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Here We Go: SocGen Warns There Is "Possibility" Fed May Increase QE Next Week

Tyler Durden's picture





 

And so, one by one, the crazy pills theories start rolling out. Yesterday, as we first pointed out, Deutsche Bank made waves when it became the first "serious" organization to suggest that the Fed has now missed its tapering window, and will plough on thorough until the next downturn without ever lowering the pace of Flow (of course the reflexive paradox that the economy would be in an out of control depression without QE in the first place somehow does not figure in that calculation).

And while this has not been a novel idea (we first predicted that once perpetual QE starts it will never taper, long before QE 3, aka QEternity was even publicly announced last summer)  today, all the penguin "pundit" copycats have jumped aboard this theory. Well, not all. SocGen has decided to make waves of its own with an even crazier pills idea: instead of no taper... ever... the Fed, that glorious redistributor of wealth from the middle class to the 1%, while happy to adhere to that old saying: "a funded welfare program a day, keeps the guillotines away" will not only not announce a Taper in next week's FOMC meeting but will in fact hike QE!

From SocGen:

Although we assign a very low probability to a decision by the FOMC to increase asset purchases at its October meeting, it is not a possibility we can ignore. Assuming the Fed does not increase asset purchases this year, we consider the bottom of the range on the 10yT to be 2.40%. The market impact of an increase in Treasury and/or MBS purchases would be to rally the long-end of the curve back towards 2.00%, destroy volatility (again), possibly tighten the mortgage basis, and supporting equity, credit and emerging markets.

 

The potential downsides to increasing asset purchases would be that (1) the market would assume the FOMC was focusing on a very grim economic picture; (2) the perceived risk of inflating asset bubbles in various market segments would rise; and (3) the FOMC may run into a credibility problem (again) by whipsawing the market.

 

...

 

The question now may very well be whether or not the FOMC will choose to increase asset purchases at the next meeting, or whether it will include language in the FOMC statement that indicates they are strongly considering the option. A simple interim solution would be to reinsert the language that appeared in the May through July FOMC statements that “the Committee is prepared to increase or reduce the pace of its purchases to maintain appropriatepolicy accommodation as the outlook for the labor market or inflation changes.”

...

Market Impact

 

The outcome for the US rates market going into year-end could vary dramatically based on what the FOMC signals next week.

Scenario 1: The FOMC statement is relatively unchanged, recognizes recent economic weakness as potentially temporary, and suggests that a reduction in asset purchases within the next six months has not been removed from consideration. Probability: 50%.

 

Lower end of range on 10yT: 2.40% through November; possible sell-off in December if data begins to improve.

 

Scenario 2: The FOMC statement reinstates language that asset purchases could be increased or reduced, and raises greater concern about recent economic weakness. Probability: 40%.

 

Lower end of range on 10yT: 2.30% through November; sell-off muted or unlikely unless December FOMC statement and communication begin to reinstate possibility of tapering in Q1 14 in response to improving fundamentals.

 

Scenario 3: The FOMC increases asset purchases by $10-20bn in October. Probability: 10%, with full disclaimer that our economics team thinks this probability is closer to 0.0001% and that your author is nuts!

 

Lower end of range on 10yT: 2.00%. The bull flattening of the Treasury curve will run us all over.

In retrospect, this suggestion as ludicrous as it is, makes sense. After all, the Fed has lost so much credibility, it will never make up for it with a taper in October, December, March or June. In fact, the longer the Fed delays tapering (which it now will never do), the greater the confidence loss. So since there is no downside to going full retard and never tapering again, the Fed may as well go the other way: after all, it is not as if anyone on the FOMC understands what a collateral shortage is, or how dire its implications are, despite the TBAC's best efforts to educate the clueless academics in America's Politburo.

And the other upside from the Fed announcing a $15-20 billion, or moar, increase in October or shortly thereafter, is that it will merely bring the grand reset that much closer. Which, considering the centrally-planned, crazy pills New Normal world we live in, is easily the best possible outcome.

So do your worst: Janet.

We, who are about to drown in your liquidity, salute you.

 


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Thu, 10/24/2013 - 15:02 | Link to Comment hedgeless_horseman
Thu, 10/24/2013 - 15:04 | Link to Comment PRO.223
PRO.223's picture

That's for sure. Faber saying the Fed would be doing a Trillion a month before this ends looks right on.

Thu, 10/24/2013 - 15:05 | Link to Comment hedgeless_horseman
hedgeless_horseman's picture

 

 

The Twelve Steps

  1. We came to understand that our government is powerless over its spending - that our nation's debt had become unmanageable.
Thu, 10/24/2013 - 15:08 | Link to Comment max2205
max2205's picture

Bring it on bitchzzzz

Thu, 10/24/2013 - 15:27 | Link to Comment Pinto Currency
Pinto Currency's picture

I think Marc Faber is right and the Fed has lost control of the bond market.

All the jumping around we are seeing is just the Fed and friends trying to make it appear that they are causing the market action.

The market is just doing what it wants and the Fed is pretty much just nude at the side of the road.

Thu, 10/24/2013 - 15:29 | Link to Comment King_of_simpletons
King_of_simpletons's picture

I have a number and it is $150 Billion.

Thu, 10/24/2013 - 15:39 | Link to Comment Pharming
Pharming's picture

That sounds like a perfect number.  Remember the good ol days when $867 billion was a big number?  Yeah...good times...

Thu, 10/24/2013 - 15:55 | Link to Comment Pinto Currency
Pinto Currency's picture

Ben's song:

 

Well, I wound it up to
Nine hundred and ten
Twisted the speedometer
Cable right off the end

Had my foot glued
Right to the floor
Charlie Evans said,
There's still much, much more

Went around a corner
And passed a truck
I crossed my fingers
Just for luck

The fenders clicking
The guard rail post
Janet Yellen beside me
White as a ghost

I guess they thought
I'd lost my sense
The telephone poles
Were going by like a picket fence

Thu, 10/24/2013 - 17:09 | Link to Comment kaiserhoff
kaiserhoff's picture

Yellin is on record as saying she wished interest rates could be negative.

   What an ugly, stupid cow.

Thu, 10/24/2013 - 17:17 | Link to Comment Pinto Currency
Pinto Currency's picture

 

The problem is she's blind driving The Hot Rod Lincoln just like Ben, not her looks.

http://www.lyricsmode.com/lyrics/j/johnny_bond/hot_rod_lincoln.html

Thu, 10/24/2013 - 17:20 | Link to Comment Manthong
Manthong's picture

A taper with a line and a one over the top?

Thu, 10/24/2013 - 22:34 | Link to Comment TruthInSunshine
TruthInSunshine's picture

If the Fed actually increases their asset purchases, strap in tight because it will be an open admission on their part that they have lost all control of a crisis that their very tools significantly exacerbated.

If this were to happen, I'd become MUCH more bullish on precious metals, too.

I believe one really can make a credible case that the economy is in far worse shape now than prior to implementation of QE & LSAP programs, since it is primarily debt assumed by government, businesses (corporate bonds), and consumers (now at a new record) that has fueled a massive % of GDP and consumption since 2009, not to mention that the real numbers regarding employment & wages are still horrid (despite the fed & gov't throwing trillions "at the wall").

The orthodox view that deflation should be avoided at all costs is probably one of, if not the most fallacious dogma in mainstream economics, and it ties into the points and metrics I spoke of above; we know that deflation would automatically rein in government deficit spending, while boosting business & consumer purchasing power, while allowing both businesses & households to deliberate (as it is, Americans are now going into debt at a rate that's multiples higher than the rate at which they're allocating any monies towards retirement savings).

Thu, 10/24/2013 - 17:38 | Link to Comment DosZap
DosZap's picture

Yellin is on record as saying she wished interest rates could be negative.

 

Shows how stupid she is, they ARE.Anyone getting 2.5% (their #), return on any CD's IRA?.(more like .35/.5% for preferred customers FOR a year investment).

Thu, 10/24/2013 - 19:06 | Link to Comment Night Hawk
Night Hawk's picture

My bank is offering .95% for a TEN year CD.

I told them no thanks, I'll make more money by picking up change from the sidewalk.

Thu, 10/24/2013 - 20:33 | Link to Comment andycrazn
andycrazn's picture

interest rates is negative if you factor in inflation. so yellen is right about that

Sat, 11/02/2013 - 23:47 | Link to Comment Ctrl_P
Ctrl_P's picture

+1 for you. I have a copy of this on a 45.

Thu, 10/24/2013 - 15:47 | Link to Comment BigJim
BigJim's picture

Why do they need to QE to infinity? The (official, I know) debt is 'only' $17T. If they were to purchase, oh, I don't know, $12T over the next 6 years, forgiving it as it matures, they could taper off QE and allow rates to rise.

Still means we have a lot of QEing to do though.

Thu, 10/24/2013 - 17:15 | Link to Comment kaiserhoff
kaiserhoff's picture

They can't forgive the debt without someone eating the loss.

That's why the fiction of repayment some time in the distant forever future is so important.

 

Thu, 10/24/2013 - 17:30 | Link to Comment donsluck
donsluck's picture

Um, the FED would eat the loss and issue more 1s and 0s.

Thu, 10/24/2013 - 17:49 | Link to Comment kaiserhoff
kaiserhoff's picture

The Fed has a balance sheet like any other private entity, and the owner banks would not like to lose control.

More directly to your point, the losses would flow through to the treasury.  There are many ways to do it, but all would swiftly lead to hyperinflation, as printing has in dozens of places in the past.

Thu, 10/24/2013 - 15:56 | Link to Comment FL_Conservative
FL_Conservative's picture

Initially, the market will rally on the news of an increase in QE.  Then, once they have a chance to ponder what the Fed did, the market will sell off because they'll realize that the Fed is shooting blanks (i.e., QE isn't working).  That's when things will get VERY interesting.  

 

BTW, I'm calling for Yellen to increase QE from $85BB to $125BB during Q114 and the market to snap by summer.

Thu, 10/24/2013 - 17:56 | Link to Comment MeMadMax
MeMadMax's picture

I say spring because of the dismal holiday earnings reports.

Thu, 10/24/2013 - 18:21 | Link to Comment NotApplicable
NotApplicable's picture

I say it will snap within a week of the next false-flag, and not a day sooner.

"Shock and Awe," FTMFW!

Thu, 10/24/2013 - 18:23 | Link to Comment Oldwood
Oldwood's picture

There is nothing to ponder. Its like we are in a space ship with a gaping hole in the side and ground control is piping in more oxygen. There just isn't enough to offset the losses so those in the capsule crowd ever closer to the oxygen inlet trying to get moar. Those farthest back will be expiring soon but for those few that can get their lips clamped firmly on the nozzle, they won't let go. This will continue until inflation takes hold strongly and they will just keep pumping for all they're worth until money is practically worthless, and even then they will have it piled in their rental storage buildings like Walter White.

Thu, 10/24/2013 - 20:51 | Link to Comment gatorengineer
gatorengineer's picture

i Dont doubt your hypothesis of increasing QE.  I just dont understand what the catalyst for the snap would b?.  Would 20% more bubble really be that crazy?  30%?  why cant we go hyperbolic for a period....  Algos can do amazing things...  Reality was suspended long ago.

 

 

Thu, 10/24/2013 - 15:51 | Link to Comment Lewshine
Lewshine's picture

QE, any amount, by its nature is FRAUD. A simple manipulation of value - That's all! The Fed and the banks have been able to manipulate, jimmy rig, freeze and flash every asset class available for investment. Why are we having this 2008-2009 discussion? Here, let me help everyone on the board - Tomorrow morning precious metals will lose 3 to 5% mysteriously. Spy will be up another 1%, Naz 1.25%, and the Dow .50% - Oil will remain flat and below 100 to offset the real inflation rate the Fed is happy to ignore. WTF?

 

Thu, 10/24/2013 - 16:08 | Link to Comment Ham-bone
Ham-bone's picture

seems entirely plausible...

Thu, 10/24/2013 - 17:55 | Link to Comment Keyser
Keyser's picture

More like Groundhog day as it's been SSDD for a while. 

 

Thu, 10/24/2013 - 15:09 | Link to Comment bank guy in Brussels
bank guy in Brussels's picture

In above article Tyler boasts

« we first predicted that once perpetual QE starts it will never taper »

Whoa ! As I recall, there were several ZH pieces about 'Why Bernanke MUST Taper' ... ZH claims about silo-ing collateral and all that ...

And ZH was WRONG ... Bernanke said 'I am the f-cking Bernank, Taper MY F-ckin' Ass !'

Even the great Tyler is allowed to make a mistake ... but funny to pretend Tyler didn't make one, when he did ... Now Tyler is pretending to have been always 'QE to Infinity !' like Jim Sinclair

Ha !

Thu, 10/24/2013 - 15:11 | Link to Comment fonzannoon
fonzannoon's picture

Yes ZH went for "the fed must taper". whoops.

Thu, 10/24/2013 - 15:14 | Link to Comment Bay of Pigs
Bay of Pigs's picture

Yes, and many posters here called BULLSHIT on that call too.

The USD bulls and deflationists were sure the FED had to stop QE and raise rates.

Thu, 10/24/2013 - 15:17 | Link to Comment fonzannoon
fonzannoon's picture

the funny thing is the USD bulls still think they will end QE next year. It's amazing. 

Thu, 10/24/2013 - 16:00 | Link to Comment El Vaquero
El Vaquero's picture

They may dabble in tapering, but it'll be short lived if they do, and their reaction to what happens will be that the untaper is much bigger than the taper was. 

Thu, 10/24/2013 - 16:02 | Link to Comment fonzannoon
fonzannoon's picture

what is the point of dabbling in the tapering? The economy supposedly has weakened since september, when they said they would not taper. So it's worsened since then and they would taper now? Just to dabble?

I don't see that at all. I see moar, if anything.

Thu, 10/24/2013 - 16:12 | Link to Comment El Vaquero
El Vaquero's picture

It depends on what comes apart next.  Taper in the next couple of months?  No, I don't see that.  Taper if there isn't a debt ceiling fight in three months?  Quite possibly.  I wouldn't place any bets on any actions the Fed might take for a short time, just raise the possibility.  Long term, yes, they're going to print and print more.  One reason they might try to taper is all of the grumbling about dropping the dollar for international trade.  They've long since lost control and are just along for the ride.  Doesn't mean they won't panic or do something just for show. 

Thu, 10/24/2013 - 17:01 | Link to Comment Zero Point
Zero Point's picture

Perhaps they might discuss some huge, expansion, then taper off on that discussion.

That would be responsible. Yeah.. responsible... *begins to dribble*

Thu, 10/24/2013 - 15:42 | Link to Comment Pharming
Pharming's picture

The Bizarro Jerry world becomes more and more like reality every day...  Down is up, backwards is FORWARD, left and right are the same...God help us.  Time to reset.  

Thu, 10/24/2013 - 17:30 | Link to Comment buzzsaw99
buzzsaw99's picture

yes. zh mocked commenters for months who were (they thought overly) confident there would be no taper. I give them wiggle room because zh loves to sensationalize but they NEVER ONCE mentioned the anti-taper scenario before the september meeting. They were also hyper-bearish on bonds which I consider the height of folly.

Thu, 10/24/2013 - 18:44 | Link to Comment Greenskeeper_Carl
Greenskeeper_Carl's picture

Peter Schiff called it. He also called Jante Yellen a while back. I believe his words were something like "Ive always known it would be yellen, because she was the absolute worst choice obama could make, so thats why i knew he would choose her"

 

Thu, 10/24/2013 - 22:09 | Link to Comment HardlyZero
HardlyZero's picture

Yes, it is difficult to predict when the tipping point will occur, but it appears Yellen will be at the helm.  Hopefully collapse will be quick and decisive.

Thu, 10/24/2013 - 15:32 | Link to Comment Crime of the Century
Crime of the Century's picture

I'm also pretty sure that the hated Rickards was the first to explain stock vs flow on King World News before the Tylers© ever brought it up. It was originally from an arcane Fed paper that Rickards highlighted.

Thu, 10/24/2013 - 15:35 | Link to Comment TheGardener
TheGardener's picture

ZH is KWN translated for the sanest of doomsters..

Thu, 10/24/2013 - 16:29 | Link to Comment Ham-bone
Ham-bone's picture

I don't think many (any?) of us have truly original thoughts...just compilations of what makes sense and/or serves our purposes. 

Thu, 10/24/2013 - 16:44 | Link to Comment TheGardener
TheGardener's picture

You are replying to me ? Original thought is my trademark here.. :-)

Thu, 10/24/2013 - 17:14 | Link to Comment Urban Redneck
Urban Redneck's picture

What's more scary, that this post might be an orginal thought, or that it might be plagarism of an actual script?

Thu, 10/24/2013 - 21:27 | Link to Comment Tall Tom
Tall Tom's picture

What is more scarey is that you forgot the encore.

 

Every audience deserves an encore.

 

Encore...

 

The American People are destitute and homeless as Jefferson predicted. There is a Hyperinflation as worthless Dollars flood the Economy. With little or nothing to purchase there is a massive Famine and Social Upheaval. The lights then go out.

Thu, 10/24/2013 - 15:33 | Link to Comment debtor of last ...
debtor of last resort's picture

The point of no return could not be defined during the messy timespan. ZH is not doing Gods work.

Thu, 10/24/2013 - 20:54 | Link to Comment gatorengineer
gatorengineer's picture

They could taper into either a European or Chinese collapse...  Those countries would need to get their dollars out at a much higher value than now.

 

Other theory would be to slam the Chinks hands in the cash register and take it to 1.60 to the euro...

 

I dont see them staying at 85 B.....  one way or the other in a big way and right after the first.

Thu, 10/24/2013 - 15:12 | Link to Comment SafelyGraze
SafelyGraze's picture

"Fed May Hike QE"

this is great news for equities!

more rain for the green shoots!

bullish!

carry on!

Thu, 10/24/2013 - 15:19 | Link to Comment Frank N. Beans
Frank N. Beans's picture

and for the shiny stuff too (theoretically)

Thu, 10/24/2013 - 15:16 | Link to Comment Tyler Durden
Tyler Durden's picture

June 2012: "The Stock Is Dead, Long-Live The Flow: Perpetual QE Has Arrived." Contained therein, since your memory is obviously  compromised almost as much as your reading comprehension, will be found this:

 "UNLESS THE FED IS ACTIVELY ENGAGING IN MONETIZATION AT EVERY GIVEN MOMENT, THE IMPACT FROM EASING DIMINISHES PROGRESSIVELY, ULTIMATELY APPROACHING ZERO AND SUBSEQUENTLY BECOMING NEGATIVE!"

 

All caps aside, what this means is simple: if it is indeed flow that matters (and it is), then Fed intervention can never stop, period.

Oh and yes, June 2012... three months before anyone thought QEternity would be unleashed.

As for tapering, which should have been driven by collateral considerations which, however, the Fed has ploughed through, we have always said Taper would merely result in an immediate untaper. From August 7, 2013:

At this point the debate over the September taper is largely formulaic: the "boxed-in" Fed really has no choice: not as a function of the economy or any other irrelevant tangential factor which will be promptly undone by the tapering itself leading to the untaper in short notice

And so on.

Thu, 10/24/2013 - 15:21 | Link to Comment Bay of Pigs
Bay of Pigs's picture

TD,

I really wish you would show up moar often and liven this place up.

Thu, 10/24/2013 - 16:47 | Link to Comment Herd Redirectio...
Herd Redirection Committee's picture

He does, but usually as Boris or another alias. 

Thu, 10/24/2013 - 17:02 | Link to Comment RafterManFMJ
RafterManFMJ's picture

I've personally NEVER seen Tyler and Simon Black in the same room at the same time ... Coincidence? You be the judge.

Thu, 10/24/2013 - 15:22 | Link to Comment fonzannoon
Thu, 10/24/2013 - 15:31 | Link to Comment James_Cole
James_Cole's picture

Bernanke will have to cut the average monthly purchases by 35%, or from $45 billion to $30 billion, all esle equal, suggesting a $15 billion taper.

Of course, all else is not equal, and the other issue is that gross mortgage-backed security issuance has also tumbled: after all who needs mortgages in a market that is 60% all cash buyers. A quick back of the envelope analysis indicates that the matched reduction to keep up with the creation "flow" from a year ago, the Fed would need to taper its MBS monetization by over $10 billion, leading to a combined tapering amount of $25 billion.

 

And that is the Fed's dilemma: delay tapering to $25 billion or more and suffer an even more illquid bond market in hopes that finally, after five years of failed attempts, growth, inflation and/or employment will finally pick up, or finally admit that it has failed at anything but ramping stocks ever higher, and not risk breaking the bond market any more.

We will know in precisely six days what Ben's choice will be.

C'mon guys, it's called analysis. It's not interesting to have Tyler just say 'fed will never taper' over and over again and never actually analyze the options. 

Hucksters of course have it a bit easier (cough schiff) cause they can be right exactly up until they're wrong and have put it in zero thought / effort in the interim. 

 

Thu, 10/24/2013 - 15:34 | Link to Comment Bay of Pigs
Bay of Pigs's picture

Hucksters....lol, hey pot, meet kettle.

Thu, 10/24/2013 - 15:36 | Link to Comment fonzannoon
fonzannoon's picture

I think you mean Schiff could be wrong (gold) right up till the point where he is exactly right. 

So you are giving Tyler credit for deviating from what was right and giving Schiff shit for sticking with the right answer? That's odd.

Thu, 10/24/2013 - 15:49 | Link to Comment James_Cole
James_Cole's picture

So you are giving Tyler credit for deviating from what was right and giving Schiff shit for sticking with the right answer? That's odd.

Tyler was correct, I feel like mugato in that clip (without having invented the piano necktie to my eternal disappointment...). 

Pretty easy (& not at all uesful to anyone) to come out and take an simple position and just repeat it endlessly. The odds that fed will taper have always been low, but the tv folks need the drama so they pretend its a debate and charlatans like schiff are happy to supply content for the no-taper side. 

Like those pm hucksters, 'see we were right!' Yeah fucking right, after people lost half their capital. 

Thu, 10/24/2013 - 15:53 | Link to Comment fonzannoon
fonzannoon's picture

"Pretty easy (& not at all uesful to anyone) to come out and take an simple position and just repeat it endlessly."

Yeah, especially if it is the right position. Then it is also useful. 

So the TV folks need the drama but ZH does not rely on it?

and who lost half their capital? Some dude that bought silver at $50? Yeah I guess. Way to take that guy and extraoplate it.

You are not too bad on other topics. On this one not so much.

Thu, 10/24/2013 - 16:08 | Link to Comment Bay of Pigs
Bay of Pigs's picture

James is a bad fuckan actor. He assumes all gold and silver holders bought high and then gave up and packed it in.

Of course, hes dead wrong on that. Many are stacking all the time and adding to their position on this ridiculously manipulated low price entry level.

Thu, 10/24/2013 - 16:27 | Link to Comment James_Cole
James_Cole's picture

"lost half their capital? Some dude that bought silver at $50? Yeah I guess. Way to take that guy and extraoplate it."

Bit of selective amnesia here, I recall a heck of a lot of articles talking about how cheap the miners were, how silver was running out. And you'd have people on here bragging about absurd premiums on 30-34$ spot.

Even if the broad analysis is correct, investments are highly time sensitive. So yeah, details are critical and a more detailed analysis can also showcase critical risk not seen in the broad bravado.

Thu, 10/24/2013 - 16:35 | Link to Comment fonzannoon
fonzannoon's picture

did you address who lost half their capital in there anywhere?

Thu, 10/24/2013 - 16:46 | Link to Comment James_Cole
James_Cole's picture

Well obviously it's not exactly half but a drop in silver from 34-38$ (premium included) to 22$ is no doubt a tough pill to swallow.

Even worse though is the juniors. I recall pvg being popular with the hucksters, had a one day drop of 40% couple weeks ago. Its one year performance is the stuff of legends. But I recall Sprott thinking it a no-brainer.

I'm not arguing the pm thing, just saying when people sell things as simple narratives it invites lots of trouble.

Tyler's in-depth bond analysis seems to be one of the best things on this site.

Thu, 10/24/2013 - 16:52 | Link to Comment Bay of Pigs
Bay of Pigs's picture

"a tough pill to swallow"

See, that's where you are dead wrong. Cost averaging in (as most any level headed PM holder will tell you), allows you to increase your stack and lower your cost over time. Week to week, month to month, and year to year.

You cant see the forest for the trees, can you? Its all about the number of ounces held.

Thu, 10/24/2013 - 16:55 | Link to Comment Herd Redirectio...
Herd Redirection Committee's picture

Pretium's Valley of the Kings project can't go ahead at current prices.  Period.

But at $1800 or $2000 gold...  Its a very very big resource.    Of course, if the price of oil is $150, then the price of gold will have to be even higher.  I don't own any PVG shares, but I did DD back in the day.  Like SLW more.

Thu, 10/24/2013 - 17:01 | Link to Comment malek
malek's picture

You seem to be a bit blocked in your thinking here.

Then it is also useful. No, then it is propaganda.

Thu, 10/24/2013 - 17:59 | Link to Comment buyingsterling
buyingsterling's picture

Schiff repeats his argument endlessly because the underlying reasons why the argument is right just keep getting stronger. Cental bank manipulation via ESF rules may temporarily derail Schiff's end prognosis for metals, but the diseases which support the metals remain unchecked (and the gangrene is spreading).

If Rand Paul were to be elected in 2016 and actually got congress to approve the $500 billion spending cut package Paul put forward last year, Schiff's tune might change a bit. Until that pig flies, Schiff is right. If Schiff should be doing anything differently it would be to really dig into the guts of ESF manipulation and caution investors more that this is a long term play, at least until the market is cash and carry.

Thu, 10/24/2013 - 18:38 | Link to Comment NotApplicable
NotApplicable's picture

Sorry Tyler, but your misplaced snark in this case is embarrassing. You made a market based projection while the true result was political in nature. You were so adamant about it, I was starting to wonder if you were pushing some agenda, as I couldn't see it happening in a million years, regardless of the state of the "markets" it affected.

Consensus: September tapering start with ~$20 billion in initial reduction. As we said over two months ago.

http://www.zerohedge.com/node/476936

Thu, 10/24/2013 - 21:55 | Link to Comment Tall Tom
Tall Tom's picture

Reading the ENTIRE ARTICLE he was using the Financial Institution's expectations of forecasting the amount to be Tapered. He was using data that was available to him at the time. Since some of the Financial Institutions listed are STOCKHOLDERS in the Federal Reserve then it is reasonable to use their data as they supposedly have inside information that is not publically available.

 

The article you listed was published at the end of July. The article which Tyler lists was published in early August. This clearly demonstrates that he was in a process of reassessment...changing his mind.

 

Tyler also stated in the article that you published, "Bernanke will have no choice but to taper QE by $20 billion (or else risk destabilizing an already illiquid TSY market even more).

 

Has this happened yet?

 

The decision by the Fed not to Taper caught many by surprise. I figured that they would and was betting that Gold would be sold off. It makes a good buying opportunity an even better buying opportunity so I was actually wanting to see that.

 

Well it does not matter as we are now deep into October and few know with an absolute certainty the future events to unfold.

 

I was a Structural Steel Draftsman for awhile. My Math was pretty accurate. But it was checked as a precaution. There is a problem with being accurate most of the time. The checker gets lazy.

 

"Oh. It is another crappy drawing by Tom. His Math is right. Why bother?" 

 

Of course my mistake, the one that slipped through, cost the company $2500.

 

Understand?

Thu, 10/24/2013 - 16:03 | Link to Comment Skin666
Skin666's picture

The Fed only didn't taper to try and confuse Tyler(s)

 

And now they are fucked

 

Karma

Thu, 10/24/2013 - 17:01 | Link to Comment Herd Redirectio...
Herd Redirection Committee's picture

Well, basically.  Everyone had a 'smart' friend who said "Once the Fed tapers, they are going to have to reverse course, and start QE again."

So to regain credibility, the boxed in Fed did the only thing it could do, to paint itself as the expert(s), and everyone's 'smart' friend a paranoid raving lunatic.  It doubled down.  It untapered before even tapering.

When the Fed first announced the taper, we all said they would never do it.  Only through 3 months of continuous jawboning did some of us even begin to come around.

 

 

Thu, 10/24/2013 - 15:07 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Many people (especially around here) know how to do math.  With exponentially increasing debt servicing and liabilities, this is expected.  It will continue until food and fuel cannot be delivered to the masses (regardless of "price")...

same as it ever was...

Thu, 10/24/2013 - 18:56 | Link to Comment Totentänzerlied
Totentänzerlied's picture

Actually it will continue until large numbers are dead (well after the breaking of supply chains, which will fail from the periphery inward in a disorderly fashion) and, not particularly relatedly, the chains of command (military, national guard, political) that remain of the new national dictatorship installed to "maintain order" finally break down to a provincial level on the scale of counties and states (the new feudal manors).

We already know what each historical energy supply configuration translates to socially, politically, economically. The hardest part is getting back "down" there from "up" here.

The folly of most around here is mistaking this intermission for the grand finale.

Thu, 10/24/2013 - 15:10 | Link to Comment DeadFred
DeadFred's picture

Janet needs to be confirmed yet and there is a move to fillibuster the nomination until Audit the Fed is taken to a vote. There is no chance they will pick this time to raise QE. After she's confirmed sure, but this is just trial balloon news.

Thu, 10/24/2013 - 17:17 | Link to Comment Ghordius
Ghordius's picture

imo they'll keep it stable, too. It's such a round number, one cool trillion per year, half for Treasuries and half for MBSs. this kind of "number taken out of my ass" is often... sticky

Thu, 10/24/2013 - 15:11 | Link to Comment Dr. Engali
Dr. Engali's picture

You keep the wheel-barrow. I'll buy a flash drive with moar memory for my digital money.

Thu, 10/24/2013 - 15:11 | Link to Comment prains
prains's picture

how else is a ponzi supposed to work?

 

all this talk of tapering was to rein in the 10Y by verbosity, there's no such thing as taper in an out-of-control-sinking-ponzi, all you can do is print into it until you're forced to do something different

 

same as it ever was

Thu, 10/24/2013 - 15:11 | Link to Comment Overfed
Overfed's picture

Look at the bright side. At least we will all get to be billionaires!

Thu, 10/24/2013 - 17:06 | Link to Comment RafterManFMJ
RafterManFMJ's picture

Yup. Ill clue you into my Evil Genius Plan;

1. Begin growth of handle bar mustache.
2. Buy 300K+ farm.
3. Buy chickens for farm.
4. Pay off mortgage with sale of one egg after hyperinflation.
5. Twirl awesome mustache while shouting, "Fuck you Bernanke!"

Thu, 10/24/2013 - 20:07 | Link to Comment Translational Lift
Translational Lift's picture

Look at the bright side. At least we will all get to be billionaires!

Yea....but it will take a $trillion to buy a gallon of milk!!

Thu, 10/24/2013 - 22:02 | Link to Comment Tall Tom
Tall Tom's picture

Billionaires? Is that all? Izza gonna be a QUINTillionaire by the times dat dis iz overs. Ya thunk too small.

Thu, 10/24/2013 - 15:12 | Link to Comment stocktivity
stocktivity's picture

It's all Bullshit!!!

Thu, 10/24/2013 - 15:20 | Link to Comment Wage Slave
Wage Slave's picture

But isn't that a surefire indicator of moar beef and dairy products for the masses?

Thu, 10/24/2013 - 15:21 | Link to Comment TheGardener
TheGardener's picture

DB is the most serious organization on crazy derivatives
pills. Fall guy number one just for the infamous name content only and probably the dumb dancing bear among all the other TBTF .

Thu, 10/24/2013 - 16:13 | Link to Comment Ham-bone
Ham-bone's picture

Bubbles...can't live with 'em; can't live without 'em.

Thu, 10/24/2013 - 20:09 | Link to Comment Translational Lift
Translational Lift's picture

We all know what the definition of insanity is.  So....what is it when they double down?  F'n insane!!??

These a-holes are like the Keystone Cops putting air in a tire with a big hole in it.....OH I know we will just get a bigger air pump......That'll fix it.

Bunch a dumbfucks.......

Thu, 10/24/2013 - 15:02 | Link to Comment Dollar Bill Hiccup
Dollar Bill Hiccup's picture

Damn it, Janet!

You guys really are from another planet ... The Benny Horror Picture Show.

Thu, 10/24/2013 - 15:02 | Link to Comment Sutton
Sutton's picture

Yellen is crazier than Ben.  It will happen.  Just a question of time. 

We're Doomed.

Thu, 10/24/2013 - 15:15 | Link to Comment CPL
CPL's picture

They were eventually going to start nuking the entire fiat party from orbit.

Thu, 10/24/2013 - 17:05 | Link to Comment Herd Redirectio...
Herd Redirection Committee's picture

Its the only way to be sure.

And just for kicks, Game Over, Man!  Its Game OVER!

Thu, 10/24/2013 - 15:28 | Link to Comment lasvegaspersona
lasvegaspersona's picture

Sutton, Sutton, Sutton ma boy

if you can see the future you are not doomed you are gifted. Use your gift and protect your wealth. all that is required is faith in your beliefs and patience. It may seem like it will never end but it will. If you have done what you should you will be rewarded. Others, who should not have profitted, will profit but that is another story. Take care of you and yours and let god sort out the rest.

Thu, 10/24/2013 - 16:32 | Link to Comment Ham-bone
Ham-bone's picture

@ lost wages - the sentiment is nice that we can prepare and come out ahead in what is to be...but that's a bit too happy a face on it.  Suffice it to say we do our best, prepare for the worst, and hope for the best...and it likely all ends up somewhere in-between.  Still, it may not turn out to matter one iota.  Again, right to buy "insurance" for all types of outcomes and if by "rewarded" you mean in the here-after...hope you are right but in the here and now, nothing is for sure.

Thu, 10/24/2013 - 17:09 | Link to Comment RafterManFMJ
RafterManFMJ's picture

Hey Yellen you jellin'?

"Like a fellon."

Thu, 10/24/2013 - 15:03 | Link to Comment GrinandBearit
GrinandBearit's picture

Inmates running the asylum.

Thu, 10/24/2013 - 15:04 | Link to Comment Grande Tetons
Grande Tetons's picture

The Federal Reserve is to credibilty as CNBC is to insightful. 

Thu, 10/24/2013 - 15:17 | Link to Comment yogibear
yogibear's picture

The Fed and it's banksters will hide behind homeland security. The US Federal Reserve is a diabolical organization.

Thu, 10/24/2013 - 17:59 | Link to Comment Offthebeach
Offthebeach's picture

Wonder if I get a macine gun port maning job at a Fed "Bank", I'll have WiFi access until the mobs of starving masses storm the building, and M-60 in tow, I join them.

( the uniforms are lame, but great servant cafeteria )

Thu, 10/24/2013 - 15:04 | Link to Comment philosophers bone
philosophers bone's picture

"YOU'RE GOING THE WRONG WAY"   (Source: Planes, Trains and Automobiles)

Thu, 10/24/2013 - 15:06 | Link to Comment Grande Tetons
Grande Tetons's picture

YOUR MESSING WITH THE WRONG GUY.

Thu, 10/24/2013 - 15:18 | Link to Comment Agent P
Agent P's picture

"Dad, you're doing it wrong." 

"South to drop off MORON!!!"

(Mr. Mom)

Thu, 10/24/2013 - 15:29 | Link to Comment B.J. Worthy
B.J. Worthy's picture

"WHAT?!"

Thu, 10/24/2013 - 15:56 | Link to Comment philosophers bone
philosophers bone's picture

Banzai or someone with some artistic talent needs to parody that scene - Ben (Steve Martin) and Janet (John Candy) going the wrong way down the highway and heading towards two semis (Bond Market and Gold Market) while ignoring the warnings of Schiff and Faber (the screaming couple in the other car)?

Thu, 10/24/2013 - 15:04 | Link to Comment fonzannoon
fonzannoon's picture

There is no collateral shortage. So we will get a santa rally in stawks and bonds. Crude has even been dropping so we can all talk about how there is no inflation. Give is 3 months of moar QE and everyone will be begging the fed to do even moar.

Thu, 10/24/2013 - 15:12 | Link to Comment Grande Tetons
Grande Tetons's picture

I hope Santa gets mauled by a pack of Polar Bears. 

 

Is it Pack or Den of Polar Bears? Not sure. 

Thu, 10/24/2013 - 15:15 | Link to Comment fonzannoon
fonzannoon's picture

Santa is long the triple levered S&P. Join the fun, take profits, buy phyz.

Remember when this thing tanks the banks etc are going to make out like champs. It's the little guy that is going to take it in the ding dong again.

Thu, 10/24/2013 - 15:26 | Link to Comment Grande Tetons
Grande Tetons's picture

Agreed 100 percent. 

I take them off every two weeks.

Some weeks there is not much to take.  

Thu, 10/24/2013 - 15:20 | Link to Comment Oldballplayer
Oldballplayer's picture

A den is where bears live.  If you were to be attacked by a den of bears, it would be the same as a being attacked by the trailer of white trash.

A group of bears is called a "sleuth."  No shit.  Not even in the woods.

Thu, 10/24/2013 - 15:34 | Link to Comment philosophers bone
philosophers bone's picture

Good Analogy - and if you were attacked by a Den of Thieves, it would be the same as being attacked by the Federal Reserve Building.

Thu, 10/24/2013 - 16:55 | Link to Comment akak
akak's picture

Actually, aside from a mother and her cubs, there is for all practical purposes no such thing as a group of bears, as bears are not social animals, and generally live solitary lives --- much like so many 20-somethings today, except that the bears don't even need an electronic gadget obsession to fuel their anti-social behavior.

Thu, 10/24/2013 - 15:47 | Link to Comment Reckonball
Reckonball's picture

That would be called a "sleuth" of bears.

Thu, 10/24/2013 - 17:58 | Link to Comment KnightTakesKing
KnightTakesKing's picture

 Is it Pack or Den of Polar Bears? Not sure.

Polar bears are solitary creatures. FTW!

Thu, 10/24/2013 - 15:21 | Link to Comment Dr. Engali
Dr. Engali's picture

The fed took care of any collateral issue with the overnight double secret reverse repo.. Have a margin call problem? Come see uncle Ben, he'll fix you right up.

Thu, 10/24/2013 - 15:09 | Link to Comment dr_doom
dr_doom's picture

what a crap this is. you might as well warn that it will snow in the sahara come next july. I agree, that the taper might not see daylight again, but to comment every silly bs from useless investment banks is not providing more insights.

Thu, 10/24/2013 - 15:15 | Link to Comment Frank N. Beans
Frank N. Beans's picture

of all people, Doom, you should indeed see increased QE as a possibility

just like Japan

so if the current QE ain't workin', Fed may just increase it!

 

Thu, 10/24/2013 - 15:24 | Link to Comment Grande Tetons
Grande Tetons's picture

QE is like Viagra...it works if you like what is in front of you. 

This market is beginning to look like Rosie O'Donnel. 

 

Thu, 10/24/2013 - 15:24 | Link to Comment SubjectivObject
SubjectivObject's picture

QEternity?

What happened to QE4ever?

Is there any expectation that QE continues past the heat death of the local solar system?

Thu, 10/24/2013 - 15:11 | Link to Comment JailBank
JailBank's picture

I have been telling my buddies for months forget taper and prepare for QE $120 billion a month.

Thu, 10/24/2013 - 15:17 | Link to Comment Seasmoke
Seasmoke's picture

$125

Thu, 10/24/2013 - 15:14 | Link to Comment Agent P
Agent P's picture

"MOAR Stimulus!" cried the French.  

Thu, 10/24/2013 - 15:14 | Link to Comment yogibear
yogibear's picture

Yep, Bernanke, Yellen, Evans, Dudley and Fisher will go Zimbabwe.

Eventually $1 trillion/month.

Be ready when the Fed makes the US dollar toilet paper and the banaksters start taking 25% from bank accounts.

It's the 99% against the Fed banksters. 

Thu, 10/24/2013 - 16:38 | Link to Comment Atlantis Consigliore
Atlantis Consigliore's picture

$ 1 Trillion a month:  and like Cypress, will confiscate banks deposits over $ 100,000  to make account holders bailin the Banksters....

bye bye healthcare too,  ANYONE FOR UNDERGROUND CASH ECONOMY???   

Thu, 10/24/2013 - 15:15 | Link to Comment hmmmstrange
hmmmstrange's picture

I'm confused... The fed is going to taper the tapering of QE?

Thu, 10/24/2013 - 15:33 | Link to Comment therevolutionwas
therevolutionwas's picture

Nah...they already tapered the tapering totally. 

Thu, 10/24/2013 - 17:52 | Link to Comment Clowns on Acid
Clowns on Acid's picture

they already tapered the tapering totally twice...

Thu, 10/24/2013 - 22:15 | Link to Comment HardlyZero
HardlyZero's picture

They g'na taper the taper for the ACA papering.  How else will they pay for the care we all need ?

Thu, 10/24/2013 - 15:19 | Link to Comment lasvegaspersona
lasvegaspersona's picture

So Marc Faber was WAY off on his trillion/month idea....at least for now....

And for the record we will never see bail-ins in the dollar economy....they don't have to do bail-ins...they can just print 'wealth'...why piss people off by obviously stealing from them when inflation works and is NEVER detected by the masses until it is way too late.

Thu, 10/24/2013 - 19:05 | Link to Comment Greenskeeper_Carl
Greenskeeper_Carl's picture

They wont directly steal it. They will mandate that all pensions, 401ks, IRAs hold a certain percentage of treasury debt, becuase th markets are too wild too many people have been wiped out, therefore they must all have some of the "rock solid, good as gold" govt debt in them. Theft without going cyprus on them. And as to just creating wealth, if you keep doing that, everyone will catch on that the dollar is worthless and backed by nothing, but the confiscation scheme keeps the illusion of USDs being worth more than the paper they are printed on alive, beuase why bother stealing something that is worthless. That part i mentioned above about forcing people to buy treasuries will by them more time and therefore come first. The "printing wealth" part comes later, but is also inevitable.

Thu, 10/24/2013 - 19:06 | Link to Comment Greenskeeper_Carl
Greenskeeper_Carl's picture

They wont directly steal it. They will mandate that all pensions, 401ks, IRAs hold a certain percentage of treasury debt, becuase th markets are too wild too many people have been wiped out, therefore they must all have some of the "rock solid, good as gold" govt debt in them. Theft without going cyprus on them. And as to just creating wealth, if you keep doing that, everyone will catch on that the dollar is worthless and backed by nothing, but the confiscation scheme keeps the illusion of USDs being worth more than the paper they are printed on alive, beuase why bother stealing something that is worthless. That part i mentioned above about forcing people to buy treasuries will by them more time and therefore come first. The "printing wealth" part comes later, but is also inevitable.

Thu, 10/24/2013 - 15:21 | Link to Comment yogibear
yogibear's picture

The Fed can't and won't taper. It was all BS. The US cannot pay it's debt so it will attempt to lessen it by printing. 

Like all countries that wildly indebt themselves the US will be no different. Germany in the early 20's or Zimbabwe, 

Thu, 10/24/2013 - 15:31 | Link to Comment SubjectivObject
SubjectivObject's picture

ZSA!  ZSA!  ZSA!

Your pick:  Zimbabwe, Zombie, Zog, Zero, Zilch, Zed, Zedd, Zirp, Zerp!, __ States of Amerwrecka!

Thu, 10/24/2013 - 15:21 | Link to Comment kito
kito's picture

im going to be a contrarian. im on the record that they will taper next week by $15 billion a month. 

Thu, 10/24/2013 - 15:24 | Link to Comment Seasmoke
Seasmoke's picture

That's not being a contrarian. That's being foolish. 

Thu, 10/24/2013 - 15:26 | Link to Comment kito
kito's picture

the fed has become unreliable in its communication and errant in its judgement. i say they defy all expectations and taper. im shorting the market before the announcement. you heard it here first. 

Thu, 10/24/2013 - 15:31 | Link to Comment Grande Tetons
Grande Tetons's picture

I hope you are right.  Crazier things have happened. 

 

I will watch from a distance.

Thu, 10/24/2013 - 15:46 | Link to Comment ...out of space
...out of space's picture

i hear you kito. 1,388 top for eur/usd 

 

Thu, 10/24/2013 - 16:48 | Link to Comment Ham-bone
Ham-bone's picture

Fed's mandate - Jobs or inflation...neither one any good.

You have no leg to stand on for this one...there is no "Fed measured" inflation (likely slipping back toward deflation) and jobs ain't getting any better, participation rate blows.  Fed tapering at this point into the "horrors" of Octobers so called "gov shutdown" would have the Senators in a tizzy for Ben's head. 

No, don't see any taper coming...and an additional callout back to the original "increase or decrease" QE as needed seems a pretty good bet in October (wink, wink, Janet).

Thu, 10/24/2013 - 17:07 | Link to Comment Al Huxley
Al Huxley's picture

If you want, you could just give me your money instead.

Thu, 10/24/2013 - 22:23 | Link to Comment Tall Tom
Tall Tom's picture

You know...I had that fucked up feeling also. Benny calls all of his buddies and asks if they have their Triple Leveraged Inverse ETFs positioned.

 

The Smart Money has left the Stawk Market. The Dipshit Muppets have been lead to the slaughter by Goldman Sucks.

 

WE NEED TO TAPER.

 

Dow Jones tanks 12,000 points while Benny and the Jets take off to Antigua for Christmas. He yells out, "Thanks for the memories asswipes. And you thought that you were going to have free Health Care and SNAP. Enjoy your starvation!!!"

 

Somehow I just cannot put that past Bennie, Jon Corzine, Jaime Dimon, et al. Somehow I just cannot put that past them.

 

Can you?

Thu, 10/24/2013 - 15:28 | Link to Comment fonzannoon
fonzannoon's picture

you are out of your mind.

(not for shorting, we may be due for a pullback no matter what they decide)

Thu, 10/24/2013 - 15:30 | Link to Comment Dr. Engali
Dr. Engali's picture

Care to lose another sandwich on that one kito?

Thu, 10/24/2013 - 15:42 | Link to Comment fonzannoon
fonzannoon's picture

I retract my bet, that credit post that just went up will make him confident enough to bet you

Thu, 10/24/2013 - 15:45 | Link to Comment kito
kito's picture

LOL!! fonz, at the time i hit reply to comment, your retraction wasnt there. but the bet is in!! THERE WILL BE  A TAPER NEXT WEEK.

Thu, 10/24/2013 - 15:44 | Link to Comment kito
kito's picture

you are on!!! one sandwich plus extra large cookie and drink. 

 

 

Thu, 10/24/2013 - 15:47 | Link to Comment Dr. Engali
Dr. Engali's picture

Taper by $15 billion starting next week. It's a bet. BTW Fonz the recent post is just more talk in my book.

Thu, 10/24/2013 - 15:48 | Link to Comment kito
kito's picture

waiiiiittt a minute. i win with any taper--deal?? im banking on 15 bil but i could be a little off. could be 10 a month. but ben is going for something symbolic. so we are on?

Thu, 10/24/2013 - 15:51 | Link to Comment Dr. Engali
Dr. Engali's picture

" im on the record that they will taper next week by $15 billion a month."

 

This is the quote that I'm basing my bet on. 

Thu, 10/24/2013 - 16:08 | Link to Comment kito
kito's picture

no way doc!!! taper i win. no taper you win. yes?

Thu, 10/24/2013 - 16:15 | Link to Comment Dr. Engali
Dr. Engali's picture

Don't tell me you're not confident in your prediction now Kito. 15 billion a month and it's a bet.

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