MARKET WOULD LIKE

Portfolio managers as a group are running their funds overweight equities by an average of 67% relative to their typical benchmarks. And polls show that one-third of them believe QE3 is coming this summer. We already know that this Bernanke-led Fed is willing to be extremely aggressive, but as we saw in 2010, the hurdle is high for quantitative easing. We need (i) signs of a double-dip, (ii) a stock market correction of at least 15%, and (iii) deflation, not inflation. How on earth will the Fed be able to do anything at all by then if headline inflation is running north of 4% and the other central banks of the world are either snuggling policy or moving in that direction ? unless the central bank really wants to trash the dollar. We are certainly not inflationists and still see deflation in credit, real wages and housing prices.

Since the market will have a heart attack unless QE3 resumes on July 1, we tend to agree. July 2 would be quite a delay and certainly "not as early as Mr. Market would like." In the meantime expect a complete washout in all asset classes with an emphasis on commodities, which will allow the FOMC to push the reset button on inflationary expectations, and announce QE3 the very next day.

 

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Tue, 03/29/2011 - 10:57 | 1112743 baby_BLYTHE
baby_BLYTHE's picture

The Money Printer Will Print, That I am Sure

Tue, 03/29/2011 - 10:59 | 1112750 Dr. Richard Head
Dr. Richard Head's picture

looks like fed protest was not yesterday.  

Tue, 03/29/2011 - 11:50 | 1112982 jus_lite_reading
jus_lite_reading's picture

The Chinese have turned away a ship from California/Tokyo because of dangerous levels of rediation!!

http://fiatsfire.blogspot.com/2011/03/from-strange-to-absurdly-bizarre-a...

AND THE CEO OF TEPCO HAS GONE MISSING!!!!!

Tue, 03/29/2011 - 12:21 | 1113133 Manthong
Manthong's picture

Re: CEO,  TEPCO,  Oops.. Is there really only one honorable course of action?

Tue, 03/29/2011 - 13:15 | 1113320 Thomas
Thomas's picture

Going for the stick save.

Tue, 03/29/2011 - 13:40 | 1113399 Henry Hub
Henry Hub's picture

He is going to have a pretty serious stomach ache.

Tue, 03/29/2011 - 13:16 | 1113326 Milton Waddams
Milton Waddams's picture

From WaPo:

Tepco “is just too big to be accountable,” said Jeff Kingston, director of Asian studies at Temple University Japan.

TBTBA is the new TBTF.

Tue, 03/29/2011 - 14:21 | 1113595 NotApplicable
NotApplicable's picture

Which is quite the combination when you stop to think about it. The FUBAR has grown so large that it cannot be dealt with, yet we cannot allow it to fail, lest it take us down.

In other words, typical governed scenario outcome.

Tue, 03/29/2011 - 11:19 | 1112837 Robot Traders Mom
Robot Traders Mom's picture

Great analysis Blythe. I missed that in the article.

Tue, 03/29/2011 - 11:25 | 1112866 metastar
metastar's picture

Sounds like a Farber quote.

Tue, 03/29/2011 - 11:40 | 1112937 Clockwork Orange
Clockwork Orange's picture

Was an exact Faber quote - from approx 2 weeks ago, Bloomberg interview.

Tue, 03/29/2011 - 11:40 | 1112938 Clockwork Orange
Clockwork Orange's picture

Was an exact Faber quote - from approx 2 weeks ago, Bloomberg interview.

Tue, 03/29/2011 - 12:01 | 1113004 baby_BLYTHE
baby_BLYTHE's picture

Yes, It is a quote from Marc Faber. Exact quote CNBS Squak Box right after the Japan Tsunami:

"The Money Printer will continue to print, that I am sure"

http://www.youtube.com/watch?v=F1aGLLE6fwM

Marc Faber: "If you take a bearish view like me and you think everything will collapse and we will have WWIII...."

Steve LIESman response: "huah" "ah" "ehm"... "ugh"...

All the way to QE 18, bitchez!

Tue, 03/29/2011 - 11:26 | 1112879 MapleLeaf
MapleLeaf's picture

Faber couldn't say it better himself

Tue, 03/29/2011 - 11:36 | 1112926 markmotive
Tue, 03/29/2011 - 11:28 | 1112887 SWRichmond
SWRichmond's picture

I'm sure of it, too.  But this next time it could be because we demanded it.  "One mighty deflation to scare them all."  "Save us, Ben!"

Tue, 03/29/2011 - 13:30 | 1112999 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

We already had that.  One thing that always comes to mind when I hear the word deflation is that we had such a huge deflationary collapse that gold moved down.  They even got the dollar to go up a bit.

The big move down already happened.  Yes big money is still trying to move into mining shares and other ways to "own" PMs (SLW cough, cough), and people all around the world, as in the other side of the world (as well as here), are buying physical, but how leveraged can the system get?

There is no fundamental metric for economics.  They have all been toyed with.  How can someone chart supply/demand when P is a fallacious invention?  The Fed sets price.  There is no real price without them declaring it so.  Alchemy has taken a hold of the world, and this happened long ago.

The Fall of '08 mirrors the aftermath of the battle of Waterloo.  After the battle certain families (cough, Rotheschildes, cough) upon receiving the news lied of who won, crashing the British markets.  Those in the know picked up the assets for pennies on the pound.  I am not saying that there should not have been a deflationary case in the Fall of '08, but is it not history repeating itself knowing that Buffet placed billions in a nice position?  Did he know Tim and Ben would save him?  I think so.

Will there be more debt destruction?  Obviously.  The housing market is about to collapse on itself.  The real question is, how much longer will the Fed provide for bank assets?  And...how much longer will the dollar and all fiat be able to hold the weight of the world above the deep and dark abyss?

Tue, 03/29/2011 - 14:50 | 1113728 Unlawful Justice
Unlawful Justice's picture

This Magic show is almost over. It becomes political suicide to propagate the inevitable.  Extend and pretend all you want D.C and cohort chairsatan, but confidence from the Vox populi must be restored at all cost.  All this trickery dies in soundless defiance by our silent non-participation, as hegemonic power is reduced by brutal reality.  This is the next chapter in Hope and Tragedy.

Tue, 03/29/2011 - 13:59 | 1113491 Bicycle Repairman
Bicycle Repairman's picture

Looks that way to me.  I don't think there is a very big constituency for deflation.

Tue, 03/29/2011 - 11:29 | 1112897 Burnsy
Burnsy's picture

Gotta love Dr Faber.

Tue, 03/29/2011 - 11:35 | 1112911 Lost My Shorts
Lost My Shorts's picture

Whenever everyone is sure something will happen, it won't happen.  (So goes the conventional wisdom around here.)  Everyone is sure the equity market will have a "heart attack" without QE3.  Everyone.  Totally.  Sure.  That means stocks will rise through the summer, right?

Tue, 03/29/2011 - 10:59 | 1112752 Horatio Beanblower
Horatio Beanblower's picture

If/When commodities get hosed, it will be interesting to see the divergence in the paper and physical markets for gold and silver.

Tue, 03/29/2011 - 11:10 | 1112795 TwoShortPlanks
TwoShortPlanks's picture

I am counting on exactly that, AND, no QE3 courtesy of Ching-Chong Chinaman.

Tue, 03/29/2011 - 11:27 | 1112881 painequalschange
painequalschange's picture

Not a word today on "Stand For Delivery" in silver?

I'm talking about standfordelivery.com

 

Tue, 03/29/2011 - 12:08 | 1113062 jus_lite_reading
jus_lite_reading's picture

Stand for delivery is everyday!

Tue, 03/29/2011 - 12:11 | 1113084 Horatio Beanblower
Horatio Beanblower's picture

Correct, jlr.  Ounce by ounce; brick by brick.

Tue, 03/29/2011 - 12:26 | 1113147 snakeboat
snakeboat's picture

Quick question for y'all... do you prefer coins or bars?  Do ya go fer bars for bigger purchases?  Lots of coins for trading once the SHTF or bars for reconverting to currency during the fall to pay for day to day shite?  I'm thinking a combo is good.

And why are coins like $3-5 over spot per?

Tue, 03/29/2011 - 14:06 | 1113529 Devore
Devore's picture

Because they're pretty.

Tue, 03/29/2011 - 14:47 | 1113712 GoinFawr
GoinFawr's picture

I love your poetry Mr. Blake

"...Every night, and every morn, some to misery are born. Every morn, and every night, some are born to sweet delight. Some are born to sweet delight, some are born to endless night..."

Tue, 03/29/2011 - 13:01 | 1113273 Troll Magnet
Troll Magnet's picture

dude, stormfront.org is ---> way.

Tue, 03/29/2011 - 11:01 | 1112754 jkruffin
jkruffin's picture

I encourage everyone, to take the 2 or 3 minutes it takes, and write your folks in Congress and stop this QE experiment. Otherwise, we will all pay the price.  QE3 needs to be blocked permanently, and use other measures used to cure the ailments.  The other measures are slower, but QE is only working for the rich elite.

Tue, 03/29/2011 - 11:04 | 1112772 Ivanovich
Ivanovich's picture

Sure, like that does anything these days.

Tue, 03/29/2011 - 11:59 | 1113025 WakeUpPeeeeeople
WakeUpPeeeeeople's picture

You might try including a watermark of a guillotine or maybe one of those pics of Mussolini swinging

Tue, 03/29/2011 - 11:10 | 1112798 Long-John-Silver
Long-John-Silver's picture

It will not do any good. Congress has become irrelevant as can now been seen by a Dictatorial President that no longer consults congress even in the process of starting a war. He has his Tsar's controlling the helm of government by way of Government Agencies such as the EPA and Federal Judges that can and do strike down any legislation coming out of congress. The USA as a Republic is gone forever. We have become a Banana Oligarch.

Tue, 03/29/2011 - 11:13 | 1112805 jkruffin
jkruffin's picture

You don't know until you speak up....the more the better.

Tue, 03/29/2011 - 11:18 | 1112834 Long-John-Silver
Long-John-Silver's picture

What do you think caused the TEA party? I remember when they simply turned off the phone system and ignored even postal service delivered letters. No, we're done, The Republic is finished. When they crash the US Dollar; States will simply secede and ignore Washington D.C.

Tue, 03/29/2011 - 11:42 | 1112942 ebworthen
ebworthen's picture

Exactly - but the States will have a hard time letting go of the Federal teat.

Tue, 03/29/2011 - 11:57 | 1113017 Long-John-Silver
Long-John-Silver's picture

Worthless US Dollars = dry teat.

Tue, 03/29/2011 - 11:50 | 1112967 Temporis
Temporis's picture

I look forward to that day.

I say Texas goes first, followed by Arizona, Utah, and Montana.

 

Hell Utah is already trying to pass a law so gold and silver could be used as legal tender.

http://www.digitaljournal.com/article/305062

 

Tue, 03/29/2011 - 11:53 | 1112994 jus_lite_reading
jus_lite_reading's picture

Its almost a done deal in VA..... next up, Vermont. Once Vermont goes, its game over for the banksters.

Tue, 03/29/2011 - 11:20 | 1112841 Dr. Richard Head
Dr. Richard Head's picture

My supposed Senator, Sherrod Brown, received 2,000 phone calls, email, and visits a day with 95% of them AGAINST TARP - http://en.wikipedia.org/wiki/Emergency_Economic_Stabilization_Act_of_2008

Just take a wild fucking case as to which way he voted, along with Senator Voinovich? 

Representative democracy doesn't exists and neither does our Republic. 

Tue, 03/29/2011 - 12:23 | 1113134 Voluntary Exchange
Voluntary Exchange's picture

+534 or +540 (depending on how you define Congress)

So did the other congressional members!  And we saw what happened. The whole system is just for show, and to pretend you matter so you will keep feeding them. Banker bailouts, and a mad rush by the bankers to bonus out the cash without any care for their stock holders - you think they know something? Money now looked a lot better to them than money later. Just like when they are the first ones out of Japan. You can clearly see what they "trust" in, and where their priorities are.

Tue, 03/29/2011 - 13:21 | 1113348 rosiescenario
rosiescenario's picture

Gubbamint by and for the special interest groups...for example, Monsanto has a private meeting with Obuma, and 2 days later, the USDA gives unregulated, blanket approval for Monsnato's GMO RoundUp Ready alfalfa, despite all the warnings and testimony....just one more recent example of who really runs the show.

Tue, 03/29/2011 - 14:37 | 1113653 magis00
magis00's picture

Dr. Richard Head - pleased to hear from a fellow Ohioioan(ae?).

Tue, 03/29/2011 - 11:49 | 1112969 Ray1968
Ray1968's picture

Permit me to issue and control the money of the nation and I care not who makes its laws

 

That's all you need to know.

Tue, 03/29/2011 - 11:54 | 1112996 Fearless Rick
Fearless Rick's picture

Moron. You probably think voting matters, too.

Tue, 03/29/2011 - 11:59 | 1113026 Truthiness
Truthiness's picture

I think we've got a loooong way to go before we will become a "banana oligarch" - get outside and walk around. Plenty of people going about their business, raising their families, oworking hard and enjoying life without obsessing over the what "leaders" are doing...

Tue, 03/29/2011 - 12:39 | 1113172 Voluntary Exchange
Voluntary Exchange's picture

If they can get together and stop feeding the beasts we got a chance.  We need our own new kind of "Berlin Wall" moment and this time take Jefferson's words to heart and inisist that everything must be done based on CONSENT (that means voluntary -  or I "buy" from someone else and you don't get to shoot me because I'm not your "customer" anymore)! Then the world will finally have an America they can look up to again instead of running for cover as the drone bombs drop, or having all their drinking water and utilities, and major industry bought pennies on the dollar while their own "government" leaders retire to the Bahamas. Then we might finally see our statist nightmares change into a meaningful future.

Tue, 03/29/2011 - 12:57 | 1113263 web bot
web bot's picture

Sure... in your gated community. I'm sure the neighborhoods are quite with 1 in 9 homes vacant... Sure...

Tue, 03/29/2011 - 11:09 | 1112800 TwoShortPlanks
TwoShortPlanks's picture

Chill, it won't happen!

Tue, 03/29/2011 - 11:16 | 1112823 Dr. Engali
Dr. Engali's picture

It's too late. The system can't sustain itself. Whether you want to believe it or not we are past the point of no return. The Fed is all in.

Tue, 03/29/2011 - 11:24 | 1112872 traderjoe
traderjoe's picture

They have no way of financing the deficits without QE. QE to Infinity and Beyond.

Tue, 03/29/2011 - 12:01 | 1113027 Thomas Jefferson
Thomas Jefferson's picture

The point of no return was 2003.  QE 3, named or unnamed will proceed.  Book it.

Tue, 03/29/2011 - 11:33 | 1112914 fx
fx's picture

Yeah, write this to your congressman - he will instantly terminate the chaircrook. But wait, he actually belongs to this rich elite, no?

Tue, 03/29/2011 - 11:43 | 1112939 ebworthen
ebworthen's picture

Letter?  Congress?

The paper ones they shred for confetti at parties and inaugurations.

The email letters are forwarded to the security agencies tagged "possible domestic terrorist" or used to forward stuxnet worms to Iran - or given to Google/Facebook for marketing and research.

The virtual Capitol Dome (beltway bubble) extends out 150 miles from it's epicenter in D.C. and keeps out all constituent thought, while holding in bribes, kickbacks, free healthcare, and a special bunker.

Tue, 03/29/2011 - 12:11 | 1113072 tsx500
tsx500's picture

" just write your folks in Congress"              GOOD  ONE  ! !

Tue, 03/29/2011 - 14:27 | 1113612 NotApplicable
NotApplicable's picture

Sorry, had to junk your slave ass. You need to wake up and stay the hell away from voting booths.

Take your violent solutions elsewhere. Society only works in a voluntary form. Everything else is just a madman with a gun.

Tue, 03/29/2011 - 11:04 | 1112759 TradingJoe
TradingJoe's picture

There are no other choices for the Benster since the one and only passed long time ago!

Print or die?! Die printing?! I bet it's DIE PRINTING!

PS WB7 maybe you have something depicting The Benster Dying while Printing?!?! Lots of Zero's on the screen, his "middle finger" right about to hit "enter"?!?!

Tue, 03/29/2011 - 11:06 | 1112784 Deepskyy
Deepskyy's picture

Or even more awe inducing...

Give me printer ink... or give me DEATH!

Tue, 03/29/2011 - 11:03 | 1112760 Long-John-Silver
Long-John-Silver's picture

Perhaps they plan to fix the Middle East problem by causing food inflation so high it results in starvation by 90% of the population.

Tue, 03/29/2011 - 11:06 | 1112786 Holodomor2012
Holodomor2012's picture

No one would ever be so cruel.

Tue, 03/29/2011 - 11:19 | 1112848 Long-John-Silver
Long-John-Silver's picture

Obviously they simply don't care. I remember hearing one environmentalist say "One less human results in one more day for the earth".

Tue, 03/29/2011 - 11:59 | 1113015 Spastica Rex
Spastica Rex's picture

What do ya reckon they would say about one less banker?

Tue, 03/29/2011 - 12:55 | 1113253 web bot
web bot's picture

... or environmentalist?

Tue, 03/29/2011 - 12:24 | 1113136 Financial_Guard...
Financial_Guardian_Angel's picture

Not the basis for the plan, but it does make for what the elite may call "a pleasant (or should I say peasant) side-effect".

Perhaps these ME countries can import some plutonium from Japan and grow some potatoes the size of a small car--that would solve the starvation problem one way or the other...

Tue, 03/29/2011 - 11:03 | 1112766 bugs_
bugs_'s picture

The keynesians taught us there was a 9 month lag for monetary stimulus to show up in the economy.  So the election is in November 2012.  they'll need "whatever" to kick in when September 2012 comes around. Maybe summer is a bit early for QE3.  As an economics student I have to throw in the obligatory "on the other hand" the junkie is getting almost no high from his fixes anymore.

Tue, 03/29/2011 - 11:12 | 1112803 GoldenDragon
GoldenDragon's picture

Summer may be too early for an election pumping QE, but it will still happen.  I imagine the election pumping will be QE4 or 5.

Tue, 03/29/2011 - 12:24 | 1113137 ElvisDog
ElvisDog's picture

I think the law of diminishing returns tells us that each QE will have less and less effect. When QEX comes along and does nothing, or when the market turns down in spite of it, that's when it's game over. Belief in QE working forever to keep the markets elevated is adolescent thinking at best when QE is corrosive to the underlying structure and health of the economy.

Tue, 03/29/2011 - 14:30 | 1113622 NotApplicable
NotApplicable's picture

This is one of the reasons they will have to let some stuff break before rolling out QE3. The reset gives them some room to operate with a positive appearance.

Tue, 03/29/2011 - 11:14 | 1112775 TwoShortPlanks
TwoShortPlanks's picture

There will be no QE3. As sure as the US Gov will never again say China is a Currency Manipulator, the Feds' printing days are done. The FOMC minutes looked like they were pre-written months earlier, not a mention of Japan's woes or even BOJs' intervention.

There is a relationship (ultimatum) going-on I tell you, I can smell it.

 

Tue, 03/29/2011 - 13:27 | 1113365 Cleanclog
Cleanclog's picture

Predict QE3 will be purchasing munis, JGBs and PIIGS cuz we can't have them borrowing (er, make that surviving rollovers) at 20% interest rates.  Oh, and look for yield curve narrowing - and once we get the inflation to really kick in (except in housing) look for yield curve inversion.

Tue, 03/29/2011 - 13:51 | 1113456 bbaez
bbaez's picture

I am in housing

Help me understand how rates will remain low?

(correlation of rates & yield)

Tue, 03/29/2011 - 22:23 | 1115393 TwoShortPlanks
TwoShortPlanks's picture

***ATTENTION - ATTENTION***

Everyone, please, put down your stats, your curves, your mathematical instrunments and text books, I would like to bring your attention to the REAL world from here-on-in, we are now playing a Socio-Politico-Economic game of...you guessed it, BRAND WAREFARE!

So, forget everything you've learned about economics and stock markets, it's all shifted to a simple game of Coke versus Pepsi.

PS, the US is now Pepsi, and you've got Michael Jackson on your side!

Tue, 03/29/2011 - 11:06 | 1112783 buzzsaw99
buzzsaw99's picture

QE is the new pump and dump mechanism.

Tue, 03/29/2011 - 12:03 | 1113036 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

I prefer the term, "pump, hump, and dump".

Tue, 03/29/2011 - 13:52 | 1113464 bbaez
bbaez's picture

For Every Pump and Dump there is a TRASH & CASH

Who is Trash & Cash's Next Victim?

Tue, 03/29/2011 - 11:11 | 1112785 Hard1
Hard1's picture

Capitalism is dead comrades, the patient just regained a bit o color from the last heroin shot, but we are beyond the point of return.

Market behaving like before QE2 again, rallying on bad news on expectations that FED will get us truckloads of heroin...ahem QE.

Give me a printer big enough and I will move the market  (Bernankides c. 2011)

Tue, 03/29/2011 - 11:24 | 1112863 JW n FL
JW n FL's picture

http://www.youtube.com/watch?v=4Z9WVZddH9w 

It is long... but not without merit.

Tue, 03/29/2011 - 14:37 | 1113659 AsIseeIt
AsIseeIt's picture

JW - Thank you for this link.  This is one of the most powerful, thought provoking, films I have ever seen pertaining to economics.  Even better, is the potential solution presented.

Again, thank you for the link!

Tue, 03/29/2011 - 12:04 | 1113045 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

I am Jack's lack of surprise.

Tue, 03/29/2011 - 11:08 | 1112788 I am Jobe
I am Jobe's picture

Are they running out of Ink and have to ask India and China to assist.

Tue, 03/29/2011 - 11:07 | 1112789 bania
bania's picture

I like Jim Rickard's thesis (presented on KWN recently) that the Fed's balance sheet is so large they can just monetize the with the cash flow coming in, "QE in perpetuity", but never have to announce another official QE program again.  If this is the case, such news that they're done with QE ought to give the PMs quite a knock and shake out the weaker hands.  

But regardless, long term money debasement, whatever the form, is likely the norm.

Tue, 03/29/2011 - 11:15 | 1112825 umop episdn
umop episdn's picture

Mr. Rickard used to be understandable, even to a financial idiot like myself. However, I fail to understand how nearly 3 trillion of mostly dodgy assets can produce a 750 billion/year income stream, as I understood him to say.

The Fed has got to print, because the debt has got to grow. Queasing to infinity! The Queasing State of America 4 evah! QSA! QSA!

Tue, 03/29/2011 - 11:24 | 1112861 Bam_Man
Bam_Man's picture

It is the re-investment of amortized principle that will allow the Fed to hold the balance sheet steady at approx. $3trillion and continue to monetize.

Tue, 03/29/2011 - 13:58 | 1113492 Derp2012
Derp2012's picture

I don't get this either.  Amortized principal has to be rolled to keep the total debt constant.  Only the interest portion would be available to increase the total debt.  So, the point still stands, how do you get $750B in interest to reinvest with assets that are either worthless to begin with in the case of MBS, or pay maybe 3-5% interest rates in the case of Treasuries???

Tue, 03/29/2011 - 11:15 | 1112827 Robot Traders Mom
Robot Traders Mom's picture

Agreed, I hope the weaker hands get shaken out in PM's because in the long run, we are fucked and I want to buy cheaper.

You owe me dinner at Mendes.

Tue, 03/29/2011 - 11:26 | 1112873 RichardENixon
RichardENixon's picture

Don't you want to go twice?

Tue, 03/29/2011 - 11:32 | 1112909 Robot Traders Mom
Robot Traders Mom's picture

Only if I get a bowl of soup

Tue, 03/29/2011 - 11:41 | 1112944 bania
bania's picture

Sure thing, Man Hands

Tue, 03/29/2011 - 11:35 | 1112924 Raynja
Raynja's picture

Problem with this theory is that interest payments are remitted to the treasury. If this gets changed it increases burden on fiscal side to prop up stocks, seems easier to just print ad infinitum.

Tue, 03/29/2011 - 12:48 | 1113230 francis_sawyer
francis_sawyer's picture

I generally agree here...

Rickards might be right in a sense that it can "start out" that way... But ENTROPY will eventually rule...

Tue, 03/29/2011 - 12:10 | 1113079 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Jim broke the first two rules so many times the other day I lost track.

http://kingworldnews.com/kingworldnews/Broadcast/Entries/2011/3/27_Jim_Rickards.html

Tue, 03/29/2011 - 11:08 | 1112793 Robot Traders Mom
Robot Traders Mom's picture

I like Rosie but what he sees as "deflation in credit, real wages and housing prices," is what I call price discovery post-artificial manipulation.

This is exactly what the Fed is targeting in QE: Housing, wages, and credit. They don't give a shit about food prices or margin compression. Inflation will move up the prices of the toxic assets the banks hold and will alleviate them from their balance sheets. Pure and simple.

Tue, 03/29/2011 - 12:55 | 1113249 Voluntary Exchange
Voluntary Exchange's picture

Not if they keep bonussing out the cash, as if the music has already stopped and we just don't know it yet.

Tue, 03/29/2011 - 11:08 | 1112796 Bam_Man
Bam_Man's picture

With the FedGov's FY2011 deficit close to (if not more than) $2 trillion, you can rest assured that there will be a QE3, and that there will be a very short gap timewise between QE2 and QE3.

It is only a matter of coming up with a reasonable sounding "excuse" for doing it.

Tue, 03/29/2011 - 11:27 | 1112891 RichardENixon
RichardENixon's picture

It will probably be something as reasonable as "the dog ate my homework" or maybe "I see everything twice."

Tue, 03/29/2011 - 11:31 | 1112908 traderjoe
traderjoe's picture

Exactly. Otherwise you might even see a gov bond auction fail. Why else are the Primary Dealers taking down so much of the auctions and then flipping them to the Fed in 2 weeks?

Tue, 03/29/2011 - 14:33 | 1113630 NotApplicable
NotApplicable's picture

Because it's good work, if you can get it.

Tue, 03/29/2011 - 11:10 | 1112797 plocequ1
plocequ1's picture

QE will continue. Its the way the owners want it. Discussions on this matter is a side show to keep us at bay. QE.. Its whats for dinner.

Tue, 03/29/2011 - 11:13 | 1112804 dasein211
dasein211's picture

I miss the Fukushima updates.....

Tue, 03/29/2011 - 11:20 | 1112844 umop episdn
umop episdn's picture

This article is pretty good, imho:

http://allthingsnuclear.org/post/4136147791/how-much-does-japan-know-abo...

This is from a Korean paper called Dong-a-ilbo. How could you go wrong with that? :)

`Japan nuke reactors` pressure vessels punctured`

http://english.donga.com/srv/service.php3?biid=2011032943408

Tue, 03/29/2011 - 11:14 | 1112812 buttmilk
buttmilk's picture

What if QE2 is it and it stops, what happens then.

Tue, 03/29/2011 - 11:15 | 1112824 TwoShortPlanks
TwoShortPlanks's picture

That's what I've been thinking about...I give it 6-12 mths, at best!

In this senario, Gold and Silver will exceed critrical mass and go-off like a belt-fed mortar!

Tue, 03/29/2011 - 11:16 | 1112832 TradingJoe
TradingJoe's picture

Unfortunately we will never know, because it will never stop, capisci?!?!

Tue, 03/29/2011 - 11:20 | 1112845 Cdad
Cdad's picture

What happens?  Price discovery.  The market clears.  Value is revealed at a certain level.  Capital forms.  Investors return.

It is called Free Market Capitalism.  We used to believe in it.  Greenspan and Bernanke showed up on the scene and interrupted attempts at free market capitalism.  We continue to suffer because of them.  Things are hoarded.  Prices continue to be entirely disconnected from value.  Everything is about momentum, price movements, and gnome underpants...topped off with huge dollops of clever accounting brought to us by the criminal syndicate known as Wall Street.

Toss on media that has entirely left the rails itself, trying to be in the cool kids club, and you have a nation on the brink of Marxism.

Having fun yet?

Tue, 03/29/2011 - 12:52 | 1113235 francis_sawyer
francis_sawyer's picture

Only the great HARRY WANGER has the ultimate skills to be able to "price in" something like that...

Tue, 03/29/2011 - 13:23 | 1113345 Voluntary Exchange
Voluntary Exchange's picture

You can't have free market capitalism without capital, and a monopoly system of security and justice ("government") long ago decided fiat money was a good thing for their friends in power.

As long as the mafia gets to print and insists at gunpoint you take it or go to jail or worse, no "capital" is safe from expropriation through debasement. Debasement must end or the basic idea of thrift and investment in your civilization is not going to work. Or to put it another way, if the looters aren't stopped, it isn't going to matter, because we will jest end up in the same place again, assuming we live long enough to find out after this next crash. But someone will be around then and I would prefer we finally solve the problem once and for all like Jefferson mentioned in that declaration that people fought and died for, only to be hoodwinked by the later constitution and the whole convenient forgetting about the "consent" part of the deal.

Funny how every other "government" on this planet seems to want to forget that "consent" thing too and insist you "buy" their "product" using a gun to get you to agree. Solution: you keep the money this time and "vote" with your "purchase" based on who does the best job for you personally, not based on who is the best liar because a political system that rests upon the initiation of force is a definite fly in the soup of "civilization". This time we go for "voluntarism", free markets in governmental services, and no monopoly providers with captive "customers".

Tue, 03/29/2011 - 11:42 | 1112941 buzzsaw99
buzzsaw99's picture

QE is everywhere. It is all around us. Even now, on this very blog. You can see it when you look out your window or when you turn on your television...

Tue, 03/29/2011 - 14:35 | 1113650 NotApplicable
NotApplicable's picture

...It is the world that has been pulled over your eyes to blind you from the truth.

Tue, 03/29/2011 - 11:13 | 1112813 carbonmutant
carbonmutant's picture

They're going to try to conserve fuel by seeing how far this Wankel will coast before they waste any more resources...

Tue, 03/29/2011 - 11:27 | 1112886 Hansel
Hansel's picture

Waste resources?  Printing digital money has no cost.

Tue, 03/29/2011 - 11:46 | 1112966 carbonmutant
carbonmutant's picture

I think they're afraid of the Political cost next November...

Tue, 03/29/2011 - 11:43 | 1112945 buzzsaw99
buzzsaw99's picture

Stuff their pockets with another pump and dump is more likely.

Tue, 03/29/2011 - 11:48 | 1112974 carbonmutant
carbonmutant's picture

Well if we believe what Rosie's saying I certainly wouldn't want to be holding any equities at the end of May...

Tue, 03/29/2011 - 11:15 | 1112814 AN0NYM0US
AN0NYM0US's picture

In the meantime expect a complete washout in all asset classes with an emphasis on commodities,

Go for it Rosie we've been waiting a couple of years for your oft predicted washout in equities, perhaps 23rd time is the charm or maybe this is just your (black) swan song

Tue, 03/29/2011 - 11:16 | 1112820 fxretracer
fxretracer's picture

the end of QE2 will be like a giant tax break for the consumer, so I dont understand this doomsday scenario being talked about by QE3 wishers.

Tue, 03/29/2011 - 11:23 | 1112856 TwoShortPlanks
TwoShortPlanks's picture

WTF? Ummm, if QE3 never happens, that's effectively a US$100B a month contraction. Bye-bye commodity bubble, bye-bye Bond Market.

From my limited understanding, stopping QE or jacking rates do the same damn thing if an econmomy is acustomed (addicted); it triggers a contraction of credit...another GFC heart attack.

Tue, 03/29/2011 - 12:53 | 1113237 web bot
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This is the most smartest comment on the site today... we'll second most smartest.

Tue, 03/29/2011 - 22:25 | 1115407 TwoShortPlanks
TwoShortPlanks's picture

Thanks 'Web Bot' you may now have my children.

PMs to the Moon!

Tue, 03/29/2011 - 14:45 | 1113690 NotApplicable
NotApplicable's picture

I doubt there are any QE3 wishers here. Instead there are QE3 predictors, who simply see the impossibility of the ponzi to survive another day without it.

There is no escaping the consequences of a credit-fueled crack-up boom. So Benron will QE until it all blows up in his face. Then look for the IMF to "save us" with ZIRP out to the end of the yield curve, as there will be no market left for lending at interest. Instead all lending will be political, secured by their captive populations.

Tue, 03/29/2011 - 11:15 | 1112826 MiningJunkie
MiningJunkie's picture

There is no way that the Wall Street-owned Fed and its bribed Washington pols will allow for a deflationary collapse - UNLESS - the citizens of Des Moines and Wichita and Saint Louis and Denver all rise up and say "NO FUCKING WAY"  to the inflationary assault on their living standards.

My vote is that QE III, IV, V, and VI are all on the horizon.

And as you all know: "One must never underestimate the replacement power of equities within an inflationary spiral."

Tue, 03/29/2011 - 11:16 | 1112830 SDRII
SDRII's picture

Then IMF funding line is QE 3.0x at least a stopgap. Q up the ron paul questioning last year of the Bernank as to where the IMF money comes from. bernanke counters it is a loan?  and gets paid back. it is almost as clear as the ESFS needing no capital when it has the soundmoney credit guarantees coming from the PIIGS trough

Tue, 03/29/2011 - 11:19 | 1112838 Dan The Man
Dan The Man's picture

i'm begging for a washout in commodities...so i can load up !

...still waiting

Tue, 03/29/2011 - 11:19 | 1112846 InconvenientCou...
InconvenientCounterParty's picture

Put yourself in the shoes of Tim and Ben. You have to figure out how to create $1T out of thin air every year to fund the U.S. entitlements, keep petro-dollars stable and not collapse the whole Empire. $1T/yr is just what's on the books. Those wars and carrier groups and missiles are not cheap either. Prolly another $1T off books.

They know they are playing a dangerous game with the highest of stakes. Those are stakes 99.9% of the world will never understand. You don't want that job.

Yes, QEx is part of this elaborate magic trick. Misdirection is the key to the next notional market move --which will, of course make Q3 the obvious choice. This ain't your daddy's three card monte.

 

 

Tue, 03/29/2011 - 11:43 | 1112958 buzzsaw99
buzzsaw99's picture

You have to figure out how to create $1T out of thin air...

 

SHIFT + ENTER

 

that easy

Tue, 03/29/2011 - 14:48 | 1113709 NotApplicable
NotApplicable's picture

Actually, I think on Ben's keyboard it is the F1 key.

Tue, 03/29/2011 - 11:22 | 1112851 RunningMan
RunningMan's picture

If QE2 was working so well, then wouldn't we see more employment and busy-ness? I know some posters have said some sectors are hot/flat-out, but it seems very uneven. What will be different with QE3 that guarantees its value? 

Tue, 03/29/2011 - 11:39 | 1112932 traderjoe
traderjoe's picture

I don't think many ppl here, save a few trolls and 'optimists', think QE worked. But those that think QE3 is up soon believe that's what the Fed, banks, and deficit-spenders want. And ppl know here that for the moment we are like bugs on a windshield. For the moment...

Tue, 03/29/2011 - 11:20 | 1112853 NOTW777
NOTW777's picture

for the moment all the fed has to do is keep POMOing and floating rumors of QE3

 

Tue, 03/29/2011 - 11:22 | 1112855 JW n FL
JW n FL's picture

"In the meantime expect a complete washout in all asset classes with an emphasis on commodities,"

***Cough*** Bullshit ***Cough*** No one is stopping buying and if there is a dip the Dips will BTFD! on a Global Scale.

 

"which will allow the FOMC to push the reset button on inflationary expectations, and announce QE3 the very next day."            

Some indicators may want to be tinkered with.. but at the end of the day the market death spiral will compel the FED to issue more Paper Printed out of thin air for the purposes of pumping the Markets. 

Tue, 03/29/2011 - 11:29 | 1112900 TwoShortPlanks
TwoShortPlanks's picture

You know what, I agree with what you're saying, but I think you're looking at this from too narrow a trading view. The Fed, the Treasury, and Obamas' office all know that eventually this game is going to end, that extend and pretend has a used-by date. Already the Fed's being politically attacked, and what better than to stop printing and have a nice collapse...vindication of the past 3 years is what will happen.

So, my view is that the Fed and Treasury both realise that this game is unwinable, so better to have a controlled crash now, than an uncontrolled crash later.

Tue, 03/29/2011 - 12:20 | 1112971 buzzsaw99
buzzsaw99's picture

The CONgrift is well aware of the ongoing hostage situation. Don't %%%% with us or the stock market gets it!

Tue, 03/29/2011 - 11:27 | 1112878 partimer1
partimer1's picture

I think we will get all three things mentioned in May or earlier so that QE3 will be here on time. remember it doesn't take much time for stock to tank 15%. a couple of weeks work by the concerted effort will get us there. preparation is probably on the way. 

Tue, 03/29/2011 - 11:26 | 1112882 AmazingLarry
AmazingLarry's picture

Never understood what was so "easing" about it, anyway. Just be honest bitchz, it's smoke and mirrors. 

Dow to 16,000 and then death spiral city.

 

Tue, 03/29/2011 - 11:38 | 1112916 TwoShortPlanks
TwoShortPlanks's picture

QE was supposed to force Banks to lend and stimulate the economy by taking Bonds out of the open market, BUT, with a stagnant economy, all it did was pump Commodities, turned the Bond Market in a burger flipping event, continued the Banks' bailout by loading radioactive paper onto the Feds' Balance Sheet, and allowed Banks to not lend much at all. That's why the Housing Sector's so fucked-up; the Vampires are getting a free feed elsewhere.

It wasn't food for the body of the economy, it was adrenalyn.

Tue, 03/29/2011 - 14:21 | 1113228 web bot
web bot's picture

You are right on the money.

Tue, 03/29/2011 - 11:26 | 1112885 assumptionblindness
assumptionblindness's picture

Three words: 

Mark To Fantasy

Tue, 03/29/2011 - 11:27 | 1112888 99er
99er's picture

/ES and /ZB

Long Bond catching a bid?

http://www.zerohedge.com/forum/99er-charts-0

Tue, 03/29/2011 - 11:30 | 1112895 Cdad
Cdad's picture

Apple is about to take a dump on today's "rally."

Tue, 03/29/2011 - 11:38 | 1112936 Cdad
Cdad's picture

Oh...and CAT...that one is going to take a crap, too.

Mark it....today's "rally" [which is really suspect on account of how almost no one is in except for some fucked up retarded algo accidentally left on in the room next to where Duncan Niederauer takes his afternoon crap] is just about out of its vapor bid today.

Have fun with the plunging and screaming, the "who could have seen that one?" type commentary, to be followed by what the syndicate already knows is...the DRAMA over the budget.

Oh my, who could have seen this one coming...you know, one continuing fraudulent resolution after another, fucking hockey helmet wearing NY brokers leading the dumbshit parade.  Seriously, who could have seen it, right?

Anyone know where there is even one chair that does not have banker puke on it...so that a guy could sit and watch the coming show?

Tue, 03/29/2011 - 11:27 | 1112889 partimer1
partimer1's picture

by the way trashing the dollar, of course we will, what do you think we have been doing? 

Tue, 03/29/2011 - 11:27 | 1112892 Chasecran
Chasecran's picture

Well, QE3 may at least bring volume back to this market.  Pretty tired of this over-expectation, no pain coming, infinite easy life bot-dirven market meltup mentality.  I mean I may feel a little more bullish if we atleast took a breath.  And by the way, if someone says that merger expectations, buy backs and earnings are leading this market higher one more time...buy USD.

Tue, 03/29/2011 - 11:35 | 1112905 Youri Carma
Youri Carma's picture

Jim Rickards: "QE Forever" - Rickards says that even if they won't do QEII explicit the FED's balance sheet is so wide that in practice QE is going forward implicit.

LISTEN TO: KWN Special Sunday Release: Jim Rickards Sunday, March 27, 2011 http://kingworldnews.com/kingworldnews/Broadcast/Entries/2011/3/27_Jim_Rickards.html

btw Zero Hedge doesn't understand all the tools of the FED says Rickards!

Tue, 03/29/2011 - 11:51 | 1112987 Youri Carma
Youri Carma's picture

Rickards also says that QEIII will be back on the FED's table with everything going on:

  1. turmoil in the Middle East and North Africa and the associated uncertainty premium in oil prices;
  2. the natural disaster and the damaged nuclear reactors in Japan;
  3. the U.S. fiscal situation and the possibility of a government shutdown; and
  4. continued uncertainty regarding resolution of the European sovereign debt crisis.
See James Bullard: http://www.zerohedge.com/article/james-bullard-presentation-recent-developments-monetary-policy
Tue, 03/29/2011 - 11:36 | 1112919 Dan The Man
Dan The Man's picture

theyre taking the dollar down to...60cts?   50cts? 10cts?

Tue, 03/29/2011 - 11:36 | 1112925 RunningMan
RunningMan's picture

It almost feels like the market is daring the Fed to not do QEx by going vertical on a lousy confidence release. This feels like the summer of 2008 all over again. Couldn't give work away, but the market bumped along until it all came undone.

Tue, 03/29/2011 - 11:39 | 1112930 tahoebumsmith
tahoebumsmith's picture

Without QE how will our government monetize its debt? This whole circle jerk that is happening on a daily basis is the only way Tim Geithner can pay the bills. How would it look to the rest of the world if we started issuing IOU'S like California...LOL... Do you honestly think the grand ol US of A will actually become responsible and cut its spending and balance a budget? Not going to happen now that they have wrecked the economy further and gotton more people dependent on government handouts. They have backed themselves into a small corner and are starting to run out of oxygen. The ponzi scheme just isn't working the way they had hoped....

 http://www.youtube.com/watch?v=CtvHAqK8P14

 

Tue, 03/29/2011 - 11:39 | 1112933 GFORCE
GFORCE's picture

Everyone's backtracking on QE now haha.

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