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QE3 On - QE3 Off: Bizarro World Wins, As Hatzius Threatens Lowering Forward GDP

Tyler Durden's picture


We have now gotten to the very limits of the market, where any even modestly bad news (Services ISM) even if of a secondary importance nature, sends the market surging higher as expectations that QE3 is inevitable, hit 100%. Then when good news comes, and QE3 is deemed to be impossible, the market plunges. Bizarro world, where bad news is good news and vice versa, has won. Thank you central planning. And for all those who jettisoned gold on expectations the economy was actually, chuckle, improving, here is your chart.

And here is all that took to send the market into an inverse tailspin, courtesy of Jan Hatzius:

1. The nonmanufacturing ISM disappointed expectations in March, with a drop in the headline index to 57.3 from 59.7. The decline was driven by a sharp drop to 59.7 from 66.9 in the business activity index - the biggest drop since late 2008 -- which is the component we have found to be most closely correlated with GDP growth. Other components showed smaller changes, although the employment index also fell to 53.7 from 55.6.

2. The level of the nonmanufacturing ISM is still consistent with above-trend growth in real GDP. However, this is the first meaningful disappointment in a business survey in several months, so it deserves some attention.


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Tue, 04/05/2011 - 10:52 | 1136746 schoolsout
schoolsout's picture

Even if the economy "improves," the debt load is huge and only growing will climb

Tue, 04/05/2011 - 11:13 | 1136867 johnQpublic
johnQpublic's picture

silver at 39.02

Tue, 04/05/2011 - 11:20 | 1136901 msohn
msohn's picture

And gold just broke $1450

Tue, 04/05/2011 - 11:22 | 1136910 jus_lite_reading
jus_lite_reading's picture

WHOA! SILVER AT $40 WAS A GREAT PREDICTION! Dr. Kaku says Fukushima haning by a fingernail now that REACTORS 5&6 ARE CRITICAL AND LEAKING!!!!!

and radioactive fish!!! LETS EAT!


Tue, 04/05/2011 - 10:54 | 1136750 Circlehook
Circlehook's picture

Gold Bitchezzzzzzz! QE Infinatum

Tue, 04/05/2011 - 10:52 | 1136752 spartan117
spartan117's picture

Congrats to whoever bought the effing dip at 1415.

Tue, 04/05/2011 - 10:53 | 1136766 unwashedmass
unwashedmass's picture



thanks, blythe

Tue, 04/05/2011 - 11:00 | 1136792 Cash_is_Trash
Cash_is_Trash's picture

Their suppression allows us to accumulate sound money at bargain prices.

Myself, being 27 years of age, see this as a golden opportunity to buy as much metal with my meager salary and convert it into real money.

Yesterday, my ignorant-ass roommate laughed when I said gold and silver are money and dollars are notes with no intrinsic value.

Fuck the youth, fuck the baby boomers, money is VERY cheap.

May the nonbelievers eat their paper.

Tue, 04/05/2011 - 11:21 | 1136907 NotApplicable
NotApplicable's picture

Don't forget the lead, those nonbelievers may require some for a balanced diet.

Tue, 04/05/2011 - 11:31 | 1136968 Cash_is_Trash
Cash_is_Trash's picture

I agree, the millions of nonbelievers are losing everything as we speak, defend with lead buckshot.

The rug is being pulled out from under; the commoner doesn't understand why the metals, food and energy are rising, they don't care; so I say fuck 'em.

The books and websites are out there, no excuse for ignorance.

Tue, 04/05/2011 - 12:16 | 1137329 RafterManFMJ
RafterManFMJ's picture

Pick up some 12 guage defense loads; 1 oz rifled lead slug with 4 .00 BBs on top. Best o both worlds.

Tue, 04/05/2011 - 11:07 | 1136819 DeadFred
DeadFred's picture

I hear two somewhat conflicting theories on why Blythe keeps shorting a fast rising market.  One is the gov'ment pays her to make the sheep feel good about the security of the fiat dollar.  The other says the Chinese are paying her to keep silver (and consequently gold) down so they load up on the spot market at cheaper prices.  Am I missing any reasons?  How do all you vote?

Tue, 04/05/2011 - 11:38 | 1137043 hedgeless_horseman
hedgeless_horseman's picture

The idea that Blythe keeps shorting a fast rising silver market is an old and worn out internet myth. 

Blythe is actually a very intelligent, ethical, and hard working woman.  Did I mention that she is attractive as well? 

Tue, 04/05/2011 - 11:46 | 1137080 hedgeless_horseman
hedgeless_horseman's picture

Sorry, I got that backwards.

The idea that Blythe keeps shorting a fast rising silver market is a very intelligent and attractive theory. 

Blythe is actually an old and worn out woman. 

Tue, 04/05/2011 - 11:10 | 1136844 EscapeKey
EscapeKey's picture

That's not all - look at the volume.

I'd like to place a bet that the commercial short position in the next COT report shows a dramatic increase, which obviously doesn't clue in the CFTC, as it doesn't feature Sasha Grey (oh, don't google her, she's most certainly NSFW).|netdania_fxa&name=Gold,%20spot

Tue, 04/05/2011 - 10:54 | 1136757's picture

In keeping with this theme   The final countdown...only 626 days until Dec 21, 2012... 

Tue, 04/05/2011 - 11:05 | 1136814 I Am Ben
I Am Ben's picture

Lulz ya, loved that movie

Tue, 04/05/2011 - 10:53 | 1136761 unwashedmass
unwashedmass's picture


first "meaningful" disappointment....ah, jan, doncha mean the first piece of data that even all the spinning could paint a cheery smiley face on?

Tue, 04/05/2011 - 10:55 | 1136762 TruthInSunshine
TruthInSunshine's picture

We're headed to under 50 again - it's only a question of when.

The system is so badly warped, they can't even manipulate this number at will, any more (this assumes they haven't already dumped anything tied to any ridiculous notion that the economy is healing).

Say hello to the Big Double Dipper.


Tue, 04/05/2011 - 10:59 | 1136796 Cdad
Cdad's picture

Brother Truth,

I rather think will be longing for a simple double dip...and that reality is going to be far worse than that if bankers continue to have their way, and DC continues to ignore the financial peril at hand.

It is quite the cosmic bunny hole we have stumbled down today.


Tue, 04/05/2011 - 11:11 | 1136842 TruthInSunshine
TruthInSunshine's picture

Some bunny hole at that.

The Bernank is in the vice jaws of a liquidity trap quick sand pit, and Timmay is too weak and delicate to break him free.

Timmay has resorted to announcing months if not years old news, now, in some pathetic attempt to maintain any relevance to the news cycle, like a lonely and sad hobo, full of Mad Dog 20/20, mozying down the alley way:

Tue, 04/05/2011 - 11:18 | 1136899 Cdad
Cdad's picture

This cosmic bunny hole in particular is called failure.  Despite trillions of dollars fractionalized and spent, and with a state of largely dependent and sleepy citizens having long forgotten what it means to be free, comes austerity as the last way out;  this, as the market rises, puts on its hockey helmet, walks to the center of the room, and claps for itself.

Brother, I do believe I see unicorns out there in the field.   


Tue, 04/05/2011 - 11:28 | 1136943 TruthInSunshine
TruthInSunshine's picture

Yes, and sadly, those unicorns will have to be put down, as they've been grazing on a patch of highly irradiated Bernanke Confetti, aka FRNs, which has been growing wild around here as of late.

We'll unfortunately have to tag and bag them, and pile them in the barn with the glowing swans we were ordered to take last night.

I loved those swans, before they started glowing, that is. The helped to fertilize the PM crop, but that's thriving now, anyways.

Tue, 04/05/2011 - 13:24 | 1137689 Cdad
Cdad's picture

Wow...this is one of those days when you can clearly see how deep the cosmic bunny hole is, and how far into the bowels of the BlowHorn [CNBC] the criminal syndicate Wall Street bankers truly are.

1.  We have a defense of Apple call from some blond teleprompter reader citing rumors that people are buying shares of Apple because the Iphone 5 might come early instead of selling shares of Apple because they have to.  

2.  At Abercrombie and Fitch, you have the company patting itself on the back, and the syndicate going 12 percent worth of crazy on the self flagellation. 

3.  And at the noon hour, they toss over to Laszlow Birinyi with the question, "Why will the market go higher?"  The question is absolutely mastered by Birinyi's answer, "Because I say so."

4.  These things...while gold ramps to an all time high.


Liquidating longs...

Tue, 04/05/2011 - 11:39 | 1136984 TruthInSunshine
TruthInSunshine's picture


Tue, 04/05/2011 - 10:58 | 1136771 whatz that smell
whatz that smell's picture

pigs have wings, snowballs in hell, and netflix prints red. WTF? BTFD!

10:58:56, bitchz! i can tell my grand children i was there when NFLX was red.

praise be the bernank! may the speculative fever never break!

Tue, 04/05/2011 - 11:09 | 1136837 I Am Ben
I Am Ben's picture

No need to praise me, just doing my job



Tue, 04/05/2011 - 11:01 | 1136772 swanpoint
swanpoint's picture

Anybody know anything real about Form 8621 and what's really neeed to elect CEF as a QEF? I plan to buy a lot more and am interested in avoiding get dicked by the IRS. I bought a bunch (first time buyer) of CEF this year (2011), so I think I got to file Form 8621 in 2012 and elect those shares as a QEF? Also, any advise on home safes, guns, bullets, ballastic blankets, et al. is also welcome. Do I bolt the safe to the floor in the master bedroom or in the concrete in basement? If it's in the basement, my guns won't be readily available in the middle of the night? 2 safes? 2 safes, and plaster over the coin in the drywall?

Tue, 04/05/2011 - 10:57 | 1136774 alien-IQ
alien-IQ's picture

I had always wondered what ever became of all that bad brown acid that was floating around in Woodstock....Good to see it didn't go to waste.

Tue, 04/05/2011 - 10:55 | 1136775 camoes
camoes's picture

It's not bizzaro world Tyler, it's the Buy Anything That Happens Dip scheme, tell your friends and family! Just open a margin account and lever in any randomly chosen asset and enjoy the ride! We will all be billionaires soon enough (cartwheel to carry your monies not included)

Tue, 04/05/2011 - 11:04 | 1136811 yabyum
yabyum's picture

Yo, Camoes, Thats the ticket! I will go open a home equity loan on my house........wait, I live in the shelter.

Tue, 04/05/2011 - 11:00 | 1136793 ziggy59
ziggy59's picture

what did you think my avatar was? its Bizarro World aka Htrae

Tue, 04/05/2011 - 10:59 | 1136794 99er
Tue, 04/05/2011 - 11:02 | 1136805 alien-IQ
alien-IQ's picture

EUR/USD hit the LOD @ 9:30am...been going straight up ever since....what are the odds? LOL!!!!

Tue, 04/05/2011 - 11:01 | 1136795 I Am Ben
I Am Ben's picture

New reader here!


Wow - just, WOW - that's a really cool chart you've got there with the colours and all, where did you get that?

Tue, 04/05/2011 - 11:01 | 1136797 Dick Darlington
Dick Darlington's picture

Seems that everything is good news for equities in the bizarro world The Bernank has created. PM's are the REAL winners though.

Tue, 04/05/2011 - 11:05 | 1136815 lieutenantjohnchard
lieutenantjohnchard's picture

i hear the bernank's favorite group is the allman brothers. favorite song: one way out.

Tue, 04/05/2011 - 11:12 | 1136864 I Am Ben
I Am Ben's picture

actually it's this one:

Cracks me up every time! Ohh and that riff..

Tue, 04/05/2011 - 11:15 | 1136873 lieutenantjohnchard
lieutenantjohnchard's picture

good one. hadn't seen it before.

Tue, 04/05/2011 - 11:59 | 1137187 takinthehighway
takinthehighway's picture

Anybody ready for a ZH theme song?

Tue, 04/05/2011 - 11:06 | 1136820 Clockwork Orange
Clockwork Orange's picture

No QE3?

Shouldn't we be flash-crashing soon?  Or does that come after the spike where we slay the shorts, then pull Gramma into the market.

Oh, never mind, in one of the few glimmers of hope, Gramma has decided with finality she will not be gettiing into the ponzi again. 

No matter what Bullard says. 

Tue, 04/05/2011 - 11:06 | 1136822 Trillax
Trillax's picture

Damn.. 1446.7 as of 11:06am EST.. big spike again.

Tue, 04/05/2011 - 11:07 | 1136823 Platinum_Investor
Platinum_Investor's picture

I believe QE 3 has to be off for the short term. 

It would be suicide for them to extend it right away.

They will need to spin it some other way that people can`t understand

and will get the job done the same as now.

Tue, 04/05/2011 - 11:08 | 1136833 Misean
Misean's picture

How do you game the 401k market? Unlike 2000, this bubble has produced no capital investments at all.

Tue, 04/05/2011 - 11:16 | 1136891 InconvenientCou...
InconvenientCounterParty's picture

Oh, don't despair. Medicare "privitization" is next. That's when the money spigot opens for a new generation of innovators.

Tue, 04/05/2011 - 11:07 | 1136836 Milton Waddams
Milton Waddams's picture

It's just like the old days of the late-'90s bubble, stocks would rally on higher unemployment... because it was interpreted as disinflationary, thus reducing the odds Greedspan would take away the liquidity punch bowl.  Uncork the bubbly!

Tue, 04/05/2011 - 11:08 | 1136850 lieutenantjohnchard
lieutenantjohnchard's picture

time for commentary on silver and gold from zh's resident genius' on the topic: spalding "vanishing act" smailes, and the old catfish mouth himself, robotard.

Tue, 04/05/2011 - 11:09 | 1136856 spartan117
spartan117's picture

So much for resistance.

Tue, 04/05/2011 - 11:11 | 1136865 The Count
The Count's picture


Like that guy said in the movie Armageddon, "It's time to sit back and embrace the horror". Let's face it dudes and

, the whole world is screwed. 

Tue, 04/05/2011 - 12:04 | 1137241 youngman
youngman's picture

I  am a fighter....I want to be in the last percentile of survivors....just so I can know I was right all along...

Tue, 04/05/2011 - 12:46 | 1137503 The Count
The Count's picture

Fine, but realize that resistance is futile. Its only a question of who is last to sink with the Titanic.

Tue, 04/05/2011 - 23:48 | 1139695 StychoKiller
StychoKiller's picture

How is it that no one ever thinks about the iceberg's feelings?!

Tue, 04/05/2011 - 11:13 | 1136871 SheepDog-One
SheepDog-One's picture

You got half the equation right, on bad news the market goes up. Wheres the part about the market plunging? Havent seen that at all. I only see the DOW up 7 anyway, hardly an inverse tailspin.

Tue, 04/05/2011 - 11:15 | 1136876 nobusiness
nobusiness's picture

Almost time for wall street to throw a temper tantrum because QE3 looks like it won't happen.  Watch for them to take the market down hard in the next 3 weeks to scare the shit out of Bernacke.

Tue, 04/05/2011 - 11:13 | 1136877 doomandbloom
doomandbloom's picture

the market will be taken QE3...

but this was the banks are in reasonably good shape ( with mark to myths) ....everything will be owned by them...

Tue, 04/05/2011 - 11:14 | 1136879 economessed
economessed's picture

I'm not buying the dip, I'm buying LIQUOR and AMMUNITION.  They ease me in quantitative ways.

Tue, 04/05/2011 - 11:14 | 1136882 ruffian
ruffian's picture

when china raised rates this morning and gold didnt crack you knew this was coming

Tue, 04/05/2011 - 11:16 | 1136884 The Count
The Count's picture


Like that guy said in the movie Armageddon, "It's time to sit back and embrace the horror". Let's face it dudes and dudettes, the whole world is screwed. 


Tue, 04/05/2011 - 11:17 | 1136888 camoes
camoes's picture


Tue, 04/05/2011 - 11:17 | 1136889 spartan117
spartan117's picture

Where are all the PM trolls?

Tue, 04/05/2011 - 11:22 | 1136919 H. Perowne
H. Perowne's picture

Answering margin calls. Gotta love those shorts . . .

Tue, 04/05/2011 - 11:17 | 1136890 ruffian
ruffian's picture

inverse H & S neckline broken in stop $1580

Tue, 04/05/2011 - 11:19 | 1136894 DavidC
DavidC's picture

So, let's get this clear...

The figures come out worse than expected, which causes the market to surge on the basis of expectation of QE3, which, because of said surge means there is going to be less need of QE3, which means that the market will tank because there is going to be the expectation of no QE3, which means that there will be an expectation of QE3 because the market has fallen, which will cause the market to surge...

Yes, all absolutely clear now.


Tue, 04/05/2011 - 11:22 | 1136918 AmazingLarry
AmazingLarry's picture

Wiser words have never been spoken. 

Tue, 04/05/2011 - 12:29 | 1137398 falak pema
falak pema's picture

its called a blind alley...

Tue, 04/05/2011 - 11:19 | 1136895 mule65
mule65's picture

Gordon Gekko: If you're not inside, you're *outside*!

Tue, 04/05/2011 - 11:22 | 1136898 baby_BLYTHE
baby_BLYTHE's picture

Ron Paul interviewed by Kitco News

Utah Legislation- Gold Silver legal tender- competing currencies a must for liberty.

Male viewers might enjoy the interviewer ;)

Tue, 04/05/2011 - 11:21 | 1136902 Tense INDIAN
Tense INDIAN's picture

I dont understand ...what the hell is going on??

Tue, 04/05/2011 - 11:19 | 1136903 AmazingLarry
AmazingLarry's picture

I will be personally bailing out Ag and Au when they smack it down. If enough of me do the same (as in nations or Sprott) does this not cause JPM et all to piss their pants everytime? Or don't they sweat the spikes cause they know what they can do quite easily?

Tue, 04/05/2011 - 11:23 | 1136913 TraderMark
TraderMark's picture

Interesting interview this morning where hedge fund legend Michael Steinhardt agrees with many of the negative views of what is happening to America (ex stock market, ex Washington D.C. boom town) - and spends a minute ripping Warren Buffet to shreds to boot.

Tue, 04/05/2011 - 11:28 | 1136956 AldoHux_IV
AldoHux_IV's picture

QE is now in perpetuity despite what shit dick Satanke says or his MSM minions.

Tue, 04/05/2011 - 11:33 | 1136991 truont
truont's picture

Wow, Adrian Douglas was right about the 1% cap on daily gold gains.

Gold spiked up 1% for the day and cannot seem get above the 1% cap.

Wed, 04/06/2011 - 00:30 | 1139775 Hephasteus
Hephasteus's picture

1 percent per day on enough days is one hell of who gives a shit about caps.

Tue, 04/05/2011 - 11:35 | 1136998 John Law Lives
John Law Lives's picture

It's all good.  According to economists, the devastation in Japan is only expected to shave 0.2% off their 2011 GDP.  In a $5 Trillion economy, that equates to an approximate $10 Billion reduction in GDP in 2011.

I wonder if the economists who came up with that hokum and bunkum are using that "new math" to go along with their "BS" economic ideas.

Tue, 04/05/2011 - 12:09 | 1137271 youngman
youngman's picture

and they are shutting plants here in the USA for lack of parts....and they will be the last to open as Japan will get theirs going first.....good for FORD....I will never buy a bailout car..ever

Tue, 04/05/2011 - 11:34 | 1137022 Hondo
Hondo's picture

The market nits need to drop this market 300 points....get the FED's attention......and they will start the presses up again and give you a couple of trillion or so.

Tue, 04/05/2011 - 12:37 | 1137439 TruthInSunshine
TruthInSunshine's picture

300 points?

It needs to drop about 50%

Tue, 04/05/2011 - 11:46 | 1137100 glenlloyd
glenlloyd's picture

Look at the pile of debt, look at the 'improvement' in the economy and then ask yourself if it was worth it, because tax payers just stuck with the bill, Bennie B slipped out the back door early.

Tue, 04/05/2011 - 11:54 | 1137160 Hollow_Point
Hollow_Point's picture

A perfect trading world for George Costanza, opposite George that is....

Tue, 04/05/2011 - 12:02 | 1137191's picture

Silver going ape shit....

Tue, 04/05/2011 - 12:11 | 1137291 tawdzilla
tawdzilla's picture

Wall St. better watch out for what they ask for.  If QE3 happens, high gas prices will destroy corp earnings.  (Not that anyone should care about such trivial issues as earnings.)

This is the razors edge on which The Fed stands.  This is one reason why Bernanke needs to take his foot off the QE pedal temporarily (after QE2).  The other reason is for political cover.  If he lets the markets fall, he can then be credited with saving them once again...the teeter totter game continues...we all become reliant upon the Fed to save us from ourselves.  ZIRP, QE, Trillion Dollar Deficits (TDD)...the three-peat. 

Tue, 04/05/2011 - 12:29 | 1137391 wswarrior
wswarrior's picture

I don't know what you're talking about the market plunging on good news, it seems to go up regardless of the news. 

Tue, 04/05/2011 - 12:34 | 1137430 TruthInSunshine
TruthInSunshine's picture

Frogs boiling slowly

Comfortably numb they are

Boarding the Pain Train

Tue, 04/05/2011 - 14:39 | 1138009 Things that go bump
Things that go bump's picture

Spring rains glowing frogs

Radiant illuminance

In the silent hours


Tue, 04/05/2011 - 13:50 | 1137800 tawdzilla
tawdzilla's picture

All of the passengers on the train see the cliff up ahead.  But instead of stopping, our fearless bus driver is making the train go faster.  Eventually, we all become blue in the face from second guessing WTF he could be doing:

"They told us this would be a safe ride, what happened?  Is he trying to jump over the cliff?  Do the brakes not work?  Did he get lost?  Is the accelerator stuck?  Did our conductor go simultaneously blind and insane?  Is there a T Rex chasing us?"

We yell and shout at the driver, only to get one canned response after another, "Stay seated... we have it under control...everything will be just fine."

One passenger looks out the window and notices that the tracks were intentionally laid to take the train over the cliff.  By the time all the passengers finally figure out that it is a suicide mission, they rise up, bum rush the cab area, and try to fight for the controls.  Unfortunately for the passengers, it is too late.  The inertia of the bus is unstoppable, the bus crashes into the river bottom 1000' below.

But don't worry about the Fed or Wall St. or the politicians.  They will push the eject button and out the top of the bus they fly, parachute and all.  They will dust off their pin-striped suits and prepare for the next train ride. 

(ehhh umm...positions please as we screw over a whole new generation) Conductor Ben announces..."All aboard the Crony Capitalism Express...Socially Engineered and Centrally Planned.  We offer the worst of both worlds:  the greed, cronyism, and exploitation of capitalism (without that messy competition of course); and the red tape, spending binges, unaccountability, and police power of a gov't bureaucracy.  This is your ticket to the 20th (uh, I mean) 21st century.  Don't worry, the ride is free...your grandkids will pay for it." 

Sat, 04/09/2011 - 21:23 | 1154178 thames222
thames222's picture

Debt, inflation, prices, all on the rise, and wages keep getting lower.  All the ingredients for failure, last night's "fix" isn't doing anything for us long-term.

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