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Here We Go: SocGen Warns There Is "Possibility" Fed May Increase QE Next Week
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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nooooo way doc!!! you say no chance of taper. i say taper. this is only a taper/no taper bet. whadddyasay?
What if they increase QE?
Do I get a cookie?
ok taper, i win.
stays the same, doc wins.
increase in qe BOP wins.
deal.
Kito - when you say taper @ 15B... the bet is taper @ 15B. A man is only as good as his word. You are breaking trades like you are Goldman Sachs here.
He is technically breaking the trade. But that is a nuts trade. I would not have proposed it without at least 3/1 sandwich odds.
Okay Kito I am a magnanimous and forgiving person :) I will take your bet alteration as it stands. If the Bernank tapers next week I'lll buy you a sandwich, soda,( I'm sorry about your luck with bloomberg I'm not buying two to make up for your lack of big gulps) and a cookie.. If he doesn't then you have to do likewise for me.
I say we get a ruling from the field.
lets ask disabled vet.
just my 2 cents but the thought that they will taper is so nuts that if I were doc I would not need to put a figure on it. They will either stay the same or increase. I say 75% chance they stay the same. 20% chance they increase and 5% chance they double it.
I concur....Doc stop being cheap....If Bernokio tapers $1.- it will be sensational!
You have a point Kito, and I was thinking of doing the same thing re: the Dow.
Think about it. The fed takes away the punch bowl for 3-6 months or so. Economy tanks, market goes to shit and everyone will be clamoring for QE. Yellin steps in and ups QE to $150 bill or so. It gives the appearance that the fed is in control & their propaganda campaign has more room to run
We know they're not... I'll keep buying gold as well.
"Here We Go: SocGen Warns There Is "Possibility" Fed May Hike QE Next Week"
My monthly, weekly and daily gold charts are presently nodding their heads in agreement with the above statement.
It appears that QE is like really going after the clitoris.
You think it is working. But in the end, she just gets annoyed and kicks you out of bed.
No, in my case I KNOW it is working :-)
When there is a run on the US dollar the Fed will just close the banks and announce a bankster holiday.
When the FOMC annouces this it should create a panic to dump the US dollar with anyone with a brain.
The stock market is already starting to price it in. Zimbabwe, Weimar Germany is the path Bernanke, Yellen, Evans, Dudley and Fisher are going.
It's why Germany wanted it's gold back and other countries want PM. They know what the US Fed's plans are.
They may just keep increased QE a secret, for the good of the country. For all we know they may have already increased it.
That would be my guess as well, but somebody, at some point will brag about it.
Let's move to North Dakota...
Please advise,
I know millions, billions, and trillions (lot o zeros) but what really comes next?
Is it really zillions?
Next comes Zimbabwe and neo-feudalism...although many would argue we're already there.
What comes next is prison. Lots of prison.
First...where are you from?
If you live in America...
Millions 106
Billions 109
Trillions 1012
Quadrillions 1015
Quintillion 1018
Sextillion 1021
Septillion 1024
Octillion 1027
Novillion 1030
Decillion, 1033
Anything Greater than 1050 is defined as an Absurdity
IN THE REST OF THE WORLD
Millions 106
MILLIARDS 109
Billions 1012
Trillions 1015
Quadrillion 1018
Quintillion 1021
Sextillion 1024
Septillion 1027
Octillion 1030
Novillion, 1033
Decillion 1036
Anything Greater than 1050 is still defined as an Absurdity
if they do increase QE (although I'm not sure how you can increase something that is already at infinity...), you can pretty much kiss the USD goodbye. It will get crushed to new all time lows.
wealth effect?....
Bernanke's son owes over $400,000 in school loans because he knows the US is going Weimar Germany/Zimbabwe and debt will be printed down.
There should be a panic to dump the US dollar.
Yogi, while I would never doubt the veracity of your comments, would you by chance have a link to that little esoteric tidbit?
Entire world runs on gorging on cotton candy now....just wait till the diabetes sets in.
Ok, looked it up.
Quadrillion and so on...
http://en.wikipedia.org/wiki/Names_of_large_numbers
Did you find the difference between the American System and the British (World) System?
I wrote it out for you above.
Thank you Tall Tom.
Now's the time for metal accumulation, not price appreciation.
Get that through yer melon and it all clears up.
The first part has meant stupid low prices for what is Real. The second part? It'll come soon enough, and Yellen's arrival on the stage only further cements it.
Just keep accumulating ounces. Forget the noise.
Sounds like an excellent plan to me.
Good to see you again Bob. Hope all is well...
Thanks and same back. Usually I just lurk so the NSA doesn't get more material for my already bursting dossier :-)
I always enjoy your wisdom and wit. My best to the Humpbacks.
The elites are in full control of the money machine, and they have no intention of turning the spigots off. No amount of wealth seems capable of satisfying them... even as the middle class vanishes before our eyes.
So buy more NFLX?
Quit chasing the paper for more paper. When I retire 40 years from now, if I'm not dead, stock options, volatility, profit margins, will all be jokes of nostalgia the elderly tell in their virtual sex fantasy bars.
Yellen is very likely to increase QE, but probably not until she is officially in charge. Until then, my guess is no change in QE.
The question to be asking now is: "How much will Yellen increase QE and how quickly?",
Dax 10000
I have a steaming pile of dog shit you can buy with newly created money, and you can still call it an asset if you want!
One of these days ZigZag will come out with "taper papers" to roll your fiat in before it goes up in smoke. Maybe even a new note, the extra thin even burning taper paper with low ash.
Inmates running the asylum.
Let me correct that fer ya'!,Plan going according to schedule, ALL is well.
Fictitious numbers added to a pile of fictitious numbers...
How much air can you pump inside a basketball before it pops? The problem isn't the air...we got plenty. All you need.
It's the limits of the basketball.
I guess we'll find out soon enough.
You can put a fork in the U.S.S. Titanic... she's done.
22, The good ship sank over four years ago.
But to recognise, and admit this fact, only brings you closer to the reality that we are all dead.
Collective fantasys will fail collectively, when enough people can no longer pretend away reality.
They said not to visit this website with its tude'...but what if we live here. When the window going to crack and the Atlantic rushes in ? See the fish...
I'm tired of working. The FSA may be on to something. Let's monetize everything now, get it over with.
Bernank grant me the liquidity to accept the things I cannot afford; courage to leverage the things I can; and wisdom to not give a damn.
+1 ptoemmes, best post of the day.
I doubt this will bring much serenity.
Good job on the reworked "prayer"
Up my FASFA Yellen Mutha Fukka.
I need more.
With the Debt limit essentually lgored, we at the Fed can ramp the S&P to 2250 and the DOW to 20,000 in no time.
This is where everyone says; "PRINT BABY PRINT"..... opp's, I mean; "DRILL BABY DRILL".
The US dollar looks like it's ready to fall off a cliff.
Bernanke, Yellen, Evans, Dudley and Fisher will continie to print while the US dollar free-falls. I can see it now.
Maybe the dollar can break below it's all time low this time.
Django Django - Default : http://www.youtube.com/watch?v=DDjpOrlfh0Y
This will end well, NOT!
Place your bets...
I'll go with an increase to $100 billion a month to be announced in the Fed's December press conference.
Some days I think it would just be easier if I put a gun in my mouth & pulled the trigger...
You will jerk the gun and blow your face off, living through it disfigured.
Or you might just damage one Brain Hemisphere and be a vegetable. Many survive Headshots. They do not do well...but they survive.
You have got to target the neck so that you bleed out. That way you will not botch the job.
Personally I have the Syringes in the Refrigerator loaded with Insulin for a massive OD. I do not want to leave too much of a mess.
This is fucking Crazy +5
No way out