This page has been archived and commenting is disabled.

Guest Post: Fed's Economic Projections - Myth Vs. Reality (Jun 2013)

Tyler Durden's picture




 

Submitted by Lance Roberts of Street Talk Advisors,

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Thu, 06/20/2013 - 13:46 | 3675866 Dareconomics
Dareconomics's picture

Economic projections are always a myth.  Economic forecasts are no better at predicting the future of GDP than random. This is best explained in The Signal and The Noise by Nate Silver

 

http://dareconomics.wordpress.com/2013/06/20/around-the-globe-06-20-2013...

Thu, 06/20/2013 - 13:53 | 3675889 true brain
true brain's picture

THe market today: Sell motherfuckers, sell. The last one out the door is a dead one.

Thu, 06/20/2013 - 13:54 | 3675897 negative rates
negative rates's picture

The fed tires a bit more each day.

Thu, 06/20/2013 - 13:59 | 3675907 Bay of Pigs
Bay of Pigs's picture

Kick those fuckan tires Uncle Shalom!

Thu, 06/20/2013 - 15:05 | 3676151 nope-1004
nope-1004's picture

It's clear from that idiotic Q&A session yesterday that Bernanke has no fucking clue what he is doing.

 

Thu, 06/20/2013 - 14:05 | 3675929 Kiss My Iceland...
Kiss My Icelandic Ass's picture

 

 

"One thing is for certain; the Fed faces an uphill battle from here."

Just in time for Ben to head for the hills.

Thu, 06/20/2013 - 14:45 | 3676080 fuckitall
fuckitall's picture

This is what I said yesterday, QE having diminishing returns as economy gets worse and value of paper assets deteriorates, requiring more QE to keep 'em inflated. It's happening to everything Fed buys, treasuries, MBS, foreign bonds, you name it.

Getting harder to keep these bubbles inflated as economy tanks, and it'll tank big time next year when Ocare comes online. Maybe why Bernanke is heading for the door.

Thu, 06/20/2013 - 14:31 | 3676003 Midasking
Midasking's picture

tapering is not happening or the entire world will be a smoking hole in the ground. QE will be expanded you can count on that. http://tinyurl.com/mem7o7x

Thu, 06/20/2013 - 13:49 | 3675879 ghostfaceinvestah
ghostfaceinvestah's picture

the markets are addicted to QE, the withdrawal process will be long and painful.

Thu, 06/20/2013 - 13:56 | 3675902 ejmoosa
ejmoosa's picture

QE is the equilvalent of sythetic profits being injected into the economy.

We do not have profit growth significant enough to grow employment, let alone replace QE.

 

The US economy will be right-sized shortly.  

Thu, 06/20/2013 - 14:07 | 3675934 Bay of Pigs
Bay of Pigs's picture

What "withdrawal process" is that? I don't see anything happening like that.

Oh, the promises....yes indeed, the promises.

Thu, 06/20/2013 - 13:53 | 3675891 richard in norway
richard in norway's picture

What the hell is happening with the Norwegian kronor, its down 4% against the dollar!!

Thu, 06/20/2013 - 13:56 | 3675901 greatbeard
greatbeard's picture

>> its down 4% against the dollar!!

Be thankful it's not gold.

Thu, 06/20/2013 - 13:57 | 3675904 richard in norway
richard in norway's picture

Or silver

Thu, 06/20/2013 - 13:55 | 3675899 nasdaq99
nasdaq99's picture

HOW MUCH MONEY DID THE FED LOSE TODAY????????????

Thu, 06/20/2013 - 14:04 | 3675926 LetThemEatRand
LetThemEatRand's picture

Or asked differently -- how much money did the future U.S. taxpayer lose today?  Because last time I checked, the banks make their own money but lose yours.

Thu, 06/20/2013 - 14:04 | 3675927 scatterbrains
scatterbrains's picture

I'd say they broke even on their naked short vix / short gold but taking a beat down on their SPY and long bond positions.

Waiting to see if SPY can close below 160.. then this whole 3 rd camel hump might just be a break out FAIL

Thu, 06/20/2013 - 14:08 | 3675939 Dr. No
Dr. No's picture

Please explain, with the power to print money from nothing, can one loose money?

Thu, 06/20/2013 - 14:16 | 3675956 mt paul
mt paul's picture

when you print enough

a few pallets of cash

are bound to fall off the truck somewhere..

thus you have lost " money "

Thu, 06/20/2013 - 13:55 | 3675900 e-recep
e-recep's picture

the waterfall sell-off of those precious commodities shows that we are close to the big implosion and QEs are less and less effective in delaying the collapse of the pyramid.

Thu, 06/20/2013 - 13:57 | 3675903 Bay of Pigs
Bay of Pigs's picture

So sell gold and silver and go long dogs and ponies?

Thu, 06/20/2013 - 14:00 | 3675911 CrashisOptimistic
CrashisOptimistic's picture

Or . . . it means the dollar is up a ton.

Thu, 06/20/2013 - 14:05 | 3675928 HardlyZero
HardlyZero's picture

BernanQE relativity theory...and the rest of the world is DOWN a ton.  We are now exporting massive inflation and the Brazilian mobs are still massive.  When food and energy costs skyrocket the 95% of the world's population will not be happy.  The Pacific and Atlantic are very large moats to cross.

Thu, 06/20/2013 - 14:10 | 3675943 Bay of Pigs
Bay of Pigs's picture

USD 81.91 +0.60

That's a ton?

 
Thu, 06/20/2013 - 13:59 | 3675906 rosiescenario
rosiescenario's picture

When Ben steps up to the mike today or tomorrow to explain what he said yesterday was misunderstood, we're going to see the pm's go into a rocket launch mode.

Thu, 06/20/2013 - 14:06 | 3675931 HardlyZero
HardlyZero's picture

If Ben needs any help writing his telemprompter...include the word "template" in his lecture.

Thu, 06/20/2013 - 14:11 | 3675947 the grateful un...
the grateful unemployed's picture

who knew, lowering interest rates in a credit based economy was actually DEFLATIONARY!!

Thu, 06/20/2013 - 14:17 | 3675952 ebworthen
ebworthen's picture

I wish Ben would send me my $3,000,000 stimulus so I can live in FOMC fantasy world too.

I promise I'll spend some of it and tip at 20%, Mr. Chairman.

Trickle down!  C'mon Doctor QE!

Thu, 06/20/2013 - 14:18 | 3675961 NEOSERF
NEOSERF's picture

Honestly, I think given how political this has become and Ben wanting to at least have attempted to curb QE before leaving, is doing this and will start to taper as early as next month...$5B less per month through end of the year and if things suck, he will retire, hand it to Yellen who as a dove will jack it back up to $100B/mo.

Thu, 06/20/2013 - 14:21 | 3675967 ebworthen
ebworthen's picture

Perhaps, as long as they have enough Mom and Pop investor money off the craps table to ramp it up again.

Thu, 06/20/2013 - 14:23 | 3675970 sbenard
sbenard's picture

Where's Bubbles Bernanke when we need him? Who does he think he is, letting us down like this! Of all the NERVE!

Why, if he lets up with the money printing, we might actually have to WORK for a living! We might have to actually PRODUCE something! We might have to do R&D! We might have to become more PRODUCTIVE or something!

Doesn't he know we have a RIGHT to free money? Doesn't have know it's our ENTITLEMENT? Doesn't he know we can't SURVIVE without endless free money?

Did Bubbles fall asleep in his helicopter or something? How DARE he! He should be ASHAMED of himself! Ugh!

Thu, 06/20/2013 - 14:31 | 3676002 franzpick
franzpick's picture

New lows: Dow support is at 14,500, down 325,  just 2.2% more, but hard to imagine a black Friday bottom.  My screens suggest serious knife-catching Monday, down 3 % more. This will be one long weekend at Bernanchios.

Thu, 06/20/2013 - 14:38 | 3676036 falak pema
falak pema's picture

Spurs

Heat

The only projection that counts tonite.

Thu, 06/20/2013 - 14:48 | 3676098 xxxxx
xxxxx's picture

Maybe we have reached the tipping point and the Great depression can start in Ernest. A replay of the 30's.

Thu, 06/20/2013 - 15:07 | 3676158 Kreditanstalt
Kreditanstalt's picture

Sorry, but I will RESIST living in a world which accepts "moderate inflation"...why should there be ANY inflation???

Thu, 06/20/2013 - 15:11 | 3676179 NEOSERF
NEOSERF's picture

Great article.  Re: personal inflation, there should be a measure of inflation rate vs. disposable income...if I have $200 of disposable income in January on $50K yr or $30K takehome or $2500/mo...then that means I am spending $2300/mo.  6% annual inflation on things that I buy with that $2300 is $138, meaning I now have $62 for things like movies, restaurants etc....1 or 2 years of this with no wage growth and the economy grinds to a complete halt.

Thu, 06/20/2013 - 15:56 | 3676477 dale digler
dale digler's picture

Yes, no kidding the Fed is in a tough spot, but if you keep telling the lie long enough, it becomes the truth. Keep selling it, and people will eventually buy it. Often times, the truth just gets in the way. If the government is paying people to be unemployed, are they really unemployed? If  debt is being bought, regardless of buyer,  is it still the seller's debt?  Growth is measured incrementally, relative to the recent past, growth is still growth. Clearly it's a game of nutshell, but sleight of hand works because it confuses.

As I see it, the Fed is buying stocks indirectly. The money they give to the  banks and lenders is not being lent out, but for book balancing and reinvested in the market for profit. The asset bubble that's been created is an enticement for the profiteering companies, (Dow and S&P), to do what the lenders aren't. Invest in themselves directly to expand for growth and more profit. 

At this point, the Fed will likely double down on money priming, as  the supposed new chairwoman is Krugman in a dress. Hey, when you're already $18 Trillion in debt, what's another 5 or 6T? Meritocratic egalitarianism for the masses  is coming. If you're  special, you'll be special, otherwise you're not. Washington is all about it, just coming at it from opposite ends. The debt may not really mean anything.  Economic implosion isn't the worst thing that could happen. There's a reason the U.S. spends trillions of dollars on it's military. They can always load up the gunships, tanks, and aerial support to do whatever needs to be done in  almost any situation. Go where the money is, I'm buying what the Fed is buying.

Thu, 06/20/2013 - 16:41 | 3676727 AllWorkedUp
AllWorkedUp's picture

The beautiful thing about the Bernank's forecast is that it will be as wrong as rain. The "taper" if it happens at all will last maybe one month before the Fed announces a new, increased bond buying program.

Funny how in all the minutia of the bullshit housing number today, the jobless claims were up 18,000, waaay worse than expected.

Yeah, fuckwads, the economy is getting better, except there are no jobs unless you are a connected gov't piece of shit. If not, then you're just shit out of luck except for the occasional burger flipping job that might be available at your local burger stand.

Bring on the printing and the gold price ramp or just bring on the fucking civil war where we get a chance to take out as many bankers as is humanly possible.

BTW - fuck you NSA

Thu, 06/20/2013 - 18:36 | 3677121 neutrinoman
neutrinoman's picture

Umm ... as I wrote a few days ago, the Fed is unmoved by the real economy. Its first objective is monetizing government deficits, which are currently shrinking. Hence the taper talk.

The Fed has also belatedly realized the huge bubbles in commodities, stocks, and real estates it has (re)blown. Realizing it now is better than realizing it later.

The bond market reaction is a puzzle. QE doesn't raise bond prices. It lowers them, because the Fed is a price-insensitive buyer, while the sellers are price-sensitive. The more they sell, the lower the prices go. (The anticipation of QE does raise bond prices, as bond traders front-run.) Once we see real risk-off underway, and we're only just seeing the beginning, bond prices will rebound, sharply.

We could see the ten-year at 1.5% in six months; by the next recession, it could be as low as 1%. The 30-year will be back below 3%.

The wild card is ZIRP, not QE. When will ZIRP end? Very unlikely to end before 2015/H2, at the soonest. Is that what the bond market has in mind? Because it is ZIRP, not QE, that is holding up bond prices. In any case, the bond market seems far ahead of itself.

There's also a lot of confusion out there about the difference between ZIRP and QE. But the QE-risk asset relationship does again show how much this is a function of flow, not stock. It's all about stoking financial markets, not the real economy. If the new M1 were circulating, we'd see a "stock" effect from a larger monetary base. But that is so small as to be undetectable. It's all flowing within the "canyons of Wall Street," as David "Stock"man put it.

(Sorry for the pun.)

Do NOT follow this link or you will be banned from the site!