Morgan Stanley Launches Fed Frontrunning Toolbox, Asks What The End Of QE2 Will Look Like For Rates

Tyler Durden's picture

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Judge Judy Scheinlok's picture

You already know my opinion about this. QE3 is already underway. This time Oil Exporters step in and buy US Ponzi products with fiatcons given to them by oil thirsty pigs.

This cannot last. There is no equilibrium anymore. Or should I say disequilibrium has become obvious.

equity_momo's picture

There is always equilibrium , your timescale is just off. Wait.

Orly's picture

Important Fed Board members are coming out strongly against any further QEasing.

I think it's a done deal.  Once everyone figures it out, get long USDJPY and USDCHF.

equity_momo's picture

Even that odious fat smug little fuck Meyers was of the opinion QE3 wasnt needed. Although i'd sooner trust Bernie Madoff than any former fed member. Especially that prick.

duncecap rack's picture

You shouldn't hold back. Say what you mean.

strannick's picture

Im still trying to parse your meaning from your opaque euphemisistic diplomat-speak 

RoRoTrader's picture

That is an interesting opinion in the context of trading price, Orly. Tnx for putting out there to read.

Clampit's picture

My biggest question about QE2: how will we know it's ended? Sure there will be some announcement, probably followed by updating of metrics, but given the current power structure I don't see anywhere close to enough accountability and audibility to take the data seriously.

My prediction? The "end" of QE2 magically turns out to be no big deal, and certainly won't precipitate any selloff.

kaiserhoff's picture

When the Fed Audit is made public, right after Hell freezes over.

Quinvarius's picture

They will never stop QE.  They might stop telling the public about it.  But the Fed will continue buying Treasuries.

saltine's picture

If QE ends, US interest rates increase. Then US equities and residential real estate tank. Precious metals correct significantly.

For the life of me, I can't see that happening 15 months before the US elections.

I had dinner last night with a guy who is an analyst for a US based international firm that invests pension and similar funds in large commercial real estate ventures. His firm has accepted as fact that QE is ending.

dcb's picture


take away the fed induced liquidity and asset prices drop, near term inflation elevated, long bond yields drop in value.

look at interest rates in Japn,

The net effect of Qe has been to raise interst rates, now lower them and multiple ZH articles have pointed out that the whole rationale for Qe is flawed based on this fact.


Xkwisetly Paneful's picture

Stop disturbing the herd.

Afterall the overtly obvious always works in calling the markets. Frightening about 100,000 -5 the other side vs this.

Can toss in never ending cheap ass capacity from the Chinese.


Where is that all inclusive chart of QE and everything known to man?

Rogerwilco's picture

The end of QE. Let's see, commodities tank 50%, DX surges to 90, yields on treasuries head for zero. All good from the Fed's perspective. The cost? Hedgies and pension funds get kicked in the balls and their portfolios are 30% off the highs. Win-win!

Bernanke is a hero again, gasoline is $1.75 a gallon, 30-year mortgages are 4%. He bought Obama another two years, maybe even a reelection. Extend, pretend.

Dollar Bill Hiccup's picture

Given the current ramp job in equities, 30% down will still leave the SPX around 1000, a far cry above the day of the devil two years ago.

Maybe we'll see Tupper on CNBC again telling everyone to go short!

Orly's picture

That's exactly what I have been thinking.  The Bernank's actual target was 1050, so they can overshoot to make the market appear to be cratering when it is actually well beyond where they need it to be.

I told you these guys were really, really bright.  No one believed.

Believe it now?

DR's picture

Yea, everyone is waiting to move some of their "risk on" gains into treasuries after QE2. This will put a damper on yields rising too much.

malikai's picture

So what happens to budget deficits then? Uness everyone goes mad on a treasury binge rates are due to soar. How will that look politically during an election cycle? What about the guaranteed recession that will then be blamed on Obama?

jimcg's picture

My guess is that clients paid by the word, graphs were additional.



Robslob's picture

Sweet...huge correction in equities AND precious metals means I can finally close my short positions, double down on gold and silver and have plenty of cash left over for the coming hyper-inflationary event....

That event will be congress taking over the printing presses from the Fed.

buzzsaw99's picture

They have been QEing all along. The only difference now is that it is blatant QEing.

disabledvet's picture

a "collapse in equities" is a beginning not an end to a crisis.

Yen Cross's picture

Long term charts are worthless. It's real TIME.

long-shorty's picture

"All good from the fed's perspective" ???

are you Sheening?

JGambolputty's picture

Bernanke, et al, 2004: "[I]t is crucial that the

central bank’s promises to maintain some part of its quantitative easing as the economy recovers be perceived as credible by the public."

QE2 will be followed by a roll-over period, just as QE1 was.

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