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Dovish Lockhart's Hawkish DecTaper Comments Stymie Stocks
It was all going according to plan. POMO lifted the S&P 500 instantly 7 points at 1015ET back to unchanged and the mainstream media could discuss the fact that stocks are "off the lows." Then (admittedly non-voting member) uber-dove Dennis Lockhart hit the wires with some oddly hawkish commentary:
- *LOCKHART SAYS TAPERING 'COULD VERY WELL TAKE PLACE' NEXT MONTH
- *LOCKHART SAYS QE NOT MEANT TO BE 'PERMANENT FIXTURE' OF POLICY
Which sent stocks to the lows of the day. We are sure, of course, that these remarks will be walked back by the next Fed speaker but for now, it is clear the market remains entirely headline (and Fed) driven.
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What happened to "we will not monetize this debt"? It became "this is not a permanent fixture of policy". Except, of course, that 80% of the Fed's balance sheet now can be considered "temporary", if one were to listen to the Fed.
Well, technically nothing is permanent.
Funny, the discussion is about will the Fed taper/un-taper/re-taper/dis-taper...but they hold less than half the T debt "foreigners" now hold. In a rational world, one would assume that the foreigners would be the first to taper and begin "normalizing"??? Yet, somehow this ridiculous miopic discussion is a singular discussion of what the $2.5 T Fed will do irrespective of the $5 T foreigners will do...
Some background below...
1- SS surplus has ceased and this was for a long period helping to soak up excess treasury debt...the early version of QE? The non-marketable debt has hardly grown while nearly all debt growth is in "marketable debt" ($5 T to $12 T)
2- this marketable debt has been soaked up primarily by two sources...Fed, $2.5 Trillion (Fed had primarily Bills in '08 but dumped all Bills and purchased solely Notes/Bonds) and Foreigers, $3.5 Trillion. When looking at the increase in foreign countries ownership, many have like the Fed spectacularly increased their T debt ownership since '08...but seems very few discuss this Foreign rate of increase as wildly unsustainable...
Fed increased Treasury holdings by 300+% from '08...
China by 120% since '07 ($476 B to $1.2 T)
Japan by 100% since '07 ($620 B to $1.1 T)
Belgium by 800% ($16 B to $133 B)
Norway by 1200% since '06 ($5 B to $68 B)
Brazil by 800% since '09 ($33B to $245 B)
Russia by 3000% since '06 ($5 B to $163 B)
UK by 100% since '09 ($57 B to $127 B)
Switzerland by 400% since '08 ($45 B $170 B)
Ireland by 600% ($16 B to $90 B)...and the same true for so many more countries while nearly none were sellers???
Only major that hasn't spectacularly increased T ownership...Germany...$60 B then and $60 B now.
All these countries massive increases in ownership of a debt instrument yielding a negative return is maybe just as big a story as the Fed's increase. And done w/out negatively impacting the dollar. How would these countries ever "normalize" while the Fed tapered or actually shrank it's balance sheet (ha ha). No, these are all one way hyperbolic movements and there is no exit or going back...these cannot be undone w/out an interest rate super spike to destroy the whole ponzi....(for instance).
Lockhart's a fucking liar and needs to be punted right in the pills for treating everyone like friggin morons.... who the fuck do these clowns think they are??? They serve and exist at the pleasure everyone elses' patience.
Some of these Fed jackasses have to come out with taper talk on occasion. If not, there is no stage set for 'potential taper' precious metal slams. They just take turns on the taper/no taper talk BS.
http://www.marketwatch.com/story/feds-lockhart-dont-rule-out-oct-for-taper-2013-08-06
Same shit back in August. Bastard.
I refer you to an old comic gag in the Charles Schultz strip Peanuts. In that strip the protagonist Charlie Brown would, full of hope, prepare to kick a foot ball held by the antagonist Lucy....you know about that?....well then this shit is not new is it?
Now Yellin holds for Bennie.
He is the only reason why the market takes a pause.
Hard to fight the fed actions.
It's a good thing I'm long metals :~
Tyler, since you are nuking people like francis sawyer maybe you could do us all a favor and start getting rid of these gold and silver trolls?
If we get a taper at all, it will only be 5 Billion or so. Then Ol' Yellen will ramp up the printing to 150 Bil a month.
It will go on, in ever increasing amounts, until the system explodes
How long until they hold every last piece of MBS garbage?
That's not likely in the cards.
This printing is possible only to the extent it replaces money in the system that disappears due to the ongoing default of mortgage trillions all over the world. Somewhat clearly the rate of defaults that cause money to disappear is roughly $1 Trillion per year, which is the amount offset by the printing.
Printing more than that would instantly crash the dollar, and so they don't print more than that. Printing less is a bit of hopium that the defaults are slowing down, which is clearly belied by the re-collapse of housing underway now.
The can't do a taper of any significance until after Christmas unless they've totally lost their minds. Causing a crash or major downtick around the holidays will cause some serious societal problems and it could blow up in their faces big time in a 'let them eat cake' sort of way. Best scenario is something like 5B initial taper on MBS securities just to pyschologically prepare the junkie for the there ain't enough junk left to keep them medicated at this level much longer.
Agree completely. The sunshine and skittle shitting unicorns needs to keep going through the shopping season. Consumers are already on edge.
I was on edge until I got my 2014 Boater Girl calendar.
http://www.offshoreonly.com/articles/boater-girl-of-the-month/weve-crown...
All better now.
Over.
And she totes a machine gun...sigh
Only reason they make it drop is to blame poor sales on the drop to cover up the fact they've been lying the whole time. If they can't cook the sales numbers then they need cover to explain why they suck this year and to keep up the meme that the economy is directly tied to the health of the stock market.
Do Dalio's comments, and now the interesting Op-Ed Mea Culpa Huszar piece, have FED rattled?
The vocal critique and warnings are growing into a chorus.
Is this all coordinated? Tin foil hat time, peeps.
Yes, that means you probably won't make 400% in a car company that doesn't make hardly any cars, in a matter of months.
But don't despair. At least you won't lose 400% .
Oh, wait, margin debt is where?
I think he's just messin' wid us.
Taper in December?? ...don't think that they'd really go out & kill Santa, and all of the goodies that Xmas brings about!?!? TAPER IS OFF !!!
Let's be honest. Even Labor Day was too late to save Santa this year.
Santa will bring Food Stamps. Few people with money will increase their Christmas spending over 2012 with ObamaCare confusion. The only hope for Christmas is a significant number of people who purchased healthcare in 2013 decide NOT to purchase in 2014 and party like hell this Christmas because tomorrow they maybe dead. People who purchase their own insurance are getting significant premium increases that will decrease their discretionary spending in 2014. 2nd, anyone with corporate insurance will be a fool to expect salary increases in 2014.
On top of all this, the main street economy SUCKS and Christmas 2013 is going to hurt Main Street even more.
Look at all the gas money they're in pocket
Gonna be the best Christmas evah.
Change in per capita real purchases will be zero or negative in 2013 vs. 2012. Make your prediction....
BAH HUMBUG! Taper Onnnnn!!!
It' doesn't matter anyway because the Federal Reserve has lost control of the bond market.
POMO & taper comments didn't cause the pop & drop on above chart.
It was a mid-session EARNINGS beat and a mid-session EARNINGS miss that moved the market.
My kingdom for a leash!
It amazes me that these guys go off half cocked with speculation that causes trillions of dollars to flow. Do they have a plan? I believe they do and therefore these random comments are likely scripted....otherwise these people are all numbnuts with no plan ...and frighteningly...running the show.
Pulling the strings. The FED can shit in its hand and the wall street assholes and CNBC shills will eat it up, corn and all. They must think its hilarious how the entire "market" can be manipulated with a few meaningless words.
Oh it may as well be permanent alright. They will be a token taper but as soon as the market heads down it will return with full force but that was the plan all day. See then they can pretend "This is just part of the normal business cycle..see how wonderful the recovery has been since 2008". When the Bread & Twerkuses citizens figure it out it will be entirely too late but that could be next year or next decade but it closing in.
Inflation is raging in consumer goods and they can pretend all they would like with funny stastics that the job market is improving..not only is it not improving but degarding as it has been for years...these services speciality jobs are all well and good but they are the TRICKLE DOWN and that is all...it is nothing sustainable such as manufacturing..now the I.T. jobs are outsourced..
This game is over..
BULLSHIT.............. No taper ever, come on Lockhart the FED's credibility is lonnnggg gone............
Talk of taper is nothing more than TALK of taper. Taper ain't ever gonna happen. Not no way, not know how.
just being the most transparent ever.... duh when every fed memeber has a voice one of them has to get it right.
LOL, TAPER .. haha, man, apparently it never gets old. The market participants are trained like dogs.
Just a ruse to get Yellen through confirmation process
These non voting members get to say whatever they want and it is absolutely fucking meaningless. Zero Hedge should post a history of the hawkish comments made by members of the fed and then ask itself why they pay any attention whatsoever to hawkish comments.
The fact that these idiots are deciding when it might be a good idea to choose to nuke the finanical system and the economy is a pretty good indicator of why the Fed must be disbanded. What he is doing is like Obama saying he very well could nuke Russia next month. These guys need to shut their idiot mouths and stop threatening the world with a US debt default and meltdown.
*LOCKHART SAYS TAPERING 'COULD VERY WELL TAKE PLACE' NEXT MONTH
Sorry Mr Lockhart, it is Santa next month! Tapering is just bullshit we all believe in Santa rather than you courrpt liars!
They should pay for the QE from their own pockets