This page has been archived and commenting is disabled.
Fear And Greed's Chris Wood Discounts The Fed Fetish
Somehow, CLSA's Chris Wood is always correct in the end. The only prediction where he has been wrong, for now, is in his $3,400 gold price target by the end of 2010 (which was set back in 2002). But have no fear: as he explains "There is some surprise here that gold has not already gone higher given
everything that has been going on and given Billyboy’s evident
willingness to keep interest rates at zero for a long period. That gold
is not higher shows that the consensus has not yet appreciated that the
real reason to own gold is not “inflation” but rather the growing risk
that the endgame of the present policy response is the collapse of the
Western fiat paper system." And considering that there is a trader meme going around that every fake bomb is equal to $100 billion in QE, and we are up to something like 8 or 9, not to mention that the T(eleprompter)OTUS is about to make a speech post market close, the dollar is almost certainly about to get the Friendo treatment by the chairman.
Greed and Fear - The Fed Fetish
All attention remains focused on what the Fed will decide next week. With talk in the market that the Fed could do up to US$2tn in terms of purchases of fixed income securities, there is clearly room for a further rally in risk assets as well as major disappointment for risk seekers if the Fed does not live up to expectations. GREED & fear’s view would still be on a disappointment in terms of the action announced.
The result of next week’s mid-term Congressional elections is likely to lead to more political paralysis not less. Another major fiscal stimulus next year is only likely in the event of further major disappointment on the economy which then creates the political need on the part of both parties to be seen to be doing something.
US Treasury Secretary Tim Geithner has sought to stem the “currency wars” over the past week with a proposal for the G20 to limit current account surpluses or deficits to 4% of GDP. Still Geithner’s formal position that the US is still for a strong dollar is obviously deeply compromised by recent Fed rhetoric.
Market action has begun to price in expectations of higher inflation. Still the issue here is how much this action is a case of the market discounting what the Fed is about to announce in a typical reflexive manner rather than reflecting real inflationary pressures rising.
For now GREED & fear has a hard time seeing how inflationary pressures will rise short of the sort of outright currency debasement that leads to hyperinflation. The latest US housing data would appear to confirm that this all important market is weakening again.
Another sign of deflationary pressures is the ongoing decline in US bank revenues as reflected in the recent set of bank results. GREED & fear would advise investors to focus on this revenue line when looking at banks, at least as much as the profit line which can be manipulated so extensively via discretionary accounting techniques.
About one area on which the political extremes of both right and left in the US can agree is their anger at taxpayer funded bank bailouts. There is a shared sense of anger that the “too big to exist” banks not only caused the crisis but have emerged from it remarkably unscathed via aggressive lobbying in Washington and via their astute manipulation of the over hyped issue of systemic risk.
There is an ongoing effort by a defensive Obama administration to spin how successful TARP and other such programmes have been in terms of making money for taxpayers. GREED & fear views such self congratulatory behaviour as way too premature financially; most particularly as the all important housing market has continued to be artificially propped up by massive intervention via Fannie Mae, Freddie Mac and the Federal Housing Administration.
The continuing activity of these mortgage monsters is causing major distortions to the American economy. Yet with hardly anyone in Washington questioning this insane policy, it looks like American could be stuck with a socialised mortgage market for years to come.
The continuing momentum behind the Asian asset reflation story can be seen in the renewed pick up in secondary residential property sales in Hong Kong. It would seem that it is fast becoming time for the Hong Kong government to draft yet another “cooling down” package for Asia’s most hot-to-trot residential property market.
The property market in Jakarta is also heating up. There is growing demand for small condos in central Jakarta for an emerging middle class while land prices are also surging in central Jakarta where land is being purchased as a store of value.
If there is real momentum in the Indonesian property story, one major hoped for reform still looks unlikely. That is foreigners being allowed to buy property. The issue is way too sensitive politically for Indonesian president Yudhoyono, a man never known for his decisiveness.
GREED & fear has always had more faith in the ultimate gold price target of US$3,400/oz first set here in 2002 than the exact date when that target will be reached, which was originally set as the end of 2010.
There is some surprise here that gold has not already gone higher given everything that has been going on and given Billyboy’s evident willingness to keep interest rates at zero for a long period. That gold is not higher shows that the consensus has not yet appreciated that the real reason to own gold is not “inflation” but rather the growing risk that the endgame of the present policy response is the collapse of the Western fiat paper system.
GREED & fear will be wrong on the gold bullion price target if there is a sudden change of heart in Washington and a decision made to take the pain rather than continuing to follow a policy of trying to inflate another asset bubble via yet more leverage. One of the key variables for gold bullion, if not the key level, is the level of real interest rates.
h/t arnaud
»
- 7613 reads
- Printer-friendly version
- Send to friend
- advertisements -
argento feminas!!!
http://auctionpictures.coinauctionshelp.com/june2_2010/1964kennedyroll3.jpg
http://www.bnn.ca/News/2010/10/27/Silver-market-manipulation.aspx
A commissioner on the U.S. Commodity Futures Trading Commission believes there have been repeated attempts to manipulate the silver market. BNN gets into the debate with Jeffrey Christian, managing director of CPM Group; and David Morgan, editor and founder of Silverinvestor.com.
I can not believe this day has arrived. I have been expecting it, for certain, but now that it is here, I am wondering if the stockpiles of supplies I have will be enough to last through this cold long winter.
That gold is not higher shows that the consensus has not yet appreciated that the real reason to own gold is not “inflation” but rather the growing risk that the endgame of the present policy response is the collapse of the Western fiat paper system."<<<<<
Now you are talking. Preach it brother.
Amen!
Just a few questions so don't get all upset like you normally do.
But what happens if your God does not materialize? And the FED pulls off another miracle? Are you going to suicide yourself? Or is that frowned upon by your religion?
Tyler, Who is on the plane from Dubai?
"That gold is not higher shows that the consensus has not yet appreciated that the real reason to own gold is not “inflation” but rather the growing risk that the endgame of the present policy response is the collapse of the Western fiat paper system."
The fuckers are going for broke. It will be all or nothing.
the consensus has not yet appreciated
The paradigm that is "Don't bet against the Fed" is deeply ingrained. This is no doubt the reason why the $3,000 target for 2010 was missed. An entire generation of adults has worked their entire adult lives in this environment of gradual credit easing by the Fed since 1980. To them, it is reality. Breaking that paradigm will take either years of evidence to the contrary, or a catastrophic break of some kind.
CD would love to tell us more about this and is better qualified than I...
"The only prediction where he has been wrong, for now, is in his $3,400 gold price target by the end of 2010"
year is not over yet
I wish gold would drop just a little so I can buy some more. Of course as a true believer I should buy it anyway. Am still buying silver
IMO the key variable to AU pricing is faith in governments. Purely another insurance policy that pays off when politicians screwup.
damn those multi use metals..damn them to hell. where is nadler? can't you make a call or somethin' man?
I was not interested (no knowledge / lack of WHAT the hell it was) mainly on Palladium, @ $256.00,it was (aside from Silver) the least expensive metal, and I NEARLY
(Wish the hades I had) bought 30-40 ozs.
Alas, one more time I failed to heed the GUT, only to cost me dearly.( Netflix @ $17.00!!!,Cisco at $8.00)
However, a point was made in an article by Casey(I think), that Palladium although it had done very well....if the SHTF, good ruck getting your $$$$ OUT of it quickly , or if at all.
It has semi precious qualities, and is a metal also used for jewelry,and is mixed with Gold to make White Gold.
But, the main value from it comes from auto's, if we have a major SHTF deal, I would not want to be caught with 50-60k in Palladium.
Also there was an article about a new process, to use hardly any Platinum(compared to now), in Cat Cons,using Tungsten core, and a Plat coating,and it working just as well as the full monty, and a hell of a lot cheaper, and of course FAR less Plat.
That would drive the price down a TON.
We shall see..................
T(eleprompter)OTUS, aka the National Codependent Authority or NCA is dressed out for the Halloween zombie dance party
Scuttlebutt has it that he is going as a teleprompter. Further, AlGore is going as a lockbox and Biden is costumed as an imbecile. Hillary is, of course, going as a B*tch.
With Dubya going as a Goldman Sach of pixie dust, Dick is going as himself (batteries - those being the fuck you champ Rahm hizzelf - and blue diamonds included for those What What moments) with his happy boy Palin balloon tied to his wrist while we'll be sure to see the M&M sistas, Meg & Mary in full drag king regalia
Fluffers or Hobits all
Spiked heels, leather corsett, black fishnets and a whip I hope!
Spank me baby... Owwwwwwwwwwwwww
Actually, I always pictured her in a dragon skin corset with Freddie Mercury black pants .. Just like the M&M sistas
http://www.youtube.com/watch?v=VMnjF1O4eH0
Excellent!
Thanx. I wanted to add.. Since they just don't know how to do the genuine jeans n boots action..
http://www.youtube.com/watch?v=7V1kt803W5w
Based on my own observations, people usually dress up as their alter egos or wish-fulfillment fantasy characters. For example, can you imagine Bill Clinton as a Lutheran Minister?
I wonder if Chris Wood is going to give Martin Armstrong proper citation...
http://www.martinarmstrong.org/files/Gold%20an%2011%20Year%20High%20for%202010%2009-17-2010.pdf
"Gold has never been a hedge against the claims of inflation [...] Gold is the hedge against political instability and government DEFAULT."
Not that I follow Armstrong other than purely as a spectator, just found it funny to see this concept gain traction. Could be dangerous if it catches any wind...
Similar to the list of economists/bloggers who feel AU to $5k is now at 65.
The system will collapse and liquidate, the only thing that is going to help or make it quicker is to get the liquidation process into high gear... ie Hilter style, either way, slow or faster process... the system will have to hit a bottom from which all you lemmings can start the same process scam backup and claim you have it all figured out.
Been like this for 1000s of years.
"Same as it ever was"
I figure 3-6 decades this time, for Japan it will be more like 5-8 decades from their top.
I figure 3-6 decades this time
And everyday Mako posts on ZH: "Its collapsing, its collapsing". So 60 years * 365 days equals approx 22000 more doomsday posts from Mako. The man is a machine, or at least should be replaced by one.
"GREED & fear will be wrong on the gold bullion price target if there is a sudden change of heart in Washington and a decision made to take the pain rather than continuing to follow a policy of trying to inflate another asset bubble via yet more leverage."
Greed and Fear knows DC probably won't be leasing back their own testicles and have bet on their continued eunichism. prolly a good wager.
Big,
My thoughts PreZackly............
Nothing will fiscally change Nov 3rd.
We are still fook'd.(long term).But the austerity bullet WILL happen,Obumma, has ZERO choice, if he wants to continue as POTUS till 2012.(he is a gnats ass away from impeachment, removal).
BUT, the ATTITUDES of the public will change, and we could very well see a sea change in hiring , and spending.
IF that happens, this DISASTER Obummma thinks he is in, may be the BEST thing ever for him, and the worst for us( he will take credit, and benefit), if (when ) it crashes and burns, HE wins again, because if the GOP gains as many seats as they are predicting, they will GET all the BLAME ,yet ONE more time.
So, Obama wins, Weds, either way....IMHO.
I can see Gold backing off 50%,(SLvr will stay same, and likely go up slowly after a pullpack, on demand/supply).
However, once the Newness of the Sea Change is over, I see Gold back to original prices, and higher.
But the austerity bullet WILL happen.
BS, there will be no austerity for the US. The minute the austerity button is pushed, the economy will collapse. Not to mention the fact that the political will isn't there. WTF do you think they're going to cut that would make a meaningful difference to the bottom line? SS, Medicare/Medicaid, military? Get real.
The Republicons could come up with the most Rational phase-out plan for Social Security ever, but the Decepticrats would oppose it simply because it interferes with their wishes for a complete Nanny-State to take care of their playground-born notions of "Fairness". I expect no Adult, rational solutions from the US Govt as long as EITHER branch of the Leviathan Party is in charge -- Grand Implosion here we come!
my question is, when will it collapse? we're all waiting.
I hate the Fed, but i'll be a monkey's uncle if they haven't been able to extend and pretend like mofos.
many are aware the 'system' is unsustainable. so how does it continue to sustain itself?
seems to me that so many have skin in the game of keeping it going, and will fight tooth and claw for it not to come crashing down.
personally, i can't wait for it to come crashing down, because the job market is the worst it's been in mine and my parents' generations, and it won't improve without meaninful restructuring of the entire economic model.
How far can you drive a car with the needle on E? We are going to find out.
apparently, one can travel quite a distance if you're coasting in neutral downhill.
Watch that Ben!! I've seen him do some things.
Just when you think he's thrown in the kitchen sink he shows up with a dump truck full of kitchen sinks!
Gloom and Doom. Well it is getting a bit gloomy the only hope Obama has is that the lame duck congress won't do anything stupid that will give the Republicans a chance to refocus the blame for the disaster that is on its way. There are new climate rules just issued by the EPA effective January 1 2011. Who needs elections when you've got Cass.
Gold and silver for transactions while the dust settles.
Austerity will happen...its just when?
Probably when its too late, if history has anything to say.
...and I doubt it comes anytime before the next federal election.
Like any large, massive object, the US Govt carries a lot of intertia -- the reaction to any collapse will be too little, too late!
Why not gold at $ 3000 yet? Obvious, massive continued manipulation. Doesnt matter if gold is $ 1500, $ 3000 ...it´s the value, stupid ... thank the gods for its being still exchangable for fiat at these levels so peasants like I can buy.
In Viet Nam, where gold is deposited in banks and used for real estate settlement, new rules by Vietnam's central bank "has stopped banks selling gold deposited by customers and using the funds for loans or for converting into foreign currencies, partly to help take downward pressure off the dong (I know what you are thinking but the dong is the Vietnamese dollar)".
I find this interesting because most Americans have no idea what role gold plays as currency in many countries. The article continues....
"A recent surge in the gold price has led to increased smuggling of the metal into Vietnam, fuelling demand for dollars to buy it and thus pushing the value of the dong down on the black market.
The authorities effectively banned gold imports in mid-2008 to help tackle the trade deficit and take pressure off the dong, although they have granted import quotas occasionally since then, most recently in early October.
That has done little to reduce speculation the dong could be devalued for the fourth time since last November."
Populations like the Vietnamese that have seen hundreds of fiat currencies come and go know that fiat currencies are never trustworthy for long....even if they are named 'dong'.
http://www.reuters.com/article/idUSHAN46777220101029
A rare glimpse of Fed gold holdings, thanks to a Financial Times article....
"The NY Fed revised down the number of countries whose gold it stores by 40 per cent to 36, from a 2004 statement in which it said it held about 60 nations’ gold.
The revision is significant because the NY Fed’s historic vault, built on the bedrock of Manhattan island, is the world’s largest repository of bullion with holdings worth about $290bn, but very little is known about which countries store their gold there. Individual vaults have numbers so any visitors cannot tell which gold reserves belong to which central bank."
http://www.ft.com/cms/s/0/15bc74ea-e2b0-11df-8a58-00144feabdc0.html
We have all cheap uggs for sale in our website http://www.salesuggs.org ! You can meet all your needs for UGG hot sale here and will certainly be satisfied with the top quality at low price. All UGGs on sale are made with the 100% genuine sheepskin from Australia and are hand-made in our own factory completely. So you need no to worry about the quality and the cheap UGGs for sale are all to be delivered in free shipping. Enjoy the large discount!
1.
UGG Amberlee
|UGG Kensington
|UGG Elsey
|UGG Langley
|UGG Roxy Short
|UGG Roseberry
|UGG Oliviya
|UGG Raya
UGG Brookfield Short