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The Surprising Death Of "Surprise"
"The period of peak liquidity will remain in place for the foreseeable future," suggest Brown Brothers Harriman in a recent note, and as Reuters reports, for all the fevered speculation about when the Federal Reserve will begin scaling back its monetary stimulus, market volatility has been taking a leisurely nap, suggesting investors see no major shocks on the horizon to derail their bets. "We're not trying to follow the twists and turns of the very short-term investment cycle," confirms one wealth manager who will only change his strategy if the Fed "dramatically changed," its policies. The market's apparent ignorance of the ebb and flow of data surprises - both positive and negative - is clear as it has virtually no bearing on short-term yields, which have remained at historic lows thanks to the trillions of dollars of liquidity and zero interest rates from the Fed. "Fear not the Fed," advises BofAML, as the Fed's $85 billion-a-month asset purchase program trumps everything.
Low market volatility is a sign markets expect no "taper" any time soon, or that they are steeled for a reduction in the pace of the Fed's bond-buying if it comes.
The sting of the taper has been gradually sucked out of markets since the Fed's surprise decision not to start withdrawing stimulus in September.
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But the Fed's $85 billion-a-month asset purchase program trumps everything, and as long as the liquidity taps are open, the economic data will only have a real impact on markets if it changes the Fed's thinking.
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The following chart shows that since mid-2011, the correlation between U.S. economic surprises and two-year Treasury yields has completely broken down:
The ebb and flow of data surprises - both positive and negative - has had virtually no bearing on yields, which have remained at historic lows thanks to the trillions of dollars of liquidity and zero interest rates from the Fed.
But it is not just interest rate volatility that have succumbed to the Fed's heavy and visible finger (and thumb)...
So there it is - no news is bad news ever again... or as we have repeatedly noted "bad news is good news, and good news is great news." What could possibly go wrong?
As the Reuters headline proclaims: "Forget data and rhetoric, Fed liquidity's the only show in town."
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Taylor, do you have your BTC $600 hat ready?
$569 right now.
If you have gains (which is ANYONE who has bought it prior to now), I would highly recommend a little "tapering" of your own. At least get your own cost out so you're only playing with house money.
$575 10 minutes later...
Watched the subsequent drop to $538 in real-time..
That shit moves fast!
You just want a dip! You want to BTFD!!! Caught you! Now, go to http://freebitco.in/?r=25727 and get some for free! Did you catch me!?@#
Taylor ! LOL
think you may have cut too close today, make sure to pick up some tulips on the way home this week....as a reminder
Our collective behavior makes it easy to see how we got here, and easy to see how we have no way out.
And just for some colorful downarrows, I would suggest that BTC mania is a glaring indicator and reminder of both.
Sweet- always nice to see the top- when everyone is absolutely, positively sure that nothing can go wrong.....
This liquidity will disappear as soon as the Chinese repatriot to cover their bullshit real estate bubble- Ben will be sitting on his hands, cursing why he didn't get out a month earlier......
I'm guessing you were around for the last two blow-off tops. Does feel a bit similar, doesn't it?
Everyone = < 1% of the population now? Yeah, that's a real signal there bro.
The party will go on until everyone, including the shoe shine boy is a trillionare
Is that when everyone, including the shoe shine boy, gets their newly minted trillion dollar platinum coin from the US Mint?
"...since mid-2011, the correlation between U.S. economic surprises and two-year Treasury yields has completely broken down"
This couldn't possibly have anything to do with the beginning of QEternity, right?
More accurately, it is death of markets.
At least, the Bitcoin market is alive and kicking And it is a big FU to the Fed.
Take advantage and convert the ponzi into true forms of capital.
It's Wall Street's game, not those who are nimble enough to find alternatives.
Wall Street has become the punchline of every joke.
QE and weakening of the dollar will not end in my lifetime. Watch for all assets to rise, some faster then others. I'm waiting for food, gas, etc to soar ag ain. Health insurance, airfare, etc are still soaring.
The undervlaued assets (like PMs) will make a robust come back.
Overvalued assets (like stocks and houses) will most likely see a correction.
BRING DOWN THE GOVERNMENT. http://m.youtube.com/#/results?q=no%20surprises%20radiohead&sm=1
Bubble part deux, surprise!
S&P 666 is real valuation you dumb monkeys.
Jump in the pool if you can avoid the piranha's!
Ooh! They have sharp teeth!
If you're not sure when the blood is in the water and the swarm of piranha's is coming then STAY OUT OF THE WATER!!!
As much as "NoDebt" and I disagree? I have to take his opinion.
On the issue of surprising death of surprise here is an exposé by ZH's arch enemy : Krugman.
All about secular stagnation (barbarous expression) and PERMANENT BUBBLES economy, as exposed by his alter ego Larry Summers
http://krugman.blogs.nytimes.com/2013/11/16/secular-stagnation-coalmines...
Chew on that if you want indigestion !
Anyways, with Krugman its surprise avec surprise. What else in this crazy world?
"Fear not the Fed," advises BofAML, as the Fed's $85 billion-a-month asset purchase program trumps everything.
"Forget data and rhetoric, Fed liquidity's the only show in town."
Until it isn't, which could be sooner than people think, amid complacent thinking that the FED is really in charge.