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JP Morgan On QE 3: "No Way, Jose"

Tyler Durden's picture


Just out from the only economist at JP Morgan who is even remotely credible, Michael Ferolli.


Our answer is: no. We think it is very, very unlikely. In a nutshell, we don't think the inflation or inflation expectations data are near the point where the Fed would consider further large-scale asset purchases, and even if the inflation data were to start to move in that direction the potential political fall-out is so great that the Fed would be extremely reluctant to purchase more assets.
The recent economic activity data has been decidedly disappointing. By some broad measures such as GDP, it could well be the case that the first half of this year will look even worse than the second and third quarters of last year -- the quarters leading up to the FOMC's decision to purchases another $600 billion of assets. While the growth data may look similar, a crucial difference thus far has been inflation. Last year, core inflation was decelerating through the middle part of the year. So far this year, core inflation has run below the Fed's target but at least it has shown signs of possibly moving back up toward the target. Just as important, inflation expectations were moving down last year; this year they have held up fairly well. These expectations may have received a boost from QE2, a boost which is about to fade. Indeed, the Fed's own measure of 5yr-5yr forward TIPS breakeven inflation expectations is near the lower end of the range seen since the November QE2 decision. Nonetheless, if we are right that growth will improve in the second half this should give some support to pricing power and to inflation expectations.
Even if we are wrong on a second half rebound, we still believe the political hurdle for further asset purchases is tremendously high. The backlash from Capitol Hill after last Fall's decision probably took the Fed off-guard, and the political impact was not a prominent factor debated in the lead-up to the November decision. Our sense is that this time around it would have to be a major consideration, even if such a sentiment is not expressly conveyed in public communications from Fed officials.
In the absence of further asset purchases, what options are available to the Fed if the current soft patch does not prove to be transitory? In a February speech, Vice Chair Yellen discussed some policy options "if there were an unexpected faltering of the recovery." Two options were mentioned, both relating to communications. First, the Fed could adjust forward guidance to push back expectations of the timing of the first hike, and second, they could shift back expectations regarding the timing of when the Fed contracts its balance sheet. Given that it appears the market is currently pricing in very little Fed tightening, either traditionally or through balance sheet renormalization, the marginal impact of either of these steps for easing financial conditions is likely quite limited. As such, it appears that without taking significant political risks there is little the Fed is able to do to support the recovery if growth fails to rebound as anticipated next quarter.



So... anyone feel convinced?

In other words, we just need two more QE 3 denials, before the cock crows, for it to be officially confirmed.



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Tue, 05/31/2011 - 13:45 | 1325862 ??
??'s picture

memo to MHFT or should that be from MHFT

Tue, 05/31/2011 - 13:46 | 1325865 OutLookingIn
OutLookingIn's picture

NO? That means QE III is on the way!

Tue, 05/31/2011 - 14:17 | 1325985 Mountainview
Mountainview's picture

QE3 yes, but under a new name LM1 (Liquidity Measures 1) followed by SEM (Special Economic Measures)...and on and on...

Tue, 05/31/2011 - 14:31 | 1326033 flacon
flacon's picture

It will be called "Zim-Stim" - (short for Zimbabwe Stimulus). 

Wed, 06/01/2011 - 04:22 | 1327794 TwoShortPlanks
TwoShortPlanks's picture

The next series will be called 'Foreclosure Easing'...forcing the Banks to lend, agian, and again, and again. This is uberleverage for the banking uberspeculator...the creation of a Housing Derivative Market.

Tue, 05/31/2011 - 14:57 | 1326084 john39
john39's picture

well that does assume that a total crash is not, in the end, the real goal.

Tue, 05/31/2011 - 15:34 | 1326174 metastar
metastar's picture

Sure you've read all these truths before ...

  1. "If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered."
  2. "I believe that banking institutions are more dangerous to our liberties than standing armies..."
  3. "The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."
Tue, 05/31/2011 - 13:46 | 1325866 Cash_is_Trash
Cash_is_Trash's picture

Printers online. Check!

Analysts ready. Check!

Plausible deniability. Check!

...and lift-off of QE3, paving the way for further economic collapse and transfer of wealth never before seen.

Tue, 05/31/2011 - 13:44 | 1325869 Hugh G Rection
Hugh G Rection's picture

It's not needed... good.


Then give back the $25bil, cover all your silver shorts and stop manipulating Ag you fucking bastards.


O and sorry for missing the last 7 mortgage payments assholes, this underwater squater wants you to produce the paperwork... as soon as Linda Green gets a chance to sign the docs.

Tue, 05/31/2011 - 13:58 | 1325921 Arrowflinger
Arrowflinger's picture

Linda Green is bigger than Santa Claus.



Tue, 05/31/2011 - 13:48 | 1325874 Rainman
Rainman's picture

I am convinced our gubmint masters will do anything to cover up any and all previous fuckups with even more outrageous fuckups as necessary.

Tue, 05/31/2011 - 13:49 | 1325878 luk427
luk427's picture

How can anyone take what JPM or Goldman says seriously. They are the two most corrupt companies on the planet.

Tue, 05/31/2011 - 13:52 | 1325889 OutLookingIn
OutLookingIn's picture

Yes, and by proxy own the government. No matter one party or the other, they have both by the financial "short" hairs!

Tue, 05/31/2011 - 13:55 | 1325908 Hugh G Rection
Hugh G Rection's picture

Didn't you see "Too Big To Fail" on HBO???


Hank Paulson sold all his Goldman stock before moving to conflict of interest.  Fed and Treasury care about the American People, not their buddies at Goldman and JP.  No sir, no conflict at all..


<sarc off>

Tue, 05/31/2011 - 13:47 | 1325879 White.Star.Line
White.Star.Line's picture

Once graft starts, it's so, so, so very hard to stop....

Tue, 05/31/2011 - 13:50 | 1325880 Jim in MN
Jim in MN's picture

Well, it would be rather a faux pas to start QE3 without a TEOTWAWKI event first.  Ergo, it is impolite to 'see it coming' because that undermines the time-honored tradition of 'whocoodanew?'...

Tue, 05/31/2011 - 13:53 | 1325896 White.Star.Line
White.Star.Line's picture

Diversion almost seems unnecessary with the public slumbering along.

Tue, 05/31/2011 - 14:49 | 1326076 aheady
aheady's picture

Yeah, that's what I was thinking.

Tue, 05/31/2011 - 18:38 | 1326852 Fiat2Zero
Fiat2Zero's picture

This diversion is targetting ZH readers.

Tue, 05/31/2011 - 13:51 | 1325884 MyKillK
MyKillK's picture

Why does the Fed care about political backlash? They don't go through elections and Congress doesn't have the power to stop anything they want to do.

Tue, 05/31/2011 - 13:55 | 1325924 DosZap
DosZap's picture

Congress if they had testes, could pass a law today,and do away with the Fed.

Get enough votes from both parties, and the Pres cannot even veto it.

Bye bye Bennie & the Jets.

Tue, 05/31/2011 - 15:20 | 1326137 Hugh G Rection
Hugh G Rection's picture

You forget how the Fed deals with pesky elected officials?

Tue, 05/31/2011 - 18:45 | 1326859 Fiat2Zero
Fiat2Zero's picture

They don't, but they don't like to get called in to testify.  Then BB has to try to explain to our idiotic congressmen very basic economic facts and terms.  Oh and he might run into Ron Paul in the restroom and have to flip him the bird.

The fact is that the Fed is independent of congress.  They don't even have to tell them what they are doing (even after the fact).  Nor do congress want to know what the Fed is doing.  If they did, they'd have to try to understand economics, which they don't.

BB will do whatever he wants, and hide it.  We'll find out many years later what was done, if ever.

Tue, 05/31/2011 - 13:48 | 1325885 nah
nah's picture

when the only tools you have are cover ups and subsidies

Tue, 05/31/2011 - 13:51 | 1325886 ghostfaceinvestah
ghostfaceinvestah's picture

There was great political opposition to TARP too, it even failed a House vote, until they crashed the stock market in threat.

Expect the same this time, just like after QE1.  Should get a nice market correction in a few weeks.  If there is no further printing it will turn into an all-out crash.

Tue, 05/31/2011 - 13:56 | 1325929 fuu
fuu's picture

That was a beautiful day.

Tue, 05/31/2011 - 15:18 | 1326144 oogs66
oogs66's picture

if they crash the market again I swear i will cover shorts and get long and play their game like a nice sheeple

Tue, 05/31/2011 - 14:04 | 1325890 sbenard
sbenard's picture

I hope he's right, but expect he's wrong.

Re: Yellen's comments.

I don't think either "option" will work because if/as the "soft patch" (sounds strangely reminiscent of last summer, doesn't it?) gets any softer, the market will already be anticipating an extention of the dates of the first interest rate hike and the Fed's "contraction" of its balance sheet "assets" (if they can be called that). If the softness continues, they will already be baked into the cake.

QE3 is a done deal as far as I'm concerned. So is the resulting inflation!

Tue, 05/31/2011 - 13:53 | 1325891 earnulf
earnulf's picture

JP Morgan lying through their silver plated teeth.   But no QE3 till the public and CONgress screams for it.

Tue, 05/31/2011 - 14:33 | 1325999 Bay of Pigs
Bay of Pigs's picture

Yes, it's all about fear and brainwashing at this point.

"Help me, I'm drowning" (Congress to the FED)

Then throw them the anchor (QE3).


Tue, 05/31/2011 - 13:49 | 1325892 jiggerjuice
jiggerjuice's picture

Stealth QE3 at first. If the market drops, say, 5-10%, then the hounds will be screaming for QE3 outright - the hounds being Congress, who will demand that their insider trading deals remain in the green no matter what. Oh, and the banks too.

The only way to win trading is to copy bank prop desks or Congressional trades. Of course, infinite greed means Goldman will sell Congressmen shit wrapped in yellow foil and then short it... Until then, I doubt anyone in power will care enough to put them behind bars.

Tue, 05/31/2011 - 14:27 | 1326008 tmosley
tmosley's picture

QE-lite 2 bitchez.

Tue, 05/31/2011 - 13:49 | 1325893 TradingJoe
TradingJoe's picture


Tue, 05/31/2011 - 13:50 | 1325901 agent default
agent default's picture

Ok fine so there will be no QE3.  So the US will service and repay its debts in real terms instead of inflated dollars. I don't believe they can.

Tue, 05/31/2011 - 13:55 | 1325907 DosZap
DosZap's picture

What a sack of horse manure.


They have NO options but to do so.

And they know it.

So do we.

Tue, 05/31/2011 - 13:52 | 1325911 suckerfishzilla
suckerfishzilla's picture

If you don't know all of the details of the deal yourself then wager that JP Morgan is lying.  It is probably an absolute.

Tue, 05/31/2011 - 13:53 | 1325913 Josh Randall
Josh Randall's picture

This is french for "Please don't buy anymore PM's -- because the dollar will be stronger with no QE" sorry Morgue - lets see your shorts! 

Tue, 05/31/2011 - 13:56 | 1325915 suckerfishzilla
suckerfishzilla's picture

JP Morgan is the oracle of lies.

Tue, 05/31/2011 - 13:53 | 1325916 PulauHantu29
PulauHantu29's picture

"Oft before I swore but was I sober when I swore."

Deflationary depression = Riots in the streets

INflation = Higher prices and a few complaints

QE3 in some form is coming....100% guaranteed imho

Tue, 05/31/2011 - 14:00 | 1325930 Arrowflinger
Arrowflinger's picture

Ferolli didn't really say there would be no QE3, he just thinks it is politically dead until there is enough deterioration to foment an excuse.

Tue, 05/31/2011 - 13:57 | 1325931 JW n FL
JW n FL's picture

No Worries!


Secret Off Book 0.01% Loans for everyone except "We the People"!


Do you need money?


Are you are a known terrorist?


No Worries!! the FED has you covered! with a special, off book Loan! Look we gave Gaddafi $100's of Millions of U.S. Dollars while the U.S. Citizen was forced from their homes by illegal seizure!


The Politicians are owned by us.. so don’t worry.. the courts are owned by us.. so dont worry..


Come on down today for you backdoor, off book loan(s)! You won’t be disappointed! Just ask Gaddafi!


This special will last for a really long time so no rush, successfully operating now for over the last year!!


SHHHHHHH.. don’t tell “We the Sheepeople!” LOL!!!


Tue, 05/31/2011 - 14:03 | 1325937 JW n FL
JW n FL's picture

Technically our loans don’t count as U.S. debt proper!


So there is no need to raise the debt ceiling!


Time to make those scumbag, working class, out of work free loaders squirm!!!


Forced Austerity! Let’s see what we can push out of these sheep!!!

Tue, 05/31/2011 - 14:17 | 1325991 SheepDog-One
SheepDog-One's picture

Thats all thats ahead for america, more impoverishing and 3rd worlding. 

Tue, 05/31/2011 - 13:57 | 1325932 ArrestBobRubin
ArrestBobRubin's picture


Tue, 05/31/2011 - 14:03 | 1325933 AGORACOM
AGORACOM's picture

This further supports my call back on March 30th that QE3 will be delayed ... but it will come  (

In a nutshell, there is little political support / economic basis for further QE ... until the floor starts to fall out again and QE3 does find political / economic support.

In the meantime, we are heading into potentially volatile times with the potential to damage / create wealth .... and I don't think the powers that be mind this scenario at all.


George ... The Greek ... From Canada


Tue, 05/31/2011 - 13:58 | 1325935 Cdad
Cdad's picture

Oh more QE?  Who will buy the XRT then?  

BTW...what a masterful arbitrage trade on that ETF today.  Simply magical.  You have to tip your hat, really, at the scheme which works...until it doesn't.

I've never seen an entire group of stocks trade so obviously into hurricane like headwinds...even as one after another of the individual names contained within have taken massive hits.  The trade now has narrowed to a few key names.  Nothing like a thin and narrow bid to create wealth.

Thank you for this wasteland, Ben Bernanke.  Thank you too, Hank Paulson [even as HBO romanticises your epic heist].  Thank you Mary Schapiro for being so patient with criminal syndicate Wall Street bankers, giving them so much time to unwind their crimes by looking the other way and keeping your staff so busy meeting relentlessly with bankers in order to best determine which SEC laws can just be forgotten about.  

Tue, 05/31/2011 - 14:10 | 1325974 SheepDog-One
SheepDog-One's picture

HA HA great post as usual Cdad!

Tue, 05/31/2011 - 14:03 | 1325939 Robslob
Robslob's picture

Since they are overleveraged anyway they just don't want anybody to get a jump on them...fuck JPMorgue...!

Tue, 05/31/2011 - 15:17 | 1326139 JW n FL
JW n FL's picture

0.04% is over leveraged?


what do you mean sir? how dare you lead people to think that more leverage than before the crash is a bad thing! shame on you.. Shame! On!! You!!!


Everyone go back to grazing.. it all good! no worries! everything is under control and going to plan!

Tue, 05/31/2011 - 14:01 | 1325945 lieutenantjohnchard
lieutenantjohnchard's picture

the economist confirms the fed is a political animal. and to think to see inside (audit) the fed would compromise their independence. looks like the fed can be cowed afterall with pushback according to the economist.

i think it's spin. they'll find a way to do qe3 in one form or the other.

Tue, 05/31/2011 - 14:06 | 1325948 CrashisOptimistic
CrashisOptimistic's picture

It all comes down to the first weeks of July.

QE2 done.  Q2 GDP south of 1%.  Unemployment 9.2%.  And oil $120 pushing NON CORE inflation to 6%.

How does Bernanke print more with oil that high?  It will have been north of $90 for 9 or so months at that point.  How will he be able to make his case for transitory?

I think the cross currents kill him.  He can't do QE3 with non core inflation at 6%, regardless of weak GDP and high U3.

Tue, 05/31/2011 - 14:15 | 1325950 bbq on whitehou...
bbq on whitehouse lawn's picture

So... anyone feel convinced? 

Well.. I baught some antiquated relic, barbaric insufferable delusion, over 3 weeks ago and am now in the myst of prayer that the Post delivers unto me the glory of the sun and moon, before they clock out for the day :P

Ps: math and grammer; never a strong point in my education. Spelling is a train wreck that can only be properly appreciated in the absence of spell check.

Ah the glory of spellcheck and calculators.

Oh I would like the expose the true horror of misspelling and failed equations in its absence.

Tue, 05/31/2011 - 14:04 | 1325952 gianakt
gianakt's picture

Goldman needs to be investigated for keeping all the commodities bid up.

Tue, 05/31/2011 - 14:04 | 1325954 NidStyles
NidStyles's picture

"""In a nutshell, we don't think the inflation or inflation expectations data are near the point where the Fed would consider further large-scale asset purchases, and even if the inflation data were to start to move in that direction the potential political fall-out is so great that the Fed would be extremely reluctant to purchase more assets."""


Duh, what!?

Did I miss soemthing or did QE just turn into an anti-Inflation measure according to JPM?

Tue, 05/31/2011 - 14:48 | 1325956 Segestan
Segestan's picture

Seems that TPTB are thinking of their own institutional survival ; China problably has sent out a strong warning, ...... and JPM listens.

Tue, 05/31/2011 - 14:05 | 1325957 Henry Chinaski
Henry Chinaski's picture

Caught between a soft patch and a hard place with only 2 communications options bullets left.

Tue, 05/31/2011 - 14:06 | 1325958 centerline
centerline's picture

This is why the next round of QE will labeled as the bailout for Main Street.

Tue, 05/31/2011 - 14:13 | 1325983 SheepDog-One
SheepDog-One's picture

The FED will NEVER bail out Main St, the banksters get no benefit from making moms n pops 401K and pensions whole. Next step will be central banksters pulling the plug and seizing all 401K's and pensions in the next planned market collapse in order to 'save us' again. Impoverishing and 3rd worlding of america, bitchez. Stand far back from these maniacs and dont buy their hype.

Tue, 05/31/2011 - 14:21 | 1326001 centerline
centerline's picture

I agree.  The next round of Fed action will not benefit Main Street.  It will just be sold that way.

Tue, 05/31/2011 - 15:48 | 1326207 SheepDog-One
SheepDog-One's picture

Sure, well all of it so far has been 'We're saving you people' while they stuff their vaults full of 0% interest free money and Main St has tumbleweeds blowing down it.

Tue, 05/31/2011 - 14:22 | 1326003 bbq on whitehou...
bbq on whitehouse lawn's picture

401k's will never be seized they will be given options, limits, controls and be prevented from barrowing against.

But never out right taken.

Capital 'controls' are one thing stealing is another.

Tue, 05/31/2011 - 18:23 | 1326791 DosZap
DosZap's picture


well, I'll be spit roasted, seems you gave the perfect recipe for SEIZURE.

Anytime the people cannot access THEIR money, that is de facto seizure.

Captial Controls over individuals property, is theft, any way you slice it.

Tue, 05/31/2011 - 14:28 | 1326018 Cdad
Cdad's picture


FUBAR trade indicator is currently going crazy.  ETF arbitrage trades going vertical.  Liquidity drying up faster than Kirstie Alley's nether regions.

Plunging and Screaming trade anyone?  Prepare for all ETF creation units machines to accidentally become unplugged.

Tue, 05/31/2011 - 15:46 | 1326214 SheepDog-One
SheepDog-One's picture

Razor thin trading going on, and markets havent budged from where they opened in Bizarro World.

Tue, 05/31/2011 - 14:07 | 1325962 BobPaulson
BobPaulson's picture

Up, down, flat, whatever, the pigmen make money by fronting every trade. So even if everybody knows QE3 is a lock, only the puppet masters get to effectively front run it by knowing the exact nanosecond of every cronyish announcement and being all over it like Jabba the Hut on Leah.

Tue, 05/31/2011 - 14:08 | 1325970 PaperBear
PaperBear's picture

Of course he is wrong, there will be another QE.

There is no way out of the box.

Tue, 05/31/2011 - 14:17 | 1325986 SheepDog-One
SheepDog-One's picture

Another QE is already meaningless, having been assumed and priced into these BS stocks and bonds for 2 months now.

Tue, 05/31/2011 - 14:11 | 1325976 slewie the pi-rat
slewie the pi-rat's picture

i read this:  The backlash from Capitol Hill after last Fall's decision probably took the Fed off-guard, and the political impact was not a prominent factor debated in the lead-up to the November decision. Our sense is that this time around it would have to be a major consideration, even if such a sentiment is not expressly conveyed in public communications from Fed officials.

wtf?  once batmanke shows everyone the cake, it is already freaking baked.  then, it must be eaten! 

stealth QE w/ cover from G/Sachs? 

like elephants trying to tippy-toe. 

Wed, 06/01/2011 - 07:39 | 1327889 StychoKiller
StychoKiller's picture

FYI, elephants DO walk on their toes.

Tue, 05/31/2011 - 14:22 | 1325995 Catullus
Catullus's picture

Naval gazing at it's best. Did they feel compelled to just slop something together and throw it out there? They forgot something very key here: the fed has nor needs any credibility. Political backlash from what? There's never political backlash from maintaining the status quo.

Love the lack of analysis on the Fed balance sheet. Plenty of people have shown that not printing more will result in yields raising, the value of the bonds dropping and deflation occurring. They have to print and continue to purchase bonds just maintain the money supply.

Tue, 05/31/2011 - 15:49 | 1326226 SheepDog-One
SheepDog-One's picture

Yea I thought the same when reading this...'the FED's political credibility'? Thats like saying Carlo Gambino gives a rats ass what the civilians think about his business, theyre just straight up gangsters. These guys trying to lend credibility to the criminal syndicate of Wall St is just BS, their words assert that people like them and find them credible...what a joke.

Tue, 05/31/2011 - 14:21 | 1326002 Life of Illusion
Life of Illusion's picture


Remember this.

CB’s will be selling gold, so they said.


FED, no more QE,,,,,,,HA!

Tue, 05/31/2011 - 15:27 | 1326153 JW n FL
JW n FL's picture

hold on to that Paper!

if the Fed Printed $3 trillion in debt.. and another $15 Trillion in Loans (this does Not! include swap windows and TARP / TALF and so fucking on...) over three years..


$18 Trillion divided by 3 years ='s $6 Trillion in New Supply is Printed a Year!


$6 Trillion Dollars divided by 365 days ='s $1,643,835,6164 a Day in in New Supply is Printed a Day!!


$1,643,835,6164 Billion a Day divided by 24 hours in a Day ='s $684,931,506 an hour in New Supply is Printed an Hour!!!  Treasury Direct $14 Trillion Debt   $15 Trillion in Loans  / ='s $29T

Tue, 05/31/2011 - 14:29 | 1326012 mendigo
mendigo's picture

They have already floated a lot of credit - surpressing the value of the dollar and treasury yields. It has been embarrassingly ineffective and even counter-productive.

I think they will wait and see and then look for other options (so they will not be faulted for continuing a failed policy).

What will happen to PM's and stocks when the cessation of QE becomes reality - will it be gradual or sudden?

Tue, 05/31/2011 - 14:30 | 1326015 km4
km4's picture

QE is a simulacrum of the once thriving US economy. Without it the gig is up on 'Extend and Pretend' and 'Kicking the Can Down the road' 

Tue, 05/31/2011 - 14:27 | 1326016 pcrs
pcrs's picture

He wants the prices low when he starts buying assets

Tue, 05/31/2011 - 14:33 | 1326025 Quinvarius
Quinvarius's picture

Lets clear on thing up.  They are wrong about a growth rebound this year.

Tue, 05/31/2011 - 14:30 | 1326026 RobotTrader
RobotTrader's picture

Today's Status Report on Uncle Gorilla's Market Operations:


Bonds:  Highs of the Day.  Check.

AAPL and NFLX:  Highs of the Day.  Check.

IYR and XRT:  52-week Highs.  Check.

Gold:  Lows of the Day.  Check.

Tue, 05/31/2011 - 14:38 | 1326042 lieutenantjohnchard
lieutenantjohnchard's picture

mo down .02: check

vz up .06: check

hd up .04: check

congratulations. you're up .08 cents per share today not counting the losses of your gold portfolio that you always whine about.


Tue, 05/31/2011 - 14:55 | 1326090 Robslob
Robslob's picture

RoboTrader cherry picks stocks to prove "strawman" statement for every thread: CHECK!

Tue, 05/31/2011 - 15:54 | 1326233 SheepDog-One
SheepDog-One's picture

Gold, within a couple % of all time highs....CHECK.

Tue, 05/31/2011 - 20:36 | 1327163 sellstop
sellstop's picture

I put GLL on my screen today...


Tue, 05/31/2011 - 14:33 | 1326028 I am a Man I am...
I am a Man I am Forty's picture

don't think for a second JPM and Goldman wouldn't prepare themselves for another significant turndown to pick up assets on the cheap

all that matters is if there is a fair amount of time between QE2 and QE3

Tue, 05/31/2011 - 14:47 | 1326067 Boston
Boston's picture

JPM and Goldman and me.  My buy list is brimming with ideas.  Just waiting for the "clearance sale" to begin.

Tue, 05/31/2011 - 15:10 | 1326122 I am a Man I am...
I am a Man I am Forty's picture

oh, and me too, if this is how it plays out

Tue, 05/31/2011 - 14:30 | 1326029 catch edge ghost
catch edge ghost's picture

"Of course, in lieu of tax cuts or increases in transfers the government could increase spending on current goods and services or even acquire existing real or financial assets. If the Treasury issued debt to purchase private assets and the Fed then purchased an equal amount of Treasury debt with newly created money, the whole operation would be the economic equivalent of direct open-market operations in private assets." - Ben Bernanke


"It's getting hard to be someone but it all works out. It doesn't matter much to me." - John Lennon

Tue, 05/31/2011 - 14:31 | 1326032 monopoly
monopoly's picture

This govt. is so ridiculous. The only entity worse is Wall Street. How long must we put up with this until it all changes, that is the question.

Tue, 05/31/2011 - 14:46 | 1326066 Vincent Vega
Vincent Vega's picture


Haven't the Govt. and Wall St. become one? Can either exist without the other? It will change when it all collapses from it's own weight...likely the process has begun (imho).

Tue, 05/31/2011 - 14:31 | 1326034 gianakt
gianakt's picture

Germany,Italy, and France may start sell there Gold to shore up there balance sheet to pay for the pigs problems.

Tue, 05/31/2011 - 14:33 | 1326040 whaletail
whaletail's picture



"In a nutshell, we don't think the inflation or inflation expectations data are near the point where the Fed would consider further large-scale asset purchases[.]"

Wasn't the go-ahead with QE2 justified because the Fed didn't see inflationary risks on the horizon? If they still don't, according to this note, why would that NOW be a justification to not start QE3? 

Tue, 05/31/2011 - 14:35 | 1326045 Jack Mehoff
Jack Mehoff's picture

Ok, thank you JPM for that. Now, since QE3 is not coming I can go massivelly short the ES.


Tue, 05/31/2011 - 14:39 | 1326050 SwingForce
SwingForce's picture

Opinions are like assholes, I have 3 (what about housing?).

Tue, 05/31/2011 - 15:04 | 1326108 weinerdog43
weinerdog43's picture

You have 3 assholes?

Tue, 05/31/2011 - 20:03 | 1327079 JW n FL
JW n FL's picture

show off!

Tue, 05/31/2011 - 14:43 | 1326053 Robslob
Robslob's picture

Simple line of thought here if I was President:

Since the Federal Reserve is a private institution funded by other private institutions the U.S. Government will not recognize any of their debts to be paid.

Fuck off bankers, insolvency right back at you.

Tue, 05/31/2011 - 14:39 | 1326054 MiningJunkie
MiningJunkie's picture

All lip service - until Case Schiller turns up for three months consecutively, they will maintain full open-spigot mode with a vengeance.

Period end.

Tue, 05/31/2011 - 14:40 | 1326057 SwingForce
SwingForce's picture

Bottom Line: If Obamma don't get my house price up, I ain't voting for him next year.

Tue, 05/31/2011 - 14:40 | 1326058 meizu
meizu's picture

You all better pray that QE3 will be announced, otherwise all your silver investments will be langushing for a years

Tue, 05/31/2011 - 14:45 | 1326069 Robslob
Robslob's picture

Meizu...projecting Prechter....

Tue, 05/31/2011 - 15:33 | 1326167 oddjob
oddjob's picture

USD is on life support, endless supply of already printed narcoscript only ensures Gold and Silver going higher. PM's will be unavailable for purchase in worthless FRN's sometime soon.

Tue, 05/31/2011 - 14:45 | 1326064 lizzy36
lizzy36's picture

I don't believe there will be QE3 until 2012 or until S&P 900.
Political suicide.

Tue, 05/31/2011 - 15:10 | 1326120 Tyler Durden
Tyler Durden's picture

Political suicide for whom? Wall Street? The Fed?

Tue, 05/31/2011 - 15:57 | 1326243 SheepDog-One
SheepDog-One's picture

'Political suicide'? LOL, as if politics isnt the biggest rigged game around right beside the DOW?

Tue, 05/31/2011 - 17:22 | 1326636 kito
kito's picture

right on lizzy. stocks have held their own, inflation is healthy but not overdone (dont believe the inflation hype, the rogers etf basket of commodities hasnt budged in at least a month or two), yes there is a slowdown, but there will be ups and downs throughout this extended economic malaise. corporate profits are still healthy. we are a long way to qe3.

Tue, 05/31/2011 - 14:48 | 1326070 Sgt.Sausage
Sgt.Sausage's picture

Down is up, and up is down.

Left is right and right is wrong, doncha know it?



Tue, 05/31/2011 - 14:49 | 1326074 RobotTrader
RobotTrader's picture

Wow, AAPL up 2.5% less than 5% from lifetime highs and finishing up a 4 mo. consolidation.

Wonder how many CANSLIM junkies will be watching for the next breakout.  Already cleared the 21-day EMA today.

Stocks like Apple could care less if there is QE or not, people are buying iPads and iPhones come hell or high water no matter what.

Tue, 05/31/2011 - 14:58 | 1326088 lieutenantjohnchard
lieutenantjohnchard's picture

once again living vicariously through the success of other investors. but hey, hd is up a dime today. so you got that going for you.

Tue, 05/31/2011 - 16:02 | 1326269 Double down
Double down's picture

There is a difference between buying AAPL stock and buying an "I whatever". 

Tue, 05/31/2011 - 17:28 | 1326650 kito
kito's picture

people who junk you just cant handle the truth

Tue, 05/31/2011 - 20:47 | 1327179 baby_BLYTHE
baby_BLYTHE's picture

Eric Bowling?

Tue, 05/31/2011 - 14:53 | 1326077 MrTrader
MrTrader's picture

Buying deep OTM S&P 500 puts...

Tue, 05/31/2011 - 15:54 | 1326189 Boston
Boston's picture


And just as interesting---be prepared to SELL them after a mini-crash, at much lower S&P levels and much higher vol.

The will position you to gain from the inevitable bounce.....after QE3 or Operation Twist Part2 gets announced.


Tue, 05/31/2011 - 15:01 | 1326094 buzzsaw99
buzzsaw99's picture

mutha fugga PUHLEEZE!


JPM could get QE3, TARP, whatever with a phone call. The fed's balance sheet will not get smaller in our lifetimes unless they sell assets to JPM for a song with money JPM borrows at 0%.

Tue, 05/31/2011 - 15:05 | 1326102 user2011
user2011's picture

QE3,4,5....n will cost commodity price to go up.  Silver price going high can topple JPM.  Of course, they are going to say something like that.

Tue, 05/31/2011 - 15:22 | 1326146 carbonmutant
carbonmutant's picture

QE1 worked because it was unexpected and had never been done in the US before. A lot of people expect a QE3 in some form.

The problem is, Power works best when you don't have to use it.

QE3 is a wet match.

The FED is in no hurry to demonstrate that their best tool is a limp dick.

Tue, 05/31/2011 - 15:27 | 1326151 buzzsaw99
buzzsaw99's picture

h/t kd: "If we do not see a meaningful recovery in home prices by the end of the year, we may need to contemplate impairment charges on first liens owned by banks and wholesale write-downs of second lien exposures. This implies solvency issues for BAC [BAC 11.65 -0.04 (-0.34%) ], WFC [WFC 28.17 0.03 (+0.11%) ], JPM [JPM 42.9215 0.1315 (+0.31%) ] and C [C 40.8375 -0.1325 (-0.32%) ], and big losses for the U.S. government and private investors," says Chris Whalen of Institutional Risk Analytics...


Whalen you don't know jack shit. They will **NOT*** allow the big banks to suffer. They will ***NOT*** allow long term rates to rise. And they will ***NEVER, EVER*** stop lying accounting practices.

Tue, 05/31/2011 - 15:27 | 1326154 SunBlaster
SunBlaster's picture

"The backlash from Capitol Hill after last Fall's decision probably took the Fed off-guard"

No way JOSE!

Tue, 05/31/2011 - 15:25 | 1326158 Eireann go Brach
Eireann go Brach's picture

It will be called UTP...used toilet paper!

Tue, 05/31/2011 - 15:28 | 1326165 leonard1234
leonard1234's picture

Wow, Tyler ends with a biblical illusion.  Bravo good sir.

Tue, 05/31/2011 - 15:49 | 1326210 sgorem
sgorem's picture

 "Our answer is: no. We think it is very, very unlikely. In a nutshell, we don't think the inflation or inflation expectations data are near the point where the Fed would consider further large-scale asset purchases, and even if the inflation data were to start to move in that direction the potential political fall-out is so great that the Fed would be extremely reluctant to purchase more assets...." Sorry Ty, I almost always agree with ZH, but this is NOT CREDIBLE to me. NOTHING THAT COMES OUT OF THE MOUTH OF ONE OF THESE FUCKING SNAKES IS CREDIBLE ANYMORE. Not that it ever was......20-30%+ REAL INFLATION for the REAL PEOPLE, BEYOND CRIMINAL Government, Reserve currency status beyond repair and about to be junked, MSM still have that ole "Green Shoots Up Your Ass" trash, Housing is LOWER than any stat you are going to find ANYWHERE, Unemployment, well, what the fuck! I don't think I need to ramble on anymore about OUR predicament. I think I've layed out some good argument points that only a blind sheeple or moron would even consider to undertake. Anyway, ZH is the BEST...............

Tue, 05/31/2011 - 16:27 | 1326401 metastar
metastar's picture

The FED/TSA/Gov't rapings will continue until the people use whatever is means necessary to hold the criminal, corrupt and illegitimate accountable for their atrocities.

Needless to say, I am not too optimistic. The sheeple are all too easily lead to their slaughter, taking the rest of us with them.

Tue, 05/31/2011 - 15:55 | 1326251 SheepDog-One
SheepDog-One's picture

A lot of people are missing the big picture, there was never any intention to keep the markets up forever, just to do it long enough so that all the 401K's and pensions can be sheared in 1 fell swoop. Theyre about ready to do that now.

Tue, 05/31/2011 - 16:08 | 1326292 mayhem_korner
mayhem_korner's picture

Translation: hold your tongue Mr. Ben, Sir, until we have moved a few more drones to the short side of SPX and commodities.

Tue, 05/31/2011 - 16:23 | 1326375 iLoveMisesToPieces
iLoveMisesToPieces's picture

Deflation doesn't benefit the oligarchy.  While we all know deflation and liquidation of malinvest is by definition, how economic recoveries work, it destroys the bankster's balance sheets and it destroys their ability to pump and dump.  Deflation creates a massive amount of temporary pain as assets deflate in what will be an absolute free fall and will send the serfs into full-on pitchfork mode.  The only choice they have is inflation.  Rising commodity prices are just stealth austerity measures for the serfs.  They'll inflate until the dollar completely collapses and that will be that.

Tue, 05/31/2011 - 20:49 | 1327182 sellstop
sellstop's picture

Don't forget that the "serfs" outnumber the PTB's by several million to one. When the serfs stop buying and spending, nothing will keep the price of commodities up. They don't call them commodities for nothin'.


Tue, 05/31/2011 - 17:08 | 1326585 kito
kito's picture

when market is doing just fine with the anticipated end of qe, and thats what matters to the fed. there will be no qe3 for a long time. inflation fears are overblown. the etf RJA (food) was knocked for a loop from its 52 week high and has not returned. same for rji (broad commodities). still waiting for that 14 dollar egg.....

Tue, 05/31/2011 - 19:46 | 1327031 All_Is_Well
All_Is_Well's picture

Who is going to buy the Treasuries? WHO?

Inflation fears? This is about the bailout of the US Gov. and the banks! It won't be called QE3, that's obvious, and their not stupid. There's a massive back door deal ready to go when they decide to pull the trigger.

Tue, 05/31/2011 - 20:46 | 1327177 sellstop
sellstop's picture

Someone IS buying them.

Why is SOMEONE buying them?

There must be a reason that SOMEONE is buying them....

SOMEONE  is also buying stocks. Why is SOMEONE buying stocks?

Maybe, just maybe, the bloom is coming off of the China rose and the Asia rose, and thus the commodity rose. The money has to go someplace.

Where will the bouncing ball settle next????

that is the question...


Tue, 05/31/2011 - 18:02 | 1326731 Chuck Walla
Chuck Walla's picture

So, what will they call it? Summer vacation 1?

Tue, 05/31/2011 - 18:49 | 1326873 Fiat2Zero
Fiat2Zero's picture

For those not paying attention: Nearly every fucking thing out of JPM's lying piehole, is, well, a lie.

Just think back to the last Jedi Mind trick - Commodities have reached an intermediate top and we're cashing out with nice profits (only to get back in and front run their stupid clients when everyone loaded up on oil again).

JPM - "we made money every day this quarter" ==> means "we stole your fucking money and your too stupid to get it back".

Really people, is it that hard?

Tue, 05/31/2011 - 18:46 | 1326876 Fiat2Zero
Fiat2Zero's picture

In other words JPM just _confirmed QE3_ without a doubt.  Perhaps it will be stealth, and not named QE3, but they confirmed it.

Tue, 05/31/2011 - 20:30 | 1327148 sellstop
sellstop's picture

That was pretty much my take on the QE3 question.

It aint gonna just come cause they are stupid. Someone will have to beg them for another QE....

Like we did the last time....


Tue, 05/31/2011 - 21:55 | 1327311 Lady Heather...UNCLE
Lady Heather...UNCLE's picture

...I do not care what JPM says...I couldn't give a toss

Tue, 05/31/2011 - 23:38 | 1327551 Itsalie
Itsalie's picture

"we still believe the political hurdle for further asset purchases is tremendously high."

Does the Fed answer to politicians? I thought they are supposed to be apolitical, independent and non-accountable to politicians? For sure they all work for the banks who have graciously prescribed money printing to all the ails of amerika and europe non? If they want BHO out, then I think printing is the way to go, and BHO is becoming a liability, laughing stock, and a lightning rod of sorts.

Wed, 06/01/2011 - 00:53 | 1327660 SilverDoctors
SilverDoctors's picture

Tyler- Russian Intelligence has reported to Putin that DSK was framed after he received reports from disgruntled CIA agents that Fort Knox gold is missing/unaccounted!

Wed, 06/01/2011 - 04:02 | 1327767 huggy_in_london
huggy_in_london's picture

These guys are not the first to be saying no QE3.  Unlike 90% of most people who chuck random stupid (usually gold or silver related!) comments on here, those that actually speak to the insiders (not me, but i do have access to consultants that do) have continually said for months now that the bar for QE3 is extremely high.  That is, it is very very unlikely to get the green light.  I think some of you guys need to take the tin hat off just for 5 minutes. Your persistent ranting has become boring and predictable and is actually ruining the content on this website to the point now where almost every mainstream outfit regards zero hedge as a blog of nutters (which for the most part i would like to think it isn't).

Wed, 06/01/2011 - 04:27 | 1327796 Youri Carma
Youri Carma's picture

Everybody who can rub two of his little grey cells together can understand that QE3 is not a question. Without it the American economy goes down the tube and Judas Pirate Morgan knows it!

Indeedy: "In other words, we just need two more QE 3 denials, before the cock crows, for it to be officially confirmed."

Wed, 06/01/2011 - 04:56 | 1327805 TwoShortPlanks
TwoShortPlanks's picture

QE3 will not come until Congress burns Obama's fingers for nearly 4 years of Bail-Outs (yes, it's all been a BTFD bail-out). Congress are starting to think about the possibility of trees and ropes in the not-too-distant future, and putting themselves in the clear is really important right now.

QE3 will come, but only after Obama gets a medal for architecting history's greatest collapse (might look good next to that 'other' stupid medal).

That rediculous looking Gollum thing at the Fed will soon be searching around for his ring also.

Hey, remember when everyone was talking about 'Green-Shoots'...LOL

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