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There is No Such Thing as Sterilized QE... The Fed is Going to Disappoint.
This morning the market rallied on a Wall Street Journal piece stating that the Fed is considering a new bond buying program through which it would print money to buy bonds but then borrow the money back to make sure inflation remains under control. This has resulted in some commentators calling this "sterilized QE."
The story was published by Jon Hilsenrath who is generally considered to be a mouthpiece for the Fed itself. Because of this, the markets are taking his story to be
gospel.
I don't buy it. There is no such thing as "sterilized QE." Either the Fed prints and inflation explodes or the Fed doesn’t and the market tanks. End of story. The notion that it can somehow inject money but then take it out to make sure there’s no inflationary impact is ridiculous.
Besides, the Fed cannot announce more QE due to political pressure (if they do Obama has NO CHANCE at re-election which in turn means the White House turning on the Fed) not to mention gasoline prices, which are already through the roof.
Do you really think the Fed would do QE now? What for? The markets have only fallen a few percentage points.
So... a much more likely interpretation of this is that this story is a Fed leak to attempt to juice the market because the Fed is going to disappoint by announcing NO QE at next week's meeting.
Remember, just last week Bernanke told Congress that no more QE was coming. Also remember that the Fed has been largely using verbal and symbolic interventions to prop up the market rather than actual money printing or new monetary policies (Operation Twist 2 only shuffles the Fed balance sheet; it doesn't actually inject more money into the system).
So my view is that the Fed is about to disappoint and is doing damage control by verbally intervening via its favorite Wall Street Journal reporter to juice the markets higher.
Which means… the Fed will disappoint, and we will get a market correction. This Hilsenrath story is just an attempt to prop things up verbally without the Fed openly contradicting Bernanke’s testimony last week. All the macro and technical signs point towards something bad coming this way. The red flags are literally everywhere. And judging by the significance of them, we could very well be heading into a full-scale Crisis.
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This market is neither bull nor bear. It's just a bitch that's making it hard to secure some certainty.
WTF, is this like sterilizing your dick after you stuck it in some hiv infested asshole?
I don't want a market correction, I want a total reset. Of course a correction will be a step in the right direction as most likely it will just stair step down and you'll know everytime we are on the upswing after a lower low when guys like me show up on zh going nuts.
Dude, I don't know why I read your crap others than to make fun of your stupid ideas.
You need to drink the Ben kool aid
More garbage from Phoenix Crapital.
Haha, this is funny - phoenix capital research acting as the mouthpiece of the fed, via a mouthpiece of the fed, and attempting to plant this, by trivially appealing to ZH opinion. Psyops account with contributor rights anyone?
Here's how his article works:
1. Attract symphaty by appealing to inflation and disinformation of the fed (which actually, is true)
2. Then using this gained "reader-trust", to plant the actual message of the fed of the entire LAST SIX MONTHS: Don't expect explicit massive money printing.... won't happen.... because if you'd expect it, it would be less effective.
The unanswered explicit and implicit question: Why does such propaganda matter anymore anyways? The bots control the stockmarket, the major dealers control the bots, and the fed is controlled by the major dealers. SO HOW DOES THIS BELIEF ACTUALLY MATTER? Oh, i know.... it WOULD matter for the handful of retail suckers left in an abandonned low-volume stockmarket..... because it would enable said major dealers to profit from their naivity.
But then again: Is this efficient? The stockmarket is mostly abandonned by now. Does spending billions in propaganda pay off for a handful of suckers left in the market? Or are those billions paid as well by fiat printing, so that costs do not matter?
TL:DR: WTF IS THIS SHIT? <insert picard picture here>
Widget....two questiions.
1. How long were you a member ?
2. What percentage of his picks were money makers ?
The reason I ask is that I had requested a 2 week free trial and was told "no can do"
Oh baby its QE but sterilized. Next will be sex changed QE. And its mandatory for everyone through my BAMY care. Can't you just feel your balance sheet ready to burst!
"Besides, the Fed cannot announce more QE due to political pressure (if they do Obama has NO CHANCE at re-election which in turn means the White House turning on the Fed). . . "
Why is the notion that the Fed cannot possibly ease in an election year considered axiomatic?
Fed rumor was timed to bolster market pre-Thursday in case the Greek thingie doesn't work out. I very much doubt you'll get an announcement that it didn't work out - if it fails, it will arrive in a much murkier, but cheerier format as the spin will be heavily applied.
Appears this great Fed 'leak' was good for about a 60 point bump on the DOW, which has been holding there since.
But you gotta admit: "print money to buy bonds but then borrow the money back"
is about as surreal as it gets. This makes 3-card monti look like child's play. (Watch the pea...)
phoenix crap shoot .. and eyes wide shut
This would be a hat trick because it assumes the Fed would borrow back funds they have created by good ole debt monetization. It assumes there is no purpose to QE in the first place. It is monetary double talk beyond MOPE or maybe MOPE at a spiritual level. It is an attempt to intellectually cloud the process and to give plausible believability to PR lies.
Once you buy the bond via monetization the deed is done. It ends there. If you drain then you have done the reverse.
This is a statement that says we will step on the gas and then equally apply the brakes which means you go absolutely nowhere. It is a statement that is total gobbledegook to deflect the fact that QE is going to infinity. It is a statement that only those who do not understand monetary science might give credibility to.
This is a damned lie which belongs more out of intelligence agencies than a body claiming transparency. This is why there is no practical way out of this mess as it offers no solution to anything whatsoever.
sinclair
What it does is essentially buy a long-term Treasury with a short-term liability (which then becomes someone else's asset).
Short term interest rates should move higher, despite ZIRP.
Ben needs to monetize Treasury debt beyond 3 years to keep rates low for the mortage market and for Turbo Timmy, as the Treasury balanced due bill gets continually pushed out the curve.
Straight QE eventually will invite inflation... and it already has in the Oil markets.
Might as well try the sterilizing QE now-- because this probably the only viable exit strategy the Fed can employ without goosing the hell out of interest rates across the curve.
By the way... the original piece is mindless drivel.
Reckon Fear sells - like porn
'Inject money, while taking out money....so it never really happened, thus 'sterile'! LOL so funny....48 hour disgestion period MAX until the bots figure out this is nothing but BS.
Your Proprietary Crash Indicator said sell everything last year.
I guess you forgot to post that you got that call wrong.
Hey fukin idiot, press save 'ONE' time....not very good with simple instructions??
blow me sheep fucker.
Your Proprietary Crash Indicator said sell everything last year.
I guess you forgot to post that you got that call wrong.
Your Proprietary Crash Indicator said sell everything last year.
I guess you forgot to post that you got that call wrong.
The Fed willl continue to do something to grease the skids, otherwise lights out for Oblamer.
I agree with this commentary from yesterday. The Fed is NOT getting ready for a trip to Cancun between May and November....
http://buttonwood1792.blogspot.com/2012/03/weak-markets-is-bernanke-really.html
They have no intention of going into any election with $5 gas...we'll be in WW3 months ahead of some BS election and ObaMao will just be Continuity of Govt president from here on out.
That's the same rumor Bush had. Since Romney and Obama are the same, they could goat head and let us sheeple have our election so we can elect another puppet and keep everyone happy. It would be easier for them to just keep Obama in place since he knows all the cue cards by now and doesn't have to recite as much and they don't have to worry about foulups.
And maybe that, too.
They are greasing the skids. Buying Treasuries, pumping the Libor, keeping rates at zero, backstopping the banks, parking reserve funds with interest, .... everything but dropping money out of helicopters.
'Correction Time'
Given the stock markets have no volume, given there's been Net Outflows of $4 out for every $1 in, you have to ask where is Benny the Bluffer?
Whatever the always-wrong academic windbag says at next weeks meeting makes no difference to the stock markets as there's no evidence (funny money) he's been propping them up
all we have seen is The Feds usual criminal, illegal price-rigging scams in the Gold market.. Benny spends an awful lot of time and effort on the pricing of "barberous relics"
So this market is rising on fundementals, e.g. improving employment, increasing discretionary funds, etc.?
this 'market' is rising despite huge net outflows, despite huge insider selling, despite Hedge Funds closing left, right and centre and despite small investors heading for the Exits 3 years ago
what's keeping them up is big investors (pensions etc) not stampeding for the Exits (yet)... where would they go? US Govt Bonds?!!
There is no such thing as a good article from this guy.
Here here, Hes just a guest. Have a little hospitality for the guest. Would you like a cup of coffee and a cookie, guest?
Fuck that. Where I come from, guests get all-American blow jobs. And the OP is a shill, bj or not.
all this talk about verbal support of markets? why? he says the fed will not qe at this time? he then says they are trying to support the markets verbally so they do not fall until the lack of a qe anouncement next week? why not let the markets correct now and do the famous and ever popular "priced into the market" nonsense? fall this week? or next week? around and around we go.
Agreed. The reason he hasn't failed to predict a single market crash is that he has been predicting a crash "any time now" contantly for the last few years. I learned that the expensive way by being a subscriber, until I realized TPTB has the market 100% rigged by paper and can/will crash it whenever they feel like - no sooner, no later - making it impossible for "outsiders", in which their whole power lies. It was well worth the 300 bucks to figure this out though. (Plus the ALL THE ALL CAPS newsletters year in year out was very tiresome.)
Did YOU foresee the amount of intervention and manipulation that the Fed and others have done since 2008? Because I didn't, and without it he would have been right.
NOTHING has changed since 2008 EXCEPT for massive amounts of money that has not reduced ANY of the debt one iota. Thus, I tend to go with his analysis and he will be proved correct.
DavidC
That is my point. Nobody without insider info could/can foresee how far down the road the can will be kicked, defying all fundametals, until it is "let" implode. It is certainly an "exception" but a very painful one if you are positioned in the ultra-short ETFs since early 2010, unless you have access to unlimited zero interest credit (which I do not). I usually agree on the fundamentals he outlines, but I disagree that they are the deciding factor in the current manipulated paper market.
I can tell you that the world will end and be 100% correct... eventually.
I think the key point to bear in mind is that the Fed has not abolished reality no matter how hard they have tried.
Global financial markets are one black swan away from imploding.
http://thespiritoftruth.blogspot.com/2012/03/reversal-from-dow-13k-nasda...
Widget, you were a subscriber to his service ?
Yeah, and I did not renew it ("Private wealth advisory").