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Taper Talk is Back - It's Not Going Away This Time
The capital market for new issues and refinancing of corporate debt has been on a tear the past few months - I think that ended yesterday. That's because the dreaded Taper Talk has resurfaced. The Fed minutes yesterday rekindled Fear of Taper.
The Taper On/Taper Off story has been with us for six months now. It started in May with the release of the Fed minutes and the first "whisper' of the Taper. The talk of the Taper reached a zenith in late September as the debt markets were convinced that Bernanke would start the Taper in October. It was a big surprise to players when Good Ole Ben chose to delay the October start and push it to sometime in the future; and now it's back.
An interesting consequence of Taper Talk is how it affects the Corporate new issue bond calendar. The following chart shows how talk of taper killed the ReFi market in June/July/October, and it also shows how the window for new issues opened right after Big Ben delayed the taper for a few months. Up until yesterday the corporate finance types and bond dealers on Wall Street were having a daily party. As of today, they will be back to struggling to push deals out the door.
My read of this is that the debt market does not work well unless there is the perception of QE -4 ever. The capital markets freeze up whenever the threat of a disruption of the $85B of grease the Fed provides every month arises. When the capital markets are working well, the deal flow is there, and this is good for the economy. When there is Taper Talk the refinancing gears get gummed up, and it acts like a drag on the economy.
There is no doubt in my mind that Yellen is going to push off the Taper for as long as she can. But even the Great Dove can't push the Taper off for too long. I think that Yellen will be forced to initiate a Taper by March. That suggests that there is a four month window before the actual event, but I don't think the Taper Talk is going to subside as it did in October/November. The Talk of the Taper will be with us (and the closing of the refinancing window) for months. As a result we are going to see a pause in the up move in equities and a closing of the bond window. This will translate into an economic drag. Whatever your forecast of 4th Q and 1st Q growth were on Tuesday, you should mark them down a bit today.
QE is the lubricant of the system. But when it is ended (or threatened to end) it causes pain. We've had five years of grease, now we are going to have to pay a price. My guess is that this new round of Taper Talk is going to hurt pretty bad. The reason is that there is next to no basis to believe that QE can be continued beyond a few more months. The Taper sign is now on, it will remain on until the talk is turned into action. When the Taper Talk sign is on, beware. The sign is now brightly lit.
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Zzzzzz
http://www.zerohedge.com/contributed/2013-11-21/taper-talk-back-its-not-...
BTW, still waiting to explain how you convince people the gold oil ratio should 1 oz = ~900-1000 barrels....
If you wish to carry on the previous conversation
http://www.zerohedge.com/news/2013-11-16/nobel-winner-dares-go-there-no-...
why don't you refer to something I actually said, to whit :
(if $100,000 per ounce isn't enough to solve your problem) how about $500,000 per ounce?
YES or NO?
Yes, we do and now it your turn to answer a question, you know, the one where gold is $100,000 an oz and all commodities basically stay priced the same in USD...
How does that happen?
Edit: I answered you, now its your turn...
Yes, we do and it your turn to answer a question, you know, the one where gold is $100,000 an oz and all commodities basically stay priced the same in USD...
How does that happen?
No, honey, YOU made an assertion that there was not enough gold to support the global flow of oil under a gold standard. Me answering your questions isn't going to help our enthralled audience understand why you believe this.
What I'm trying to establish is, at what price do you think that the value of gold stocks would be enough? You've said no to $100,000; do you think $500,000 would be high enough? Yes or No?
And I told you that the price in USD didnt' matter, what mattered what the historical relationship between gold and commodity prices, in particular oil....
So how does that change? And why?
I do not know why you even need bring USD into discusson of a international gold standard... It would appear that you cannot deal with any thing but a minimnal level of abstraction...
I do not know why you even need bring USD into discusson of a international gold standard... It would appear that you cannot deal with any thing but a minimnal level of abstraction...
You appear not to understand the relationship between gold and dollars, and what the value of gold would be if a gold standard were re-imposed (and, as I stated previously, I'm not an advocate of a gold standard, per se; I have been merely pointing out your egregious, repeated, and numerous errors on the subject).
Previously you've also asked who is going to 'force' people to value gold multiple times higher. I'll give you a clue - it's the same institution that forces people to value paper (worth virtually nothing as a commodity) hundreds of multiples higher after it's had a dead president printed on it.
I find it interesting that you think unbacked USD can somehow sustain international trade (with particular reference to oil), yet somehow if the number of dollars was limited by the US' gold reserves, oil would stop flowing. This suggests a heady mix of ignorances: ignorance of the quantity theory of monetary value; ignorance of why OPEC demands USD; ignorance of monetary history; and a zero-sum, mercantalist view of trade.
Go back to school, girlfriend. You could start here: http://www.mises.org
You didn't answer really the question but in fairness, you did say the state would force the revaluation at gun point... The hypocrisy of someone who points to von Mises and claims that an international gold standard would require the state to impose a by fiat revaluation of commodities vis a vis gold is positively staggering....
I will definately quote you....
And you keep getting hung up on dollars? Why? They are not needed for the discussion...
And stop putting words in my mouth, I made no such claim about unbacked USD...
Finally OPEC does not demand USD, it is more like the US demands OPEC only accept USD. A perhaps subtle but important difference. I suggest you review your understanding of the petrodollar...
Thanks for playing... I'll be in touch...
The hypocrisy of someone who points to von Mises and claims that an international gold standard would require the state to impose a by fiat revaluation of commodities vis a vis gold is positively staggering....
There's no 'hypocrisy', girlfriend, just a recognition that a 'gold standard' is - by definition - imposed by the state. As I've repeatedly said, I'm not an advocate of the gold standard, per se, for that very reason. If it's the state that's making its citizens recognise that n dollars equal an ounce, then the state can just as easily say, well, actually, for the good of the nation, dollars are now 1.4 x n per ounce.
And stop putting words in my mouth, I made no such claim about unbacked USD...
Perhaps I misunderstood your objections to the gold standard, and assumed that you thought the current system was superior in this regard. My apologies; please explain what you had in mind.
Finally OPEC does not demand USD, it is more like the US demands OPEC only accept USD. A perhaps subtle but important difference. I suggest you review your understanding of the petrodollar...
No kidding. And of course if I don't unload every detail of all my knowledge regarding a subject in every post, I must not have that knowledge, right?
Hey! Weren't you the person who was insisting that OPEC 'accepted' USD, rather than 'demanded' it? Hmmm!
If you were spinning any harder, you would go straight through the floor...
I argue in good faith; you're a liar, a sophist, and deliberately mis-interpret peoples' arguments so you can split hairs and endlessly strawman.
Our enthralled readers can decided who the spinner is here, girlfriend.
Vous etes tres riche et aussi plein de la merde...
http://www.zerohedge.com/contributed/2013-11-21/taper-talk-back-its-not-...
Well said Big Jim..... "They can raise rates to dampen this if they've sucked enough government debt out of the system"
How much debt do they have to own to be in a position to raise rates?
Sorry, Big Jim just makes shit up, he actually has no idea....
Wow girlfriend, that's some convincing refutation you got going there!
It's the DEPTH of your rebuttals that makes them so persuasive.
So how are you going to change the historical price levels for wheat, oil, corn etc... measured in gold by a factor of ~100?
Here is a little historical data...
http://www.financialsense.com/contributors/ronald-griess/ratio-charts-gold-versus-other-assets
just for your perspective...
Are you to do it gun point or through one-world government, where the ratios are declared by fiat? Or so you have a *new* insight that you would like to share...
Did you figure out what "by fiat" means yet? Or do you need me to google it for you?
Oh goodness, you just make this so easy... .
First you lambast me for talking about the dollar price of gold with respect to supporting a global flow of oil... then you attempt to prove something about the gold standard by looking at a bunch of charts that look at the value of gold relative to other commodities... by comparing them with gold... not on a per ounce basis, but priced in USD! And they only go back to 1970... when the nearest thing we had to a gold standard (Bretton Woods) collapsed in 1971!
Your utter, abysmal cluelessness is delicious... and you don't even know it! Ah ha ha ha, keep on diggin', girlfriend!
Hey, here's a thought exercise for you: Have a look at the price of gold vs oil in a per ounce:barrel kinda way, when the dollar was actually pinned to gold. How's THAT ratio looking, girlfriend? Still think we can't have a gold standard and global trade in oil?
Unfortunately, the calories that are required to actually do anything or create anything of real value are what they are, no matter how many paper promises you "create" out of thin air. Something paper-pushers like Bruce fail to grasp. hedge accordingly.
Look - it's clear that creating tangible goods have value, but the use of PROMISES facilitates that process and thus increases the size of the pie for everybody. The supposed "paper pushers" can thus contribute to an increase in the general welfare of society, provided they have to earn their own keep without subsidies and bailouts. In addition, the process of allocating capital does have value, with the same caveats.
Give it a day or two and we'll be back to taper off...again.
Ok maybe today...
"Philly Fed Tumbles, Number Of Employees, Employee Workweek Both Plunge; Stocks Surge"
If the ambassador from planet Zayton agreed to buy U.S. debt , then they will taper
There is no Taper, there is only Yellank.
Bruce says "QE is the lubricant of the system". Sorry, wrong answer. QE is the FUEL of the system. Asset prices rise only as long as the flow is maintained. The stock is irrelevant; it's "Yeah, but what have you done for me lately?"
Bond traders and stock traders will not wait to see how the first round of Taper affects the markets. To them, tapering is tightening. At the first serious hint of Taper, there will be a stampede for the exits. Everyone will be determined to get out ahead of everyone else. If you thought 2008-2009 was a bitch, wait until you see what happens when everyone already knows a crash is coming, they just think they can sell at the top and avoid being trampled.
All Taper-talk is jawboning. The Fed cannot stop QE without collapsing stock markets, bond markets, real estate markets and the government. By December, the Fed will be talking about increasing bond purchases.
"QE is the FUEL of the system."
Agreed, that is a very critical distinction. I'm a little confused that Bruce took the approach he did. The only justification for seeing it as grease and not fuel is to make a case that there is something else that can keep the engine turning over if we could only find alternative form of lubrication besides QE.
But QE is no longer a question of nuance; it is a matter of necessity.
Not only that, but their primary constituency are the owners of the assets that would suffer most from tapering, so they won't voluntarily choose to taper. The only way a taper happens is when circumstances beyond their control compel it.
The November employment report, released 12-6, promises to be a market mover.
And PM's take another hammering - WTF ? What is it going to take for PM's to rally FFS - Under QE they were falling and with any talk of tapering they get slammed . This is becoming mighty frustrating - Fuck the Fed.
if you and the herd here weren't so stubborn about bitcoin you would of protected your wealth.... but nooooooo it has to be YOUR way
C'mon, Bruce, of course the MSM and Establishment are bigging up the taper - Yellen, the quintessence of anti-tapering, is ascending the throne... and she ain't called 'QEeen Yellen' for nuttin.
They'll taper when and only when the Fed owns enough US government & private debt that normalising interest rates won't bring the whole shebang crashing down to earth.
Ah...so you're one of those folks who actually believes that these people know what they're doing and are in control, right? LOL...too funny...
Ah...so you're one of those folks who actually believes that these people know what they're doing and are in control, right? LOL...too funny...
'These people' have managed to game the system for decades (arguably, centuries) to ensure that no matter what happens... they (or, more to the point, the people who pull their strings) keep getting richer. So, yes, unless they're just unbelievably lucky, they clearly do know what they're doing... which is NOT what they say it is (price stability, low unemployment, etc), but taking an increasing skim from the 99.9% and handing it over to the 0.1%.
I believe they're aware of the dangers of inflation and the US losing reserve currency status and the collapse of the petrodollar. They have a very difficult balancing act if they're to maintain the 0.1 percent's place at the top of the feudal financial system. Part of this balancing act involves publically denying the very existence of their underlying agenda. Will they succeed? Maybe, maybe not. It may be the ponzi-like nature of fiat money means that it will all collapse irrespective of what they do.
But you'd better believe they know what they're doing - all this financial rape we're being subjected to isn't just a happy accident.
The point of inflection for their good fortunes was the spread of global finances, and the offspring of that spread (CDO,LBOs, MBS, TBTF banking, central banking, etc).
I think they have a very firm grip on the total of global financial resources going forward.
Now, it becomes like four people playing poker, but they are actually working together. There is no risk. They show and even play each other's hands. Manage cards between hands. Decide who wins in which order to move money around the table. You get the idea. If you are watching from a distance, and let's say you don't know the rules of the game all that well, then you see "a game of poker" and nothing more.
Under the current circumstances, I wonder if they can actually lose. I wonder if the global financial system will ever be allowed to collapse and reset in a natural way. Or that any government is ever allowed to repudiate (or even pay down) their sovereign debt. There are no so many violations of "the game" that I don't think there are too many people that even know what the game has become.
I can promise one thing, it is nothing close to "the game" they are letting us watch from a distance.
At this point knowing what I know (or actually suspecting what I suspect) and having watched all this play out for a while now, I'm am finding myself less interested in the fate of global finances and more interested in the question -- what comes next? Because I can only take the current track so far in certain directions before I come to a different reality altogether. Beyond that, I cannot see. But if those guys can see it -- the ones pretending to play at poker -- then that is what we are going to get and all the screaming and pleading and hair-pulling you can do is not going to change the future.
If they really are all just 'playing' at playing poker, things could get very ugly indeed. And it certainly looks a lot like that, what with the Fed extending practically infinite amounts of money to foreign banks; it's pretty clear there is a globalist elite, it's also clear they routinely cooperate, and it seems very unlikely they don't have an agenda... and I doubt that agenda is one that has a kindly eye on the likes of you and me.
At this point my chief hope is that China, Russia, Syria and Iran really are not part of the poker game. Because once our overlords have total sway over the financial system they'll crush us all with it.
They know what they are doing AND are in control. I just don't think they will do the right thing and begin to taper. All of these Harvard, Columbia, Yale, "Kenesian Economists", brainwashed sum bitches know is that they are pulling the strings. They are controlling the masses...nudging the public this way and that. They are keeping the population of workers classified as workers or less. They...the elite...will stay the elite no matter what. The days of wine and roses are gone for the American public. Bad things are coming...for the public. The elite will continue to be the elite. It's designed to work this way! They KNOW what they are doing. You have to change the way you look at these people. They have no conscience. They have no soul. They do not believe that what they do now will have any impact on them later in life or after.
"They do not believe that what they do now will have any impact on them later in life or after."
If they knew what they were doing, they wouldn't have this belief...
Blah, blah, blah ...
Yadda, taper yadda, yadda, yadda,
Thats why shit is 'tapered' - so your asshole doesn't slam shut!
Try to not look a gift horse in the mouth.
Do not try and bend the spoon, that's impossible. Instead, only realize the truth, there is no spoon!
ase on apmex...25.00.....fuckthe paper price...the disconnect is happening right in front of you....yeah its 19....just give me 25 and you can have it...
gold 1245....give me 1306 and you can have it...