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Winners and Losers Since QE3

Tyler Durden's picture





 

As we end the month and quarter, we remind ourselves that a massive amount of the recent 'strength' in risk markets occurred on just two days - ECB and Fed statements. Reflecting on the post-euphoria 'sell-the-news' or BTFD meme, we look at how various asset classes and securities have performed post-QEternity. Two lessons are clear: Front-Run The Fed's action (every time) and Buy Precious Metals.

Silver and Gold are the big winners from the 9/12 (pre-Bernanke) close - followed closely by the Long Bond. Oil and European stocks have lost notable ground and US equities are practically unchanged - having given up their post-QE3 pop...

 

While Treasuries did well, the real winner in bond-land was the MBS market - where current coupon 30Y yields plunged as every dealer warehoused (front-ran) the Fed's indiscriminate buying promise... (MBS -70bps vs -14bps in 10Y) - it seems the front-running of the Fed's action is a winning trade again and again...

 

but all the hope was for those valuation multiples to be maintained in equity land... how did sectors do? Not so great - Healthcare remains the clear winner as Staples hold unchanged (and the high-beta QE-sensitive sectors have been sold)

 

and those no-lose financials - that surely will benefit from QE3 right? - hhmm, not so much. MS and GS are dismal; BofA and Citi are down in line with the sector's 1.2% loss; with only JPM and WFC holding any gains...

 

Charts: Bloomberg

 


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Fri, 09/28/2012 - 11:39 | Link to Comment crusty curmudgeon
crusty curmudgeon's picture

Wait, gold is not a bubble?

Fri, 09/28/2012 - 11:57 | Link to Comment Precious
Precious's picture

Neutron Ben.  The buildings are still standing but the people are all gone.

Fri, 09/28/2012 - 12:04 | Link to Comment LMAOLORI
Fri, 09/28/2012 - 12:08 | Link to Comment Precious
Precious's picture

BofA lays off 15,000 people.

CEO declares, "We must become more efficient at laundering money from the Fed."

Fri, 09/28/2012 - 12:51 | Link to Comment Anasteus
Anasteus's picture

:-)) this is by far the best explanation I've ever come across; thanks for posting it. Publishing economics textbooks in form of comic would certainly be worth considering.

Fri, 09/28/2012 - 12:10 | Link to Comment aint no fortuna...
aint no fortunate son's picture

Equity markets are gonna finish up today, no offense, its just good public policy you know

Fri, 09/28/2012 - 19:05 | Link to Comment SmittyinLA
SmittyinLA's picture

actually the only thing left standing will be the debt, which will last decades longer than the buildings.  We don't make buildings or bill payers like we used to. 

Fri, 09/28/2012 - 12:01 | Link to Comment silverserfer
silverserfer's picture

yes it is. At 5,173 degrees.

Fri, 09/28/2012 - 11:40 | Link to Comment Vincent Vega
Vincent Vega's picture

Winner's=banker's  Loser's=everybody else.

Fri, 09/28/2012 - 11:58 | Link to Comment Meesohaawnee
Meesohaawnee's picture

THAT is about the most accurate assessment. oh yea. traders who trade fundamentals..

Fri, 09/28/2012 - 13:25 | Link to Comment WhiteNight123129
WhiteNight123129's picture

The best trades are trades which either an investment and a speculation at the same time, like a refiner of minor metals with a large inventory trading below replacement cost of the of machinery at a very distress price of the minor metals, or also a situation which is both a savings and speculation at the same time, like Gold until recently was both a savings and speculation at the same time. Those are the best.

So if the fundamentals are good and you have enormous speculative upside on top of that, that is great. Financial assets are somewhat speculative with little fundamentals, given that Equity sits on top of the debt and debt to circulation (GDP) is very high, where are teh fundamentals???

 

 

Fri, 09/28/2012 - 15:56 | Link to Comment bagehot99
bagehot99's picture

Agree with the sentiment, but the biggest losers in that post were punctuation and the English language.

Fri, 09/28/2012 - 11:40 | Link to Comment “Rebellion to t...
“Rebellion to tyranny is obedience to God.”-ThomasJefferson's picture

What about the poor dumb slobs who rely on energy? I believe the members of OPEC merely raise the stakes when the crooks in Washington turn on the printing presses.

Fri, 09/28/2012 - 11:43 | Link to Comment dbTX
dbTX's picture

PM's away !!

Fri, 09/28/2012 - 11:44 | Link to Comment Alpo for Granny
Alpo for Granny's picture

FYB!!! Pretty soon I won't even be able to afford these prime cuts in gravy

Fri, 09/28/2012 - 12:11 | Link to Comment Hopium Dealer
Hopium Dealer's picture

Just do what senior citizens do: turn to the robust flavoring of canned dog and cat food.

 

Edit: I just read your username. /facepalm on my part.

Fri, 09/28/2012 - 12:21 | Link to Comment TrumpXVI
TrumpXVI's picture

I think it's time to pass some new (old) laws making begging legal for the elderly, the disabled and the insane......provided they possess the required begging license.  Perhaps bankers can be encouraged to contribute to almshouses, too (well, maybe that would be going a little bit too far).

Fri, 09/28/2012 - 12:56 | Link to Comment Alpo for Granny
Alpo for Granny's picture

That's okay Sonny I get a little absent-minded from time to time myself.

Fri, 09/28/2012 - 13:39 | Link to Comment aheady
aheady's picture

Funny funny...

My recent fave is the ad instructing wives to pour a can of Chunky soup over some instant mashed potatoes for hubby's dinner tonight. Voilà! Stay one step above pet food!

Fri, 09/28/2012 - 14:48 | Link to Comment Alpo for Granny
Alpo for Granny's picture

Mmmm that sounds delicious young man Thanks for the recipe idea Well you should try a couple of sprinkles of old bay in chunky vegetable soup. Presto! Maryland crab soup!

Fri, 09/28/2012 - 18:19 | Link to Comment aheady
aheady's picture

Nom nom... zesty idea, Gran!
Hey, I live in blue crab country and I can't afford to eat them : /

Fri, 09/28/2012 - 11:44 | Link to Comment dbTX
dbTX's picture

Additional thought; buy virtually anything they can't print.

Fri, 09/28/2012 - 11:44 | Link to Comment swissaustrian
swissaustrian's picture

GDXJ, bitchez!

Fri, 09/28/2012 - 11:44 | Link to Comment savagegoose
savagegoose's picture

x2 = y2, same as x =y . golds value increase as the amount of fiat increases.  As bankers are the only ones with this new money, they shouldnt be buying it.

naughty bankers, stop buyin up the price

Fri, 09/28/2012 - 11:45 | Link to Comment disabledvet
disabledvet's picture

Belly up to the Bar of Bullshit Boyz!

Fri, 09/28/2012 - 11:45 | Link to Comment russwinter
russwinter's picture

Will Markets go Overnight from Don't Fight the Fed to Pushing on a String?

http://www.wallstreetexaminer.com/blogs/winter/?p=5463

Fri, 09/28/2012 - 11:46 | Link to Comment lasvegaspersona
lasvegaspersona's picture

The American people might not approve of the Fed if they realized that the Fed runs the economy the same way a referee calls a game.

The same way Green Bay lost last Sunday is the same way millions of Americans loose when the Fed 'makes the call'. It is not how you play the game....it is who the Fed likes that matters.

Fri, 09/28/2012 - 11:47 | Link to Comment TheSilverJournal
TheSilverJournal's picture

The first rule is, don't fight the Fed.

If the Fed is intent on destroying the value of currency, then invest in assets that will benefit from hyperinflation.

Fri, 09/28/2012 - 11:47 | Link to Comment insanelysane
insanelysane's picture

I FEEL WEALTHY!!!

Just got 5 new credit cards, new student loan, and new home equity loan.  Add these all up and I are wealthy.

Fri, 09/28/2012 - 12:04 | Link to Comment Dr. Engali
Dr. Engali's picture

Max them out by buying some PMs, guns and ammo then default. Well you can't default on the student loan but you can buy stuff. 

Fri, 09/28/2012 - 12:32 | Link to Comment pods
pods's picture

I have heard that crack is the must have item this year for those with student loans!

pods

Fri, 09/28/2012 - 11:51 | Link to Comment fuu
fuu's picture

Silver bitches!

Fri, 09/28/2012 - 11:53 | Link to Comment mayhem_korner
mayhem_korner's picture

 

 

Ultimately, there will be no winners...just survivors.

Fri, 09/28/2012 - 12:01 | Link to Comment hapless
hapless's picture

Survivors and the "unlucky".

Fri, 09/28/2012 - 11:55 | Link to Comment Grand Supercycle
Grand Supercycle's picture

IMPENDING SELL OFF ......

Longs please be careful.

Due to recent central bank intervention and short covering spikes, these daily charts are extremely overextended and significant correction expected very soon:

SPX, DOW, NASDAQ, NZDUSD, GBPUSD, AUDUSD, COPPER, CRUDE, GOLD, SILVER. [USD strength will return]

http://www.zerohedge.com/news/2012-12-24/market-analysis

http://trader618.com

Fri, 09/28/2012 - 12:06 | Link to Comment RSBriggs
RSBriggs's picture

I'm still not clicking your fucking link and driving traffic to your site, no matter HOW many times you spam this...

Fri, 09/28/2012 - 15:22 | Link to Comment WhiteNight123129
WhiteNight123129's picture

Well noted Grand Supercycle.

And yes USD strength will return agreed, it has to do with capital flows and contraction, little to do with PM dynamics itself or printing. Also if bonds continue to rally that is all contraction looking like, but that means the Fed continues to print (necessary response to contraction)... So no major really major correction for PM, maybe we go down to 1700...

What do you think? I am waiting for the handle to form on Gold....

 

 

Fri, 09/28/2012 - 11:58 | Link to Comment BLOTTO
BLOTTO's picture

Who are the loser's?

.

Oh just the MASSES of the world...

Fri, 09/28/2012 - 12:02 | Link to Comment depression
depression's picture

Savers.

Consumers.

Anyone that needs food and energy to survive.

Fri, 09/28/2012 - 12:57 | Link to Comment RopeADope
RopeADope's picture

The losers are all carbon-based life forms...

 

The winners are silicon-based (HFT), non-cellular (banksters) and extra-terrestrial lifeforms (Krugman)

Fri, 09/28/2012 - 12:03 | Link to Comment El
El's picture

And in other news...

CFTC Orders JP Morgan Chase Bank, N.A. to Pay $600,000 Civil Monetary Penalty for Violating Cotton Futures Speculative Position Limits http://www.cftc.gov/PressRoom/PressReleases/pr6369-12

 

Gee, $600,000, huh? That must really hurt. ::: rolls eyes :::

Fri, 09/28/2012 - 12:14 | Link to Comment LMAOLORI
LMAOLORI's picture

 

 

They will find a way to pass that fine on to you.  Fines are like bribes they say pay up or you could end up facing real criminal prosecution. When Obama said 

"My administration is the only thing between you and the pitchforks." 

people took it wrong thinking he would actually prosecute them

 Obama apparently actually meant what he said at that White House meeting--his administration effectively would stand between Big Finance and anything like a severe accounting

Fri, 09/28/2012 - 12:14 | Link to Comment NewWorldOrange
NewWorldOrange's picture

"Two lessons are clear: Front-Run The Fed's action (every time) and Buy Precious Metals."

Yep -- every time. Every single time (in recent times.)

In the (awesome) video Tylers posted today of David Stockman speaking, Stockman explains that over the last 18 years, the S&P went from 400 to 1460, and that 85% of the gains came in the 24 hours preceeding FOMC meet ups. I just looked back over those events over the last few years, and it was every single time. And if there was a dip just before that (often the case), if you merely BTFD, waited a few days or so until after the FOMC meeting, and then got out until the next time, you'd be way up.

Fri, 09/28/2012 - 12:28 | Link to Comment WhiteNight123129
WhiteNight123129's picture

Gold is a bubble in formation, but why would the speculator miss a good old bubble?

As for bonds this is the bubble which has just popped, stay away.

 

Fri, 09/28/2012 - 12:24 | Link to Comment insanelysane
insanelysane's picture

On one of the bottom marquees on bloomberg tv it says that Bernanke spent weeks lobbying his pals for QE to infinity.  Wonder if he is sharing the wealth from his bankster buddies or if he will keep it all to himself?

Fri, 09/28/2012 - 12:36 | Link to Comment JR
JR's picture

“Yesterday, the Fed reported the first $20.1 billion in net, non-rolling purchases of MBS eligible under QE3 (consisting of FHLMC, FNMA, GNMA and GNMA2, most likely the bulk of them coming out of a certain office in Newport Beach which has decided to start locking in its monster profits for the year after getting QEternity spot on).” – Tyler Durden

The Fed, i.e., the Rothschilds et al., is buying up America with fiat currency created out of nothing. The Fed  controls the message, often even creates the message and is ready with its operatives to move the ownership of the country into its private holdings.

It is a similar story to how the Rothschilds purchased the English government after the battle of Waterloo June, 1915. The Rothschild family solidified control of the English government by obtaining and manipulating information it had acquired before it was available to anyone else.

Just like the Fed, the Rothschilds had created a system of Rothschild couriers in Europe that ensured the banker family immediate information about major events in Europe even before known to the rulers of countries involved.

Nathan Rothschild, looking exceedingly glum, used advance information that Wellington had defeated Napoleon to trick bankers at the London bond market into falsely believing that England instead had lost and the bankers, under this false impression, began selling the government bonds they owned.

As more and more large quantities of bonds were sold, the more the price dropped, and the more the price dropped the more gloomy Nathan looked. And all the while Nathan’s agents were acquiring the bonds at a small percentage of their true value.

When all was said and done, Nathan Rothschild virtually had purchased the English government.

Fri, 09/28/2012 - 13:07 | Link to Comment Spacemoose
Spacemoose's picture

i guess if you are rich enough you can buy a time machine (or is there some other battle of waterloo that i'm unaware of??)

Fri, 09/28/2012 - 13:28 | Link to Comment JR
JR's picture

You’re darn right you can buy a time machine. You can buy a time machine called a printing press that prints FRBNs that the Fed is using as a world reserve currency. What can be more valuable in the world at this moment than a machine that prints money; estates, yachts, diamonds and nations fade in value compared to your machine.

“Permit me to control the money of a nation, and I care not who makes its laws.” –Meyer Rothschild aka Ben Bernanke

It’s the time-old international banker strategy of loaning to national governments and impoverishing the people by convincing nations to pay their debts by playing one against the other and using control of the money supply to force the “balance of power,” via war financed by fiat money, if necessary.

Fri, 09/28/2012 - 12:26 | Link to Comment fourchan
fourchan's picture

buy the fucking dip, please?

Fri, 09/28/2012 - 12:29 | Link to Comment Lost Wages
Lost Wages's picture

Crash. Please crash.

Fri, 09/28/2012 - 12:31 | Link to Comment Anasteus
Anasteus's picture

I like Jim Rogers' quote:

“I’m not selling any gold. If it goes down I hope I’m smart enough to buy more. If it goes down a lot I hope I’m smart enough to buy a lot.”

Fri, 09/28/2012 - 15:29 | Link to Comment WhiteNight123129
WhiteNight123129's picture

Jim Rogers and Soros are the guys, they never want to miss the next bubble. Get out of treasuries. Why would you own treasuries when you know it is toxic crap? Because an insolvent central bank buys it? (Sounds like a dangerous trade to me). Pimco knows it is dangerous and he freaked out in 2011. Can not blame the man to recognize something bad when he sees it. But there are a lot of folkds on this blog advocating to do the absurdity they denounce like Prince was saying ~as long as the music plays, keep dancing~ . So as long as the Fed is still able to buy the treasuries and willing, you keep dancing and front-run the FEd. Very dull indeed. Is there any value in those bonds? Have you noticed Gundlach? I do not know if you noticed but Jim Rogers has numerously mentioned that he is short the treasuries and expects the cost of borrowing of the US to be very high in nominal terms down the road. It could be very high nominally by design and not necessarily meaning that it is because the US are bankrupt.

If the Fed is smart enough to kick start a good dose of inflation by steepening the yield curve (remember they have cornered the treasuries), they can pull the carpet underneath the feet of the dollar cash hoarders and force them to spend (sorry Kito). That move the nominal GDP up.

Nominal GDP increase in hte cards. If we could get GDP up 7% and real GDP down 1%, that would still do the trick, people with bonds and equities get fucked. The people with mortgages see those melting. And if we have 7% increase in nominal GDP that can not happen without increase in nominal wages. Are the real wages up? Who cares, that would still be very handy to repay credit cards and mortgages which are in fixed currency.

 

 

Fri, 09/28/2012 - 12:38 | Link to Comment Yen Cross
Yen Cross's picture

 Gold is going to 2k in Q-1 2013. The shit is going to hit the fan next week. The Bernanke put delayed it by one month!

  The numbers have been "atrocious"!

Fri, 09/28/2012 - 12:52 | Link to Comment RSloane
RSloane's picture

Dead Fred said pretty much the same thing. I think extend and pretend is coming to an abrupt close.

Fri, 09/28/2012 - 12:48 | Link to Comment ImNotARobot
ImNotARobot's picture

Stackin the Phyzz bitchez.

Fri, 09/28/2012 - 12:48 | Link to Comment ImNotARobot
ImNotARobot's picture

Stackin the Phyzz bitchez.

Fri, 09/28/2012 - 13:06 | Link to Comment realtick
Fri, 09/28/2012 - 13:37 | Link to Comment Yen Cross
Yen Cross's picture

 I wouldn't be surprised to see some banter out of Japan next week. The spike in ($/¥ ),today is just exporter repatriation.

 When treasury yields start to creep lower on "risk off" next week, the  everything/¥  trade will stir up a hornets nest in the MoF!

  The low 77 handle is being eyed.

 

Fri, 09/28/2012 - 13:46 | Link to Comment graspAU
graspAU's picture

Imagine all the work and risk you take if you are a commercial bank, and a mortgage servicer to earn around half a percent servicing loans? Offices, people, taxes, lawsuites etc.

Instead you can make 50% of that by just making a deposit at the fed and getting paid a 1/4 of a percent for not taking any risk, doing nothing and hiring no one.

Fri, 09/28/2012 - 14:36 | Link to Comment Snakeeyes
Snakeeyes's picture

Loser: US manufacturing!!!!!! Wait, wasn't all the QE supposed to increase employment?

http://confoundedinterest.wordpress.com/2012/09/28/this-is-a-recovery-manufacturing-shrinks-to-lowest-level-since-oct-2009/

Sat, 09/29/2012 - 02:39 | Link to Comment kumquatsunite
kumquatsunite's picture

For those of you who seem not to know your history: Germany's hyperinflation post-WWI was due to the massive reparations forced upon it after losing the war. In essence, the reparations were a further, and very deliberate, assault upon Germany in order to so main it that the punishment would last for eons and allow the rest of the (winning:) world to stockpile Germany's assets. But mai oui!! What came out of that bitter post-WWI absolute destruction of Germany via reparation (reparation payments being the catalyst that caused Germany to print with every bit of ink it had: there being no choice but to destroy its currency to meet the repration payments.

Thus, banding about "hyperinflation" in the United States is ludicrous. Are there ebbs and flows in every country over time? Yes. But any one with an ounce of brains builds that into all that they do. Ya sure didn't mind making the money at the top? And as they say, there is more money to be paid in the rebuilding than there ever is in the bubble frenzy.

As to those "precious" metals...ever drop one (gold and silver) both thud on the floor, can be watched all day and don't do anything, and are as subject to run-ups and run-downs as anything else, again, as anyone who knows the history or precious metals can tell you. And between the taxes on them and the dealer inflated costs, there must be a tremendous amount of value increase to make them worth while to purchase. So, as to me, I'll invest in the companies that will be rebuilding this country's factories. Do the doomers and gloomers not have children or grandchildren or friends or family? They win only if it all goes to heck, and we are not headed there by a long ways...or perhaps ya'll don't remember what it was like when we were children and no one had more than one car, one phone in the kitchen, and we wore it out, used it up, made it do.

So get a grip campers and remember: you participated in the mess that was made, so take a little pain and hoist your suspenders and be a man about getting it straighted out. As John Wayne would say, "There ain't no whining beneath the stars and stripes."

Sat, 09/29/2012 - 13:19 | Link to Comment JR
JR's picture

You say that “thus, banding about 'hyperinflation' in the United States is ludicrous. Are there ebbs and flows in every country over time? Yes.”

 

But, as G. Edward Griffin said, "We must not forget that the phrase ‘lender of last resort’ means that money is created out of nothing, resulting in confiscation of our nation's wealth through the hidden tax called inflation.”

Sir Josiah Stamp, president of the Bank of England and the second richest man in Britain in the 1920s, put it this way: “The modern banking system manufactures money out of nothing. The process is perhaps the most astounding piece of sleight of hand that was ever invented. Banking was conceived in inequity and born in sin. Bankers own the earth. Take it away from them but leave them the power to create money, and with a flick a pen, they will create enough money to buy it back again.  Take this great power away from them and all great fortunes like mine will disappear, for then this would be a better and happier world to live in. But if you want to continue to be the slaves of bankers and pay the cost of your own slavery, then let bankers continue to create money and control credit.” (Speaking at the University of Texas, 1927) 

Sat, 09/29/2012 - 02:39 | Link to Comment kumquatsunite
kumquatsunite's picture

For those of you who seem not to know your history: Germany's hyperinflation post-WWI was due to the massive reparations forced upon it after losing the war. In essence, the reparations were a further, and very deliberate, assault upon Germany in order to so main it that the punishment would last for eons and allow the rest of the (winning:) world to stockpile Germany's assets. But mai oui!! What came out of that bitter post-WWI absolute destruction of Germany via reparation (reparation payments being the catalyst that caused Germany to print with every bit of ink it had: there being no choice but to destroy its currency to meet the repration payments.

Thus, banding about "hyperinflation" in the United States is ludicrous. Are there ebbs and flows in every country over time? Yes. But any one with an ounce of brains builds that into all that they do. Ya sure didn't mind making the money at the top? And as they say, there is more money to be paid in the rebuilding than there ever is in the bubble frenzy.

As to those "precious" metals...ever drop one (gold and silver) both thud on the floor, can be watched all day and don't do anything, and are as subject to run-ups and run-downs as anything else, again, as anyone who knows the history or precious metals can tell you. And between the taxes on them and the dealer inflated costs, there must be a tremendous amount of value increase to make them worth while to purchase. So, as to me, I'll invest in the companies that will be rebuilding this country's factories. Do the doomers and gloomers not have children or grandchildren or friends or family? They win only if it all goes to heck, and we are not headed there by a long ways...or perhaps ya'll don't remember what it was like when we were children and no one had more than one car, one phone in the kitchen, and we wore it out, used it up, made it do.

So get a grip campers and remember: you participated in the mess that was made, so take a little pain and hoist your suspenders and be a man about getting it straighted out. As John Wayne would say, "There ain't no whining beneath the stars and stripes."

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