Hilsenrath Hits The Tape: Ignore Everything I Said Two Weeks Ago

Tyler Durden's picture

The last time the WSJ' Jon Hilsenrath was relevant was two weeks ago (in a flashback to those days before QEternity when infinite QE was not assured and Jon's input was actually relevant), when following an article of his, and due to his "proximity" with the New York Fed, many assumed that the Tapering suggested by Hilsenrath was being telegraphed by Bernanke to the market. Turns out it was nothing but yet another baffle with bullshit headfake by a central planning regime that is now merely engaged in observing market responses to indirect stimuli: if reduce monthly flow by $20 billion then X (-1%); if cut QE off entirely then Y (-50%?), and so on. Moments ago the same Hilsenrath just released another piece, which effectively refuted everything his previous piece suggested, and in fact made his position as Fed mouthpiece absolutely irrelevant, courtesy of the following disclosure: "this time, when the Fed shuts off bond buying, it won't be... predictable." He goes so far as to say that the term "tapering" is no longer even applicable! Funny that, considering on May 11, none other than Hilsenrath said: "Federal Reserve officials have mapped out a strategy for winding down an unprecedented $85 billion-a-month bond-buying program meant to spur the economy."

The irony here is that Hilsenrath is correct, but for another far simpler reason: the Fed simply can not shut down bond buying, at least not voluntarily, without crashing bond the stock market, and the perception that the economy is doing well (it isn't), just because the S&P hits new all time highs day after day.

The Fed will of course "shut down" bond buying when like in the summer of 2008 simple inflation is raging in commodities, and when a bank has to be sacrificed to induce a deflationary vortex. However, for now thanks to the epic planning in keeping the Brent vigilantes largely in check (now that the Bond vigilatnes are long dead), and since the market has a few more thousand points higher to go before everyone has no choice but to acknowledge how ridiculous the asset bubble has become, there is, to paraphrase Tim Geithner, "no risk."

From the WSJ:

When the Fed ended a buying program in 2011, it shut it off all at once. When it shut off another bond buying program in 2009 and 2010, it did it in predetermined, predictable and “tapered” steps. When the Fed raised short-term interest rates from 2003 to 2006, it raised them in gradual and very predictable steps.


This time, when the Fed shuts off bond buying, it won’t be abrupt and it won’t be predictable. The term “tapering” — which implies a predictable gradual process — probably doesn’t describe the plan very well any more, and you’re unlikely to hear Fed officials describing it like that. Instead, the Fed will take a step and then see what happens. Officials also want to avoid the market blowup that happened in 1994, when it took one step and the market assumed that meant a succession of additional steps.


A step to reduce the flow of purchases would not be an automatic, mechanistic process to end the program,” Mr. Bernanke said. In other words, if the Fed takes a step to reduce the program and the economy falters, it could sit still for a while or even dial purchases back up.


The Fed effectively wants the markets to experience the same uncertainty it experiences about policy and the economy when officials walk into a meeting, and it wants to condition the market to avoid jumping to conclusions about what it will do next. As officials keep saying, it will depend on the economy.

Perhaps the biggest insult here to sentient creatures everywhere, is that people have now become merely lab rats in the greatest behavioral conditioning experiment of all time, not only as regards to buying stocks on both bad and good news, or any utterance out of Bernanke's mouth, but an experiment designed to force everyone to simply stop thinking logically - the logic being that since every central bank is engaged full bore in reflating everything, than the economy left on its own is simply horrendous - and BTFD.

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The Master's picture

You cannot make this shit up.  Un-fucking-real.

knukles's picture

Hey, he just wants to keep his next career move options open looking for that apprenticeship with Stop-loss-ler or whatever his name is.

idea_hamster's picture

Hilsenrath, FTM[uppet]FW!

nope-1004's picture

15 minutes of fame.  In time this guy will be long forgotten.  But the faster he STFU, the less embarrassment he'll cause himself.


Pinto Currency's picture


This Bernanke, Hilsenrath chatter is irrelevant.

Both gold and silver are in price backwardation and physical shortages are being reported worldwide.

ABN Amro default now and further UBS defaults being reported on physical delivery of supposedly allocated gold.

The monetary metals speak a competely different story than the digital money printing Czar's story.

SDRII's picture

FT's Izzy is working up an article now about that "alleged" backwardization now...

Pinto Currency's picture


I am sure he is.  The FT staff must be having fits in their editorial room discussion.

Gold backwardation is not supposed to be possible, however there it is. 

See Jaitly at 13:30 of this interview.


And silver price backwardation is now more than twice the level of gold's price backwardation and it is persistent.

The market is saying that physical metal is the essential asset and is in shortage.

silverserfer's picture

it really is annoying how much attention people pay to what a fucking banker says.  

knukles's picture

Even more so, to their shills in the media who either lie through their teeth or don't have a clue.... and in either case abrogate their professional contract with the public.

Pinto Currency's picture
Market Nuggets: HSBC: Asian Physical Demand For Gold Remains Strong

Tuesday May 21, 2013 4:00 PM

Physical demand for gold in key Asian nations remains strong, says HSBC.  Gold briefly touched $1,400 an ounce overnight on strong physical buying, most notably from China and India, the bank says. “Bullion’s price premium on the Shanghai Gold Exchange stood at USD22/oz, as it remained above USD20/oz for a fourth consecutive trading day,” HSBC says. The bank cites a report in the Economic Times of India saying buyers in Hong Kong and Singapore are currently paying a $5-per-ounce price premium, while buyers in India are paying a $40 premium. “Physical gold buyers have significantly stepped into the market since bullion’s first price break below the USD1,600/oz level earlier in the year. We expect this to continue with prices below USD1,400/oz,” HSBC says.

By Allen Sykora of Kitco News; asykora@kitco.com


espirit's picture

I know we can't, but they sure as hell can make it up as they go along.

Levadiakos's picture

While Jon is still living off those "Karate Kid" royalities, I miss Grep Ip

optionsman's picture

you sound surprised........

freewolf7's picture

H: "I can't believe you guys even listen to this shit."

slaughterer's picture

Looks like another good 7 months of rally.

fonzannoon's picture

This whole monkey show was done to make hilsenrath look bad and Liesman look good. That is how important cnbc is as a state media too to these guys.

disabledvet's picture

Find yourself a commune...smoke weird stuff and say "ohm" for twenty years...when you leave ask "is QE finally over?"

LostPolarBear's picture

How long can this continue before implosion?



Haole's picture

Longer than most can stay sane and solvent.

gjp's picture

That's for sure. Somehow this tragi-comedy keeps working from them.  Everyone speaking out of all sides of their mouth, stocks just float higher, PMs give up their gains, bonds come under control, and the US dollar soars?  A daily recurring nightmare.

silverserfer's picture

most of this bulshit since 2008, 5 years is a blip on the timeline. The desctrive nature of debt + compound interest piling up on top of everything will come to its inevitable end.

GolfHatesMe's picture

Until there are no more bonds to buy. 

knukles's picture

I'm sure our spendthrift Congress, Adminisrtation and Treasury can take care of that shortage for Uncle Ben
After all when there are none to buy and rates are negative, Krugman'll claim Total and Absolute Victory and Jelq himeslf to death
Happy happy joy joy....

kahunabear's picture

Just think, when they have bought every mortgage and treasury, they can bail out all the munis! Then there are always corporates including high yield. This could go on forever. Detroit and Apple need the fed! Ugh. At what point does this not work? Maybe when they start buying JGBs someone will call them out. Oh wait, they may already be doing it.

GolfHatesMe's picture

Hating the BTFD strategy

ebworthen's picture

Hilsenrath is a cog in the confuzzlement machine of perception management.

Smuckers's picture

So let me get this straight -
What Ben does is based on the economy.
What the economy does is based on Ben.

k...got it.


knukles's picture

What's Good for Goldman is Good for the Economy.
Put 'em in the "Industrial" Average


easterner's picture

"So let me get this straight -
What Ben does is based on the market.
What the market does is based on Ben."


LawsofPhysics's picture

There are plenty of "circuses", looks like they have that under control.  As for the "bread", not so much...

Dyhana's picture

Next up, IRA's, 401K's, just kinda "borrowing" it for a bit. It's for the children dontcha know.

LawsofPhysics's picture

Irrelevant to actually delivering the bread.  Just look to what is current happening to the price to deliver monetary/commodity metals relative to the "market" price and the various exchanges (how many exchanges are calling it quits now?).

ForWhomTheTollBuilds's picture

Just another outrage in a long series of outrageous outrages.  I remember them doing this "last time" as well. 


ZH was right on top of it trying to explain to an ipad addled populace why they ought to be concerned that the governments *first* response to a budgetary crunch was to raid pensions.


No reaction...

Dr. Engali's picture

So instead of tapering now the plan is to reduce...buy moar....reduce...buy moar. This is trully a fucked up system.

Gene Parmesan's picture

I am so confused as to which of bonds and equities is the comparatively safer harbor these days. I give up.

Cursive's picture

So they floated a trial balloon with their public mouthpiece/shill and it didn't work, so now they're backing off.

realtick's picture

the fed's mission has been accomplished - they have driven rates down to zero, allowing the govt to print and borrow infinitely

rates will never rise, QE will never end, and the stock market will never look back - that's what they wanted and that's what they got

The Secret Of Their Success

q99x2's picture

When I had a job as a dog walker one of my clients had a Saint Bernanke. I used to hate walking that F'ker. 11 years old, weighed 170 lbs and blind as a bat. Made me want to apply for a job cleaning elephant pens at the LA zoo. It finally swallowed its stomach or some weird thing Saint Bernanke's are known to do. It died. My finances got a lot better after that.

Bastiat's picture

About 10 years ago a vet from Florida told me a story of giving a critically distressed elephant an enema at a roadside rest stop.  It involved a drum of mineral oil.  I guess the circus had to clean it up.  So maybe the St. Bernanke wasn't so bad.

mdtrader's picture

The problem is the minute they say taper the bond market will implode. Not only will there be no buyers, but there will be whole bunch of hedge fund managers ready to short the thing to oblivion. There's just no way the economy or the government can stand a huge rise in borrowing costs, so it's balls to the wall QE. With occasionally head fake comments about wanting to taper. Given the aim is to devalue the dollar and inflate debt away, I don't believe there is any real desire to taper at all.

Cheater5's picture

Here is the reality of the situation.  The dumb POSs at the Fed (who have never managed a trading book until they decided to create the biggest fixed income portfolio in the history of the world) are now figuring out that they are completely FUCKED and that there is no way to exit their positions without getting their head handed to them. 

If this occurs then they will have to go back to the congress and ask for capital and admit that they just spent an odd hundred billion $ or so without authorization or the explicit knowledge of the congress.  Congress will then be reamed by their constituents and that will roll downhill to the Fed. 

The Fed knows that if they have to go to the congress they will be "done", and by "done" I mean the Fed will either cease to exist or will be put under political control.  Additionally senior officials at the Fed may be starting to figure out that they may end up in prison (i.e., Federal "fuck you in the ass" prison) as the lawyers start scouring the federal statutes in search of a way to scapegoat them for the coming political backlash.

So basically the Fed is now operating in full survival/"protect your cornhole" mode.  They are probably very scared (or at least they should be) so expect irrational behavior.

Gee.  Who could have predicted that????



khakuda's picture

Once again, the implication is that they want asset prices to be incorrect, but only if they are higher than they would otherwise be, not lower.   Most of us would call this creating a bubble and malinvestment.  They call it a good plan. For some unstated and erroneous reason they think that will work better in terms of resource allocation in the economy versus the free market price mechanism. How do these guys call themselves economists or even believers in markets when they believe prices should never be allowed to adjust downwards, even momentarily?

yogibear's picture

"but for another far simpler reason: the Fed simply can not shut down bond buying, at least not voluntarily,"

LOL,  No s#%# Sherlock!

Bernanke, Evans, Dudley and Yellen are trapped until she blows.

Then they have no more tools left. Their dead. 

Continue down the same path Fed dummies.

Most will loose, a few will make out big.

TimmyM's picture

Did anybody notice how the parts of Bernanke's testimony were timed perfectly to execute a 30 year Treasury POMO pump and dump? Could it be that the Hilsenrath flip flop was just more manipulation to get some cheap bonds to set up the dump? If the FED is stealing from us to give to Wall Street with ZIRP and QE, why would they not just screw us just like a penny stock promoter?


Caviar Emptor's picture

Reagan proved that deficits don't matter.
Obama proved that debt doesn't matter (all 16 trillion of it, with student loan forgiveness and NINJA 97-month auto loans).
Bernanke is proving that currency doesn't matter either since we can always order up some when we feel like it.

Dewey Cheatum Howe's picture

It is like a kinder gentler molestaton going on here where they actually whisper sweet nothings in your ear while gently probing your asshole with a cold finger before the inevitable ass rape that comes next.

Bagbalm's picture

Well he can hardly say - We do the same trick, until it blows up in our face, 'cause that's all we got.