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Danger: The QE 3 “Hope” Rally is Going to End TERRIBLY
I’ve warned many times that QE 3 will not be coming any time soon and that stocks are on very VERY thin ice.
With that in mind, I wanted to alert you to the following news story:
Those looking for a clear and unambiguous green light for QE3 from Fed Chairman Ben Bernake’s much anticipated speech in Jackson Hole on Friday could be disappointed.
There are three reasons that add up to Bernanke likely falling short of market expectations for an all-out endorsement of additional Fed [cnbc explains] action at the annual meeting of central bankers in Wyoming the way he telegraphed QE2 [cnbc explains] last year.
It’s also rare for a Fed chairman, especially one this consensus-oriented, to get too far out front of his committee. The August policy statement clearly showed a willingness of the committee to conduct additional asset purchases.
This article was written by Steve Liesman of CNBC. Liesman is known to have extremely close ties to the Fed. So for him to write this sort of story before the Fed’s Jackson Hole meeting (Friday) is EXTREMELY significant.
Consider that the only reason the market is holding up is due to the bulls desperately hoping the Fed will unleash QE 3 this Friday. Now consider that Bank of America is close to collapsing at the very same time that the European debt contagion is threatening to take down the entire European banking system (Germany is increasingly unlikely to give the “greenlight” to more bailouts).
In this environment, for the Fed to NOT unleash QE3 on Friday could cause a full-scale market collapse. So it would make plenty of sense for the Fed to try and do some damage control ahead of time with stories similar to Liesman’s.
Now, have a look at Gold’s action this morning: the precious metal is down over 3% in just a few hours. Do you think perhaps some “well-connected” investors might know that Bernanke isn’t going to unveil QE 3 tomorrow (the Fed has a precedent for leaking information to the “chosen” few).
If QE 3 were coming, Gold shouldn’t correct. The same is true if BAC were going to be bailed out suddenly: Gold should keep rallying. But instead Gold is falling sharply.
The same goes for Brazil: THE commodity player and one of the emerging market darlings for the Bulls. Does this chart look like we’re about to see QE 3 (which would send commodities through the roof)?
Again, this is a major signal that QE 3 is not coming. Those who are hoping it will need to look at what the markets are telling us. Ignore stocks and pay attention to the credit markets: they’re on DEFCON 1 RED ALERT.
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Why wait for a dip? If it is going higher you just buy, right?
Buy all the way down. On leverage if you can.....
Who is talking about buying gold these days? Hasn't gold been going up for 10 freakin' years? Who needs to buy now? That is the question you need to answer!
gh
$190....not that great, I bought a lot of gold at $400.
Some of the most agonizing purchases I ever made was at $500 and $600. I knew I must be absolutely nuts to pay that much for a little round of metal. Lordy, gimme the opportunity -- just one more time.
You had the opportunity. At 1550! Were you asleep?
Gold down -$65, DOW up +60...no QE. I cant wait till it sinks in while Bernank is speaking tomorrow that people are not hearing $trillions pouring out of his mouth but instead talk of BS ZIRP and bond maintenance and 'standing by with tools'. At least 2,000 DOW points are priced-in QE3. Thats a big vacuum.
Gold and Silver takedowns prior to options expiration, by the bullion bankers have been documented pretty well. I'd argue it's extremely tough to separate the effects of a takedown (to provide cover for a variety of things: money printing, flagging stock market, making the true safe haven seem less safe), from the effects of the true supply and demand in the physical market.
With the level of central planning going on, it's difficult to say what "Gold is telling us." Besides, QE3 is a bit of a canard. The fact is that it isn't QE3 that informs gold, but rather, the state of the currencies. A bigger bomb than QE3 went off, which was "guaranteed ZIRP for at least the next two years." Since this didn't have the QE3 label on it, people got confused and let it slide (I'm sure Bernanke was amazed at the stupidity of everyone...did we really think he would say the word "QE3"?).
Massive money printing is accelerating, world wide, and will be conducted in the open, as well as surreptitiously (in fact, the stuff in the open is likely cover for the much more massive, and odious things going on behind the scenes, like bailing out European banks).
Gold and Silver are not fooled by labels like QE3.
Besides, QE3 won't work unless it's unexpected. Since the markets have expected it, they'll need to be taught a lesson.
Therefore you are right (markets going down fast post Jackson Hole), but for the wrong reasons (you believe the puppet show is real).
QE3 will only benefit Wall Street. Obama had hoped that QE1 and QE2 would inject wealth that would trickle down to the masses, which sort of happened in the form of food stamp entitlements.
Anyways, QE3 is too big of a political risk for Obama to take because it will not push unemployment down below 8%. Burgeoning wealth of the banks in conjunction with an unemployment rate that won't budge, is yet another nail in the reelection coffin for Obama. Obama's only real objective right now is to try and not make it worse, while creating the appearance that his "economic policies" continue to trend on the recovery path.
Regardless, unemployment has rebaselined to 9 percent. 9 percent is the new 4 percent. Unemployment should be trending back up to 14%, with the U6 trending towards 24%. Once that happens, and the S&P 500 hits 400, the country can get back on track. Weeks unemployed has gone, and remains, parabolic.
Gold is just suffering from profit taking. Wont last.
'Profit taking'....so people who held gold are selling it to others who previously didnt buy but are now buying to give the gold holders their profits?
I tend to take the reports from this outfit with a grain of salt........they are salesmen after all....... Not that I ain't buying food, fuel, and ammo lately........
Share the sentiments about QE3 or rather lack of it (at this time).
Gold was leading the way up and gold is leading the way down. There is absolutely NO good news out there from anywhere, no improvement and little or no growth.
Where is real support for POG? All the way back to $1500 levels or closer to $1200 ?
Hmmm??
indication for QE3: Gold and Brazil
have to remember that for QE4
Forget it, '2' was the last ever QE number.
Apocalypse Insurance is now a cottage industry. Bernanke is a General making a speech to the troops (Wall Street). The speech is a morale booster. Bernanke is their leader, and he will take them into battle. When things are bad there is a tendency to do a little whistling past the graveyard, which was yesterdays rally probably. Either way they're all going out there Monday morning.
Take for example the run-up to the Iraq war, lots of talk about WMDs, the Iraq Republican Guard, Scud missiles, shit you would think maybe nobody would come out alive.
That's what you do if you're a leader, you sell it as the mother of all wars, when you know damn well its a Cakewalk, and that way you come out looking pretty good in the end. But this, pumping up the markets ahead of the speech, that's not good. If they would sell the DOW down to 10000 ahead of Bernanke I would buy it with both hands, but this, this is something else.
QE on and off flips every day and sometimes multiple times during the day. This past month has reminded me of the fall of 2000. I rmember insane 100+ point moves in the markets before they collapsed.
The differene is look at the commodity markets. The daily charts look like brain wave patterns. What kind of fundamental could possible move the price of oil up and down roughly $1 every 10 minutes.
Do we get $90 crude tomorow completing a $13 upswing in a week? Does gold go back up again or drop to $1600 an ounce?
When do daytraders shoot themselves in the head?
Monday: "Hey honey I just made $20k in one day let's celebrate!!"
Tuesday: "Honey I just lost $30k tday, we've got to sell the house"
I had to make similar apologies to my wife last week.
Love your spawn of satan avatar
On Friday or shortly after that Gold will shoot up and Stocks will crap down! PERIOD! Less Noise Please!
Everyone is certain theyll not only have their cake, but be able to eat it endlessly!
Thats all this QE3 BS has been about, 8 months of fending off all bad news with hopes of free money, although the Bernank has NEVER himself said any such thing!
Do people realize the ONLY people who have ever mentioned 'QE3' is the media? Biggest flim-flam game ever in world history has just been pulled off.
Friday will be a bloodbath.
No bloodbath, maybe even a short squeeze. Short interest by hedge funds is high. They deserve to be taken to the cleaners again.
Finally, if finally Bernanke says there won't be further easing the market can come to turns with it and find some form of equilibrium.
The liquidity that has been created is not doing anything and that is going to change.
2,500 DOW points are 'QE priced-in' since January.
Don't discount ZIRP until 2013 though. Dividend paying stocks in quality companies are still better "investment" than negative interest on any short or midterm government paper.
Is the panic off the table though? Nothing has changed in Europe or here.
I second the motion. I have been following Jim Willlie for years, and there will be QE3, QE4, QE5 , until the system finally implodes. Markets were brought down for this reason, I am expecting the Bernank to continue with his ways and add some more language to juice everything.
We're already at implosion fatsack, the days of 'juicing' things are over. If youre in, you'd be well advised to get the hell out.
The QEs will no doubt continue as long as the currency can stand it. However, discerning the short-term timing is an exercise in double/triple/quadruple... headfakes, which are all designed to transfer speculative wealth to those truly in-the-know.
In any case, they will run noise in both directions at once until such a time as TINA dictates the next QE under the guise of "But, we have to do something!"
1st TARP/QE, USD 90.
Now dollar teeters on the abyss. No way can Bernanke deliver some expected diamond encrusted free gift without everything else falling apart.
Its not happening.
Everybody knew about the US Mess before, somebody knew about coming Downgrade for sure last week during the Sell Off and now we all have been told officially. Insider Job by S&P has finished US Dollar Reserve status officially now. China calls for austerity and adult supervision of the US Dollar. Nobody will buy the bluff about "strong dollar policy" anymore - austerity during Election Cycle is not the way to be reelected. Nothing has changed since we have put our Catalyst piece in place fundamentally - we only have to share with you our amusement with Washington politicians' desire to destroy your own country for the political gain. We all have two choices now - try deflation with the strong dollar, riots on the street and total collapse within few shot years or we will see the coordinated QE3.0 unlished to keep the insolvent financial system running. We have seen the beginning already: Oil release from SPR, SNB and BOJ interventions to prop up the dollar and Run to Treasuries last week. Mother Bear in Treasuries will be continued. After initial panic the dollar will go down - now it will be important to manage its gradual debasement. This is the only way to inflate out Debt, increase Tax revenues without real growth in real Inflation adjusted GDP and make export of US goods and services viable again. We will not be surprised to see the general markets up by the end of the year...in nominal terms. If you would like to know the real picture just check the value of DOW divided by price of Gold. Do not do it with your house price - you will be really depressed. http://sufiy.blogspot.com/2011/08/us-dollar-collapse-inside-job-s.html
Hmm. Gold down could be insiders going liquid at the top, to buy stox with both hands on the current relative bottom.
See it works both ways.
I happen to think stox are going to rally like mo'fos for a few days into next week, but after that, won't say.
QE2 was good for gold. Why would QE3 be any different?
Got Guns, Grub and Gold? Your gonna need it when this all goes south...
https://www.gunsgrubandgold.com/forum
That website hurts the eyes. Send it back to 1995.
Thanks for the feedback. I inherited it, and trying to get it up and running. Your not the only one who has mentioned the color scheme. I will be in the process of changing it to a more favorable scheme. Hopefully I can do it within a few days, and will see what you think then. Thanks again!
Best comment ever.
I am also inclined to think that the recent gold rally was party attributable to a princing in of QE3 expectations. Thus I would agree that the gold correction is a signal that QE3 is not happening. But there are still some dots that I can't connect right now... like, WHY IS THE MARKET POSITIVE ABOUT QE3? Like if QE2 was a fucking success??
...perhaps because QE3 will represent a brief oppty for fast buck algo trading?
The QE's are interim measures to keep sentiment high until the recovery arrives... but... it didn't arrive. To the extent that it drove euphoric mania and killed lotsa shorts, it was a success.
The question now is... does the Bernank believe that there is a recovery coming in the next 18 months? If he does, then QE3 is a no-brainer and it will happen, if he looks at Europe and now increasingly China and decides taint no recovery then no QE3.
There is no recovery coming, the US is destroyed.
QE3 was never going to happen in the first place, thats the dirty little secret everyone ignored over the last 8 months where every bit of bad news 'priced in' QE3 with a rally from under DOW 10K. Friday will be a real bitch.
Zh, how about eliminating the fear mongering client service driven op-eds and focus on what you do best, disseminating the market noise for clueless saps like myself...?
Golf - I agree with you and the original poster. These guys from "Phoenix Capital" sure make for some entertaining reading, but I can't say I buy what they're selling...and they are "selling".
What are they selling, reality?
gold was bound to correct. it looks like it priced in the margin hike on the same day a correction was due.
it pulled back solely on speculative "insider" knowledge regarding QE3 not happening? it wouldn't have gotten here in the first place, on the previous fed ZIRP announcement, if it wasn't for the sentiment already being quite the opposite.
are we in bizzaro groundhog day, where the day doesn't repeat and everyone wakes up in the morning and forgets yesterday?
hey thanks for the downvotes, gentle readers!
hours later: It's The Margin Hikes, Stupid
smart money: see you @ apmex.com this friday! dumb money: enjoy your GLD when the exchanges are closed!
Yea pretty much, until 1 morning soon everyone is screaming about not being able to access their trading or bank accounts and 'why does my 401K say -0-...not far off at all.
Did the authors of this article not even considere that it is gold's option expiration week and it always tend to be more volatile then!?
The author of this article has no clue just like Robert Prechter. Two butt heads equals two big assholes.
Prechter gave out a free week and his forecast was for the market to collapse. The market just burnt him for two days.
Now he has to draw up arrows and change his count. Which means elliott waves are historical and forecast nothing.
The market rally is because of short covering as exposed by ZH.
Hedge Funds are covering because they have record short positions. Something I wish I knew before ZH posted it.