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Guggenheim Sums Up The Fed's Dilemma
Via Scott Minerd of Guggenheim Securities,
“Volatility is rising and asset prices are highly vulnerable to all incoming news. Recent sell-offs in stocks and bonds indicate that the current uptrend could uncoil before the end of quantitative easing (QE). The amount of attention paid to rumors about QE highlights how vulnerable the U.S. economy is to the prospect of a tapering in asset purchases or a rise in interest rates.
This is largely because the current economic expansion is dependent on further gains in housing, which would be adversely affected by a material rise in mortgage rates. Between one and two percent of GDP growth is coming from housing activity. The sluggishness in the rest of the economy is evident if you remove that number from the latest reading of 2.4 percent GDP growth for Q1. This dynamic underpins the Federal Reserve’s current dilemma over how to normalize monetary policy. I do not anticipate an easy ride for policymakers or investors over the coming months.”
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Congrats to Guggenheim for figuring out the fed can't exit QE. Those guys are good.
Steve Liesman this morning defended the central bankers he knows, saying they have been able to get a solid 2.5% GDP and lowered unemployment to 7.5%.
He says things would be truely awfull without the wise leadership of central bankers.
I've got a proper fine noose reserved for LIESman too.
Noose won't stay on well after I've blown his head off his neck. Nonetheless, I'll help you out, think I have some nails we can hammer through the rope into his neck to keep it on. Now that would make a pretty picture hanging from a pole outside the NYSE.
I can't watch Baghdad Bob anymore. Not for one second. His picture alone elicits a visceral response in me. As in projectile vomiting.
At a cost of how many trillion globally that will never be paid off and probably cause a bond market crash somewhere down the road. that will be far far worse for everyone.
How many trillion what? Dollars? What the fock is a dollar? The opportunity to have chosen a different path with a less disasterous outcome passed 40 years ago.
Crises used to happen every 6-12 months, now they're every 6-12 days. The Keynesians are doing nothing but keeping the game afloat at this point. Obama will not be permitted to ask for another 6 trillion of stimulus, so this is the new normal, until next week when it's not.
A green cookie for you Fonz
Because they're bond guys first.... You know, that asset class that is just slightly more connected to what's happening. Emphasis on SLIGHTLY.
These assholes didn't say a word until market is up 150% then like cockroaches they come out of woodwork, this twitchy shill is near the top.
Guggenheim family is actually a part of the FED
Sinclair, et al have been pointing out the FUCKING OBVIOUS for years now.
"QE to infinity"
As has Minerd. He told me back in 2005 that we would have a residential mortgage crash of biblical proportions and that the dollar was doomed. The script is following his outline almost perfectly. He a great macro guy. When he gets into micro he's isn't quite that good but his calls, while usually being too early end up being right most of the time.
He's as good as there is IMO.
" I do not anticipate an easy ride for policymakers or investors over the coming months.”
Poor ol' policymakers. One question, what's an 'investor'?
When I hear 'Policymaker'....'Lawmakers'...I start tying nooses on ropes.
It's all been about buying some time so the Fed central banksters can monetize themselves a majority of bonds and equities, they bought it all for free, no charge to them. So now they own everything and it didn't cost them a dime, that was the WHOLE plan! There's NO 'exit plan' coming at 'the right time' so the 'fledgling economic recovery' can go run on it's own, it's all been bullshit it was a planned takedown planned out many many years ago.
No, that's an exit plan not unlike going to the bathroom at a party after hitting on some guys girlfriend. You head out the door instead of getting the shit beat out of you.
People will see for themselves what it's all really been about soon.
Not disagreeing per se, but never underestimate the stupity of the masses. This "enlightenment" has yet to hit the lower floors of the IQ tower.
They don't give a shit about the sheeple, their only purpose is to get sheared and slaughtered. No sheep farmer is concerned about what opinion the sheep have of him.
Yezz, because policy makers and investors should always have an easy ride.
[middle_finger_flex_excercise]
Like it has been an easy ride so far? Please. It's just that more eyes have been focussed on the bullshit we're expected to believe, starting with the nonsense numbers we get concerning the economy (employment, housing growth, etc.). I think a better discussion about when the SHTF moment would be when the masses wake up.
Somewhere between finding out what a fucking farce ObummaCare is and when we start lobbing missiles in the Middle East.
bulls now hoping for bad news as we enter recession. and, thats just to maintain the current failed policy of wrecklessly printing $85B/month. good news is bad and bad news is bad. welcome to the correction of 2013.
and, here's my question to anyone still long: when stocks drop 20%, what can the Fed do to get a bounce? print $150B? nope. there's a reason Ben wont be a Jackson Hole.....he'll have resigned by then.
Yep, I can't wait to see all the 'OMG' faces when one of these mornings all the machines have just been turned off.
Well it is obviously not working. They mayswell give all the remaining money to their friends.
Hey! The Fed caught between a rock and a hard place is my line!
LOL, Bubble Bernanke and the Fed are trapped.Nobody overseas want to touch US debt.
The Fed is stuck until the US dollar blows up.
The problem I think the Fed is beggining to realize is that people have lost faith and they are requesting delivery of gold instead of king dollar. When these gold vaults are cleaned out the Fed is fucked and they know that's where we are headed if they continue on the course they are on. There is always a price to pay Ben. You stupid bastard.
So, the only way to grow our economy now is with a housing expansion.
Isn't that just lovely. We traded our manufcturing base and all those industrial jobs in on a housing bubble. When it went bust, we were oh so surprised to discover there were no jobs to build a recovery with.
Stupid is as stupid does.
As the market deflates in anticipation of less QE, it makes continuing QE more likely. As people feel poorer from the reduction in their 401-k accounts, their spending will decrease. BOOM - more QE solves everything.
QEn has become the tax that everyone pays.
Except for the rich and bankers. For them it's a free ride because they get the money first and buy things with it. The rest of us get fucked as the money gets to us worth less than it was to the banks.
Where is economic growth going to come from if the welfare state is overtaking the productive state (real work force)? We have $17 trillion in debt that is getting shorter and shorter and needs to be constantly rolled over. I just do not see enough growth ahead to get the economy booming; so I expect QE in one form or another to become a permanent fixture. Even if we get a boom, interest rates will have to rise and the costs of serving the debt will escalate; QE will still be required as long as the debt is rising. We have been painted into a corner where there lays a pit of quicksand.
More Food Stamp, Welfare, Free education, Cell phones for voters of the new socialist state.
More taxes on productive people.
Nothing lasts forever but the earth and sky.
Gee , ya think.
Thank you Captain Obvious.
It seems that the people at the helm of monetary policy have concluded that nothing works so they are doing nothing and we are drifting blown by the winds of fate while the captains have their way with the cabin boys.
The answer was clear as day back in 2007. They should have nationalized the entire mortgage market. They should have bought every primary mortgage at par and automatically refinanced them all. Could have forgiven up to 30% of balances and still gotten paid back every penny. But that would have put the crooks out of the game an we could never let that happen. Instead we offer the crooks government guarantees.
Fannie and Freddie were/are the mortgage market and they are nationalized.
"I do not anticipate an easy ride for policymakers or investors over the coming months.”
Let them reap what they have sewn...
FUBAR.
They left out " ... and they will be struggling with their consciences as they sun bath on St Barts with the other taxpayer money thiefs of TPTB"
with more and more investment moving to the Arms and security sectors world wide; witness the NSA data centers being projected; apart from hand held telephone devices where will the economic growth in first world come from?
Shale gas and oil being the other fracked noose around the urbanised world's neck.
Casino economy and monetary bazookas when they aren't MIC ones.
" This dynamic underpins the Federal Reserve’s current dilemma over how to normalize monetary policy."
This is normal. The FED interferes with market. The FED rate is not the market rate. The FED holds a meeting and says the FED rate will be X.
wait, "volatility" is the reason you should stay out of perilous assets, like gold, right?
U.S. will become the new JAPAN
Europe is becoming the new GREECE
JAPAN is going to die.
GREECE is going to die.