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IceCap Asset Management On An Upside Down World

Tyler Durden's picture




 

Just a few weeks back, IceCap Asset Management reiterated their view that all financial markets are significantly affected by the money printing ways of our central banks. On June 19, 2013 Ben Bernanke announced that later this year the Federal Reserve would very likely begin to print less money than what they are printing today, in effect resulting in many investors refusing to catch the bouncing ball. Early estimates have the money printing being reduced from $85 billion/month to $65 billion/month.

This pronouncement was enough to send all financial markets into a tizzy with everything declining, except for the US Dollar. Investors must understand that this is a game changer. Whether the Federal Reserve actually carries through with this plan is open to debate. One consideration has to be the fact that this “tapering” of the money printing scheme is dependent upon employment, growth and inflation all moving inline with the Fed’s projections. Now, considering the Federal Reserve completely missed the Tech Bubble, then missed again on the Housing Bubble, and as shown in Chart 1 are usually too optimistic with their economic projections, there is a very big chance the mighty US recovery may not exactly pan out the way they are projecting.

 

 

Perhaps the most important observation from the “tapering” announcement was the reaction by all financial markets to what was in reality a very small move by the Federal Reserve...

 

Full IceCap Asset Management letter below:


IceCap Asset Management Limited Global Markets 2013.6

 

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Fri, 07/05/2013 - 20:25 | 3725330 wee-weed up
wee-weed up's picture

On June 19, 2013 Ben Bernanke announced that later this year the Federal Reserve would very likely begin to print less money than what they are printing today...

 

One word...  Bullshit!

Sat, 07/06/2013 - 12:16 | 3726392 spine001
spine001's picture

Taper announcement. Place yourself in his shoes. You have just place the world at risk pursuing your monetary theories at the same time, you have been fired and somebody else will conclude your experiment but you feel responsible and you will be the blamed one if it fails. The question now is hjow could evaluate where you are in the experiment? How can you convey to your successor the idea that she cant just keep on printing her way out? That you are already on the edge? Simple, just a small test, just change a few words to indicate that you may change if all is perfect, and see what happens, if the systemnis robust with no bubbles and no ecssesive leverage, the response will be minimal, if you get a large response, then you should be concerned, and if you get what we got, then run for the bunkers and dont even think of more QE, even if you dont see another choice you will see that QE is not a real choice without going straight into financial instability and chaos.

Fri, 07/05/2013 - 20:33 | 3725385 q99x2
q99x2's picture

Bernanke lacks communication skills.

 

Fri, 07/05/2013 - 20:56 | 3725435 starman
starman's picture

what great news .....move on 

Fri, 07/05/2013 - 23:16 | 3725726 max2205
max2205's picture

Now they can buy on the news when they raise fed funds...upside down...turn me round and round

Fri, 07/05/2013 - 23:59 | 3725790 Scro
Scro's picture

The author is using the govt GDP statics, that's the second problem.

Sat, 07/06/2013 - 12:15 | 3726391 ISEEIT
ISEEIT's picture

N.S.

And that's the real key. The 'statistics' are whatever the fuck they want them to be.

Hello???

Sat, 07/06/2013 - 02:23 | 3725935 faustian bargain
faustian bargain's picture

Bernanke: " Wait, when I said we would 'print less money' I meant, like, print fewer bills but use higher denominations..."

Sat, 07/06/2013 - 12:36 | 3726405 ISEEIT
ISEEIT's picture

Actual money supply growth has been extremely slow lately. Most of this 'printing' ends up in reserves, not circulation. Look at the delivery mechanism of this 'printing'. From treasury auction to PD. From PD to Fed where the 'new' money sits and 'earns' interest. The higher rates threaten to blow this system to smithereens. It's a game the Fed can't win. The gamble was apparently that intervention would be temporary. Well, it wasn't. 'Shit' never went back to normal because it was never normal to begin with. Central planning always leads to collapse. It's inevitable. The Fed cannot exit without creating a crisis and normalcy (whatever that ends up being) will not be known without a crisis. Central banks have become the system. The system is unsustainable. The next move seems to be forcing banks to buy liars debt (government securities) in order to be in compliance with the bankers slut politicians who pen the rules to be complied with.

Think it'll end well?

Buy Silver.

Sat, 07/06/2013 - 03:45 | 3725970 fijisailor
fijisailor's picture

Which has more power over the markets, the suggestion of tapering or tapering itself? 

Sat, 07/06/2013 - 05:33 | 3725998 ebworthen
ebworthen's picture

"We might take away one of the punch bowls in a couple of months."

People head for the exits.

Oh no- the guests are not here for the booze in the punch, it is the fine company and conversations.

Uh-Huh.

Sat, 07/06/2013 - 10:10 | 3726219 RSloane
RSloane's picture

Financiers and international bankers are highly emotional people almost to the point of being clinically hysterical. Any hint of disruption of their golden life will result in hysterics only matched by a hormonally-challenged madman with a gun who started life with bad DNA to begin with. The image of a cooly-calculating highly intelligent group of people gifted with prescience is absurd. They can forsee the future because they control it, not because their divine gifts put them in a position of power but because they inherit power the moment daddy's sperm touched the outer shell of momma's egg.

Anyway, I agree with you ebworthen. These enlightened group of people will be heading to the exists with over half of our GDP in tow, and I'm sure will console themselves on any particular private island that they so choose and own. For us, it will mean wildly flipping through pages of the newest brand of fall out shelters and buying more guns and ammo. The outcomes, like the beginning of life, were never meant to be the same.

Sat, 07/06/2013 - 09:23 | 3726157 Pandorable
Pandorable's picture

So now everyone expects good news to be bad news - meaning a better chance of dwindling QE - and markets to sell that 'news'. That didn't happen yesterday after an upside jobs number surprise - maybe because there was actually some bad news to counter as violence grew in Egypt, Portugal was downgraded, China PMI report was delayed and rates on the 10yr were up to 2.72%. Hmmm...

In an apparent tactical shift, after an early selling sprint, the S&P actually rose to close up 1%. Hmmmm....

While macro news indicates growing social and economic deterioration...the market decidedly appeared to ignore it ALL! Maybe all that *bad* news actually is encouraging for the QE junkies.

Rigging at work on low volume? Painting the tape to print above the 50 day sma and flush options? Bull trap? 

Or....just maybe there are no buyers left, so the bank cartel - stuck holding many asset bags - is forced to prop and trade with itself until one of them chickens out and sells.

And yes, I am short right now, but would love to hear thoughts on why even FRAUD STREET would continue to pump in the face of so many headwinds.

Thanks in advance, Pandy

Sat, 07/06/2013 - 09:58 | 3726209 opnwhlracer
opnwhlracer's picture

I'm short all the major stock index and getting torched right now. Only thing keeping me in the game is my silver and long bond shorts. Earnings season coming up. We shall see how stocks hold up through that. I say not too well.

Sat, 07/06/2013 - 10:52 | 3726262 Pandorable
Pandorable's picture

Same here...apparent objective to annihilate many stubborn shorts, as a slip will quickly become a a waterfall of disaster. 

Sat, 07/06/2013 - 15:07 | 3726671 Car 54 Where Are U
Car 54 Where Are U's picture

Where the hell is that reset button....damn, I know it's got to be here somewhere! The Bernank trying to get the genie back in the bottle. NOT!

Sat, 07/06/2013 - 17:53 | 3726939 tictawk
tictawk's picture

Benny already knows his experiment has failed and exiting QE will create chaos.  Yellen is the one who will attempt to print into oblivion. 

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