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Deutsche Bank: "Yellen May Actually Have To Increase QE" - Here's Why
With what few vacuum tube-based trading algos are left and reacting with rabid kneejerkiness to every flashing red headline, one would get the impression that what matters to the Fed's decision on how to adjust its balance sheet flow depends on the US economy. But if Deutsche Bank is correct, the next source of global economic contraction, which it will be up to the Fed to offset (just like China was the marginal growth dynamo in the months after Lehman filed), and result in an increase in QE nevermind taper, is not in the US at all, but in China where things are about to go bump in the night. Which means that just like that we have moved into the "New Normal paradigm" where the worse the news out of China, the better for stocks.
From Deutsche's Jim Reid:
Over the weekend, China’s inflation, industrial production and retail sales numbers for the month of October will be released. China’s much awaited Third Plenum meeting gets underway tomorrow where DB’s Jun Ma expects a wide ranging package of reforms will follow, in terms of industry deregulation, financial liberalisation, reforms to land titles, state-owned enterprises and social security. Our take on this is that there will be lots for the market to get excited about in the reforms but that it will not necessarily be easy to implement them successfully. Our GEM equity strategist JP Smith yesterday reiterated his bearish view on China and most of the EM complex. If he's correct Yellen and Draghi are going to have interesting 2014s with the provocative thought being that Yellen may actually have to increase QE. Food for thought.
And just for thought, because very soon the bulk of the world's population won't be able to afford any other kind. Especially once the Fed is forced to start monetizing Big Macs.
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NO SHIT
"Yellen May Actually Have To Increase QE" - Here's Why...
"Well, in our country," said Alice, still panting a little, "you'd generally get to somewhere else — if you run very fast for a long time, as we've been doing."
"A slow sort of country!" said the Queen. "Now, here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!"
If the market starts sliding or 10yr yields begin rising, there will be more printing to counter these adverse developments. One day, the marginal return of an extra printed dollar will hit zero. Then, things will get interesting:
http://dareconomics.wordpress.com/2013/11/08/around-the-globe-11-08-2013/
Rooks rike the Fed got,
a little bit pregnant.
Does this mean we should be shorting gold and silver?
Why is that king in drag?
Fuck your sloppy jowls, BernYellen!
*And shave your mustache, old hag.
wake me when it gets to $1 Trillion a month...then we're talking some money. Marc the Doomer agrees.
Priceless!
Meanwhile the edge of the cliff looms ahead, and we're still not chaning paths (only discussing how fast we should or shouldn't run).
Wile E. Coyote meets Alice in Wonderland...
Why? in a nutshell - "math" that's why.
Time to quit teaching that shit, let's come out with New Math or Chisenbop, anything so the plebes won't understand.
It's called "Common Core"
You don't even need math! They know that the economy cannot function without the stimulus(QE), thus it can't end or diminish. This monthly theatre of studying the numbers to see what they should do is utter bullshit!
No, the math is critical to understanding the problem. Without the math, people can be led to believe that the problem is political. Without the math, our banking oligarchs can hide.
I agree with that. I was talking about the blind them with bullshit data that they feverishly "analyze" to determine whether the FED will start to pull back.
And let's show them what's behind door number 3....
It's the Exponential Function!!!!!
FTMFW!
"And just for thought, because very soon the bulk of the world's population won't be able to afford any other kind. Especially once the Fed is forced to start monetizing Big Macs."
Already happening. McDonald's is increasing the price on their "dollar" menu.
http://www.usatoday.com/story/money/business/2013/09/04/mcdonalds-dollar...
Couple that with Food Stamp cutbacks and what's left on the SNAP card being sucked away faster by the increase in food prices.....hoo-wee !.........I think some land whales are about to breach !
No, we can put off "panic" until the Dollar Store is bought out by the Two-Dollar Store. THAT is when we know there's a problem!
Bullshit.
Shocking. And only 6 years behind Peter Schiff's prediction of endless money printing.
Sach blos!*
No shit, Axel Dieter Gerd Heinrich Klaus Otto Wilhelm von DuschenBank.
* You don't say!
caught in its own Chimerica mirror.
The only thing troubling about ZH these days is that dykey looking thumbnail of Janet Napolitano showing up under "TRENDING OFFERS AND ARTICLES" - next to Kate Upton, of all people. Shudder.
anything that makes Upton more uptown is good for her image. Beauty is to ugly what debt is to asset, wrinkles to smooth skin.
I'm sure she don't mind competition like that.
Aye, verily Tim - but that unsightly visage 'tis more than negated by "The 25 Hottest Cheerleaders in the NFL."
http://www.rantsports.com/clubhouse/2013/09/10/25-of-the-hottest-cheerle...
Which differs little with today's economics in that they too are mostly totally "made up."
I'm a lucky son-of-a-bitch, I have a wife who is totally real and has had no off-the-books corrections: and she's nearly immune to the effects of time. And the kicker is that she'd excelled in logic in school: beauty AND brains!
You havent been married long enuff. Give it a few years, youll be dying for an upgrade-- but the best situation is solitary.
The casino is getting greedy. Not content with Red/Black taper/No taper plays, now we are getting the Moar Taper option as well. Just keep fisting those muppets to invent a tradeable, full-proof spread on some fantasy instrument.
A System designed to grow (like microbes or cancer cells) MUST grow, or die. And a monetary system based on Debt and FRB, is designed to grow like microbes or cancer.
What part of this do the university geniuses (teachers and students alike) in Economics* and Finance** not understand?
* Economics -- the Fake science
** Finance -- the Fraudulent science
Accounting has been debased. When you cannot measure correctly, you cannot make any valid decisions. This is as planned.
Well, that's just "unpleasant speak," we ought to just dispense with that right away! </sarc>
Ever wonder how Dr. Albert Bartlett could keep from going insane? He was able to talk directly to folks representing TPTB and they'd come back with the most rediculous replies- and, really, I'd figure that they'd have to realize that they weren't talking to some dummy (which would mean that it was they who were the dummies- well, they're paid to be such, so I suppose it's all in a day's work for them).
It is getting interesting, First SocGen, now Deutsche...
Peter Schiff: Fed Will Do The Opposite Of Tapering - More Money Printing!
Peter Schiff is very consistent in his views and even if his call for more QE sounds totally outrages do not discount it too fast. ZeroHedge reports that he is not alone in his observations. If it ever happens Gold will receive The Catalyst so many people are waiting for.http://sufiy.blogspot.co.uk/2013/10/peter-schiff-fed-will-do-opposite-of.html#
Picture Germany in the early 20s.
It will be called untaper.
Now where the hell are my chocolate rations?
pods
The negative taper. Good because taper was bad...... <s>
In for a trillion, in for four trillion. Inflation gallops.
The Germans love horses, especially other people's bred.
So Peter Schiff would be proven right again? Gold should be the obvious take here, but provokedly I would still prefer Bitcoin.
BTC. The New Gold. BTFD!
I'm not thinking that I would wish to store wealth where the NSA can access it.
Vitamins good, megavitamins better? A thousand sparks is not a flame.
Szell? Is it Safe, is the Dollar Safe,
Yellen schtup and print....yah Freulein, der Wheelbarrow, is it safe?
http://youtu.be/kzw1_2b-I7A
YIKES!!!
MUST SEE--KARL DENNINGER'S STOCK PICKS BELOW:
https://www.youtube.com/watch?v=XqWIS0O2gIk
And here's a reminder for everyone below: "WORLD OF DEBT" -- WATCH IT!
https://www.youtube.com/watch?v=99xsqxzJnXs
Let's think about this.......fractional reserve banking/credit based money means more debt will always be created than money. Too much debt means deflationary pressures. Monetizing (QE) some debt removes deflationary pressure from those who are fortunate enough to have their debt "monetized". What about the rest of the REAL economy ? How does the inflation of money (QE) put funds into the hands of the consumers or the working folk who are the real economy?
That aside.....You better think about who really runs things and who benefits from QE before you call for it's demise. Someone at DB sees the writing on the wall.
The financials, the central bankers within the Fed, are taking the core out of the economy.
As Tyler pointed out today, roughly one-half of all job gains in October were “namely minimum wage hotel workers and retailers,” coupled with a devastating loss of full time jobs -- “a loss of over 600,000 full-time workers.”
And it’s the Fed that has done it.
Just look where we’ve come. The greatest economic system in the history of the world is set to topple with the institution by the oligarchs of on-going wealth transfer under socialism. There have been many steps taken in America away from the success of free enterprise capitalism; Obamacare is the latest and greatest.
Perhaps it would have made Marx proud to see this beacon of hope for the world extinguished.
As the world turns to central bank control….here’s the latest:
Czech Republic Enters Currency Debasement Club; Koruna Intervention Triggers Record Drop; "Hardball" in Pictures | Mish’s Global Economic Trend Analysis
Currency madness has spread to the Czech Republic. Central bank intervention triggered a record plunge in the Koruna vs. the Euro.
Bloomberg reports Czechs Play Koruna Hardball as Intervention Triggers Record Drop
Hardball in Pictures - Koruna vs. Euro
It seems the "ideal" level of 27 was reached in a day. Of course it is preposterous to propose that anyone, especially central banks have any notion of what the "ideal" level is.
From a consumer standpoint, the more European goods Czech citizens can buy with the Koruna the better. But central banks will have none of that. …
Asks Mish:”How the hell can competitive devaluation work, when every country can ‘theoretically print as much currency as it wants’ and every country wants a declining currency vs. every other currency to support growth?”
http://globaleconomicanalysis.blogspot.com/2013/11/czech-republic-enters-currency.html
”How the hell can competitive devaluation work, when every country can ‘theoretically print as much currency as it wants’ and every country wants a declining currency vs. every other currency"
It used to be that everyone wanted to be in the front of the plane in first class. Now everyone wants to be in the back of the plane with the fastest dropping currency.
The joke is that everyone that plays this game is on the Fiat Airpline plane and it is going down!!!! First class or back seat, it does not matter.
All countries want to diminish the value of their past debt promises and bond obligations that were tied to their past fiat denominations. Devalue their fiat, then their bond/debt obligations are decreased. In short, money printing is a way to not pay full value on their past bonds.
No exit from the Fiat plane midflight....
Of course she'll increase QE you can't taper or exit a ponzi scheme.
up vote-it really is that simple!
...and so we move from the sublime to the ridiculous.
First UBS and now Deutsche Bank.
Will the idiocy never cease?
How many times do we have to remind them that ZH knew this literally YEARS ago?
My suggestion is that both UBS and Deutsche Bank FIRE all of the stupid analysts who are ever so good at finally "seeing" the handwriting on the wall (after it has become plainer than the nose on their faces)... and donate to everyone's favorite charity... ZH.
They all knew and didn't care. All they cared about was getting bailouts to meet their short term needs and bonuses. They don't care now either.
They will say what they have to get the highest % of survival.
There is no truth with them.
There is only what benefits them this week.
That is the way they were designed to work;
that is the way they are paid to work;
that is the way they will work until you kill them, and spread lime on their graves!!!
dollar sell off
The fed has no choice but to print moar. The 85 billion a month is resulting in diminishing returns, and they can not let the system collapse without blowing up 1.2 quadrillion dollars worth of derivatives (Douche Bank has 72 trillion). Not to mention government outlies only get worse, not better.
These banks can pretend all they want, and put all the bullshit pieces out they want, but it won't change the fact that the fed is stuck.
http://www.zerohedge.com/news/2013-04-29/728-trillion-presenting-bank-biggest-derivative-exposure-world-hint-not-jpmorgan
Sounds like they need to add some more derivatives to counteract those existing derivatives.... Simple
Predict Yellen will up it to115B. Must increase as situation becomes more desperate.
A lot of us have known for awhile that an increase is more likely than a decrease.
Douche Bank is probably the first one to blow up in Lehman style manner if they cut the heroin drip which is at this point like a raging river.
want to know why I waste time speculating that what you say might happen? Irony ...... the German national bank 'champion' (not all German political parties would endorse the preceding) and then Ms Merkel would be put in the political hot seat of her life .......
.... and we all know that 'truth is stranger than fiction' .....hence what you suggest just might come about as the gods torment us further
Supposedly of the all the FED primary dealer banks their financials are the most precarious and vunerable of them all if a major systemic shock hits the system. My point is the writings coming from that direction sound like a junkie who has crossed that where they need to get high just so they can feel normal and no matter how much junk you keep doing you'll never cross that line above normal into high territory. It is a common junkie equivalent of the law of diminishing returns. Each morning the hangover is worse and worse that they need more and more just to get back to normal. The FED is the dealer and the douche is the junkie. This always ends in overdose by the junkie or the junkie beaten to death or put in jail for stealing to support the habit if some outside force doesn't intervene.
My point is the writings coming from that direction sound like a junkie who has crossed that where they need to get high just so they can feel normal and no matter how much junk you keep doing you'll never cross that line above normal into high territory. It is a common junkie equivalent of the law of diminishing returns.
In the lingo of both "pain management" and its cousin "addiction medicine," that phenomenon is called TOLERANCE or DEVELOPING TOLERANCE. How ironic, eh?
In any self-regulating organism, such as a human body or a financial market, maintenance of homeostasis is the force behind the phenomenon.
If a person's opioid receptors are constantly barraged by high levels of opioids, the body will either make those receptors less sensitive and/or reduce the number of the receptors.
Because pain perception is vital to survival!
Overloading the receptors with opioids causes the body to adapt to the "new normal" of high opioid levels. Apply that analogy to the financial markets and see where it goes.
Think about why junkies die from ODs. Because opioids are endogenous, there is a very strong entirely natural mechanism for maintaining pain perception even if a person is taking massive quantities of exogenous opioids. The junkie ends up being in constant pain which is actually caused, albeit indirectly, by their intake of "pain killers."
Needing MORE and MORE just to "feel normal" pushes the junkie ever closer to the point of respiratory suppression. They don't feel a thing, literally, and everything slows down, with the first "side effect" noticed is often constipation from reduced intestinal motility. And, as any acupuncturist could tell you, intestine and lungs play similar roles in the body because they are both internal organs exposed to the environment, for reverse functions of course. Death from heroin overdose is usually the result of a person who essentially stops breathing, skin turns cold and then blue, with drowsiness increasingly unresponsive to stimuli which is why it can often save their life to drag them into a shower and spray them with cold water and do everything you can to keep them awake until someone with Narcan can get there.
What happens when a market is in that situation? Who could drag it into a cold shower? And what's the Narcan for markets? And oh boy, if you want to see a person in pain, it's a junkie "rescued" with Narcan, for reason left to the reader.
But think about the apples-oranges aspect of this. While pain perception and associated homeostatis in face of artificial excesses are NATURAL, it's kind of mind-boggling to think that markets maintain that very same homeostasis even though the opioid system has been present for millions of years in terrestrial organisms, while markets are a very recent development. Gosh and by golly, it's almost enough convince a physicist that god is not playing dice with the universe.
Rotating QE, being instilled as part of the QE forever program
$1 trillion/month QE coming. She's a print maniac. Obama's bank.
"Taper", they said.
"Under control", they said.
*audible laughter*
Faber predicted this weeks ago,"She(Yellen) will make Bernanke look like a hawk":
http://www.youtube.com/watch?v=NN3o6nNxYfs
Our economy has become like a car in neutral...lots of noise, but we aren't going anywhere. Only this car engine is actually shrinking as it runs, and we are now down to an underpowered 1972 Subaru 4 cylinder from a behemoth 50s Cadillac.
Moar moar moar, as stocks will soar. I will not have any of that, and be content to stack on, knowing that all that paper "wealth" will flow, in the end, mostly back into the metals.
Moar moar moar...wasn't that a 70s song by Andrea True Connection? Oh how we all would love to see Yellen in a pair of hot pants singing this tune. Bill where are you?........
"Yellen Will Actually Have To Increase QE"
Love your Moniker.
Wonder if reTARP or negTAPER are taken?
The Fed can never taper. The Fed cannot keep QE at this level. The Fed MUST continue to increase QE forever.
http://knowmadiclife.com/blog/2013/11/8/forget-tapering-the-fed-will-inc...
Of course there will always be moar printing right up until the time it fails to make the rich richer. This outcome was foreseen in 1913 when the Federal Reserve Act was passed. Dilute the public's savings to nothing while skimming interest on loans backed by nothing. That's the real mandate of the FED.
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