This page has been archived and commenting is disabled.
Fed "Tightens", Tapers $10 Billion - Full Redline
Despite the world of mainstream media pundits proclaiming the US is recovering nicely and that a taper is priced in (and the warning that the 5Y auction gave this morning that it's not), markets are already reacting violently to the Fed's decision to announce a small 'taper' (and more dovish forward guidance)...
- *FED TAPERS QE TO $75 BLN MONTHLY PACE, STARTING IN JANUARY
- *FED SAYS `FURTHER MEASURED STEPS' POSSIBLE ON TAPERING
- *FED: EXCEPTIONALLY LOW RATES UNTIL JOBLESS FALLS WELL PAST 6.5%
We now leave it to Ben and his final press conference to explain his decision... and, of course, make sure everyone remembers "QE is for Main Street", 'tapering is not tightening' (despite Jim Bullard telling us it is), and just how effective 'forward guidance' is.
Pre-FOMC: S&P Fut 1771 (spiked pre-FOMC), 5Y 1.55%, 10Y 2.875%, VIX 16.5%, Gold $1236 (which was spiking pre-FOMC), EUR 1.376
As a reminder, here are the 4 reasons why the Fed was cornered into tapering... as we have noted numerous times before; the "taper" is all about economic cover for a forced move the Fed has to make:
1. Deficits are shrinking and the Fed has less and less room for its buying
2. Under the surface, various non-mainstream technicalities are breaking in the markets due to the size of the Fed's position (repo markets, bond specialness, and fail-to-delivers among them).
3. Sentiment is critical; if the public starts to believe (as Kyle Bass warned) that the central bank is monetizing the government's debt (which it clearly is), then the game accelerates away from them very quickly - and we suspect they fear we are close to that tipping point
4. The rest of the world is not happy. As Canada just noted, the US monetary policy will be discussed at the G-20
Simply put, they were cornered and needed to Taper sooner rather later...
and as Jim Bullard previously noted,
“Financial market reaction to the June and September FOMC meetings provides sharp evidence that changes in the expected pace of asset purchases have conventional monetary policy effects.
Using the pace of purchases as the policy instrument is just as effective as normal monetary policy actions would be in normal times”
Or - in other words:
Tapering Is Tightening
And as BAML noted previously, forward guidance is ineffective as,
...policy makers are finding it harder to convince markets that central bankers have more insight into the future course of the economy and policy than they actually do. Meanwhile, markets are learning that it can be painful to rely too heavily on forward guidance when the risk/reward of being long fixed income is asymmetrical when close to the zero lower bound.
Full Statement redline below:
- 37940 reads
- Printer-friendly version
- Send to friend
- advertisements -



Gold and Silver Popped before, now dropping. Where does it finish?
Live Gold: http://www.pmbull.com/gold-price/
Live Silver: http://www.pmbull.com/silver-price/
Those pussies!
And to all of you "no taper" mooks....
Told you so!!
Bullish.
Bernanke the legacy man.
Cover for the bernake so he can say he left on "good terms"
Only in a crazy and bizarre world can one cut spending by 10 billion yet still spend 75 BILLION a month and people think that is fiscally prudent and/or conservative?
It is still 75 billion a month!!
Exactly, but who knows what the printing really is or where it is going. Please, show me an audit, oh, that's right, the Fed has never been audited...
More importantly, existing debt still needs to be serviced and the future liabilities/budget still needs to be funded...
tick tock motherfuckers...
Doest he $10bil taper come from MBS, Treasuries, or both?
If both, in what %?
Bah. I'll believe it when I see it. Let's be clear: The Fed said they would START tapering in January. When in January? The 31st? So maybe more than a month away? A lot can happen in 6 weeks. This is most definitely not "Taper on".
It's "We promise to go 'taper on' sometime in the next 6 weeks. Between now and that date we will have another meeting... with a new and more dovish Fed chief".
IMHO there are a lot of people here swallowing this bs who should know better.
We all know they have to keep their foot in the gas... so, front running causes diminishing returns at an accelerated pace. The cure to prolonging the status quo? Throw off the front runners every now and again... In other words, introduce ambiguity to the mix to keep the market honest. This is all that is happening. In other words, even if they taper today, they may not tomorrow and the expectation is that they'll have to increase the printing at some future date... again, timing decisions are fool's errands.
Absolutely. This is all a misdirection. At $75 B/month, the Fed is still more than monetizing enough to soak up all of the bonds needed to float the federal govt's (non-GAAP) operating deficit. No one is going to even be able to sort things out until after the Super Bowl anyway because the govt is going to release skewed holiday season retail sales, then obfuscate further with the January seasonal lump-sum adjustment to employment numbers.
Wake me up when the bond-buying drops below the monthly pace of deficit generation AND the 10Y yield stops rising. Until then, this is nothing but Swan Song for Bentastic.
that's because the press releases and press conferences are targeted to ensure understanding by all audiences, including people who can't work with decimal points.
Scottie.. Full Reverse!!!!!
“Cappen.. I’m givin‘ her all that we got..
I canna’ do no moar!”
Dectaper - ducttaper. There, I fixed it.
I think what the FED is trying to achieve is simply to try to train the people to believe that the amount of QE is the new FED funds rate. That is, from now on, forget about the interest rate, now the central thing about their policy is the monthly rate of QE, which is to be manipulated up and down. And the mere assertion of "power" - that this tool of theirs is almighty and super influential over everything monetary - is their goal. What the actual effect on the economy is is not that important for them. It's about who is wearing the pants in the family.
Enough with trying to read sick people's minds now. At the end of the day it's all just a farce that does not deserve too much attention.
Bitcoin is down, so free payouts of bitcoins are up at http://freebitco.in/?r=25727
5 in each.
Isn't it amazing that all these figures are round numbers? That the economy does not 'need' $74.3 b/month, but exactly $75b?
If I didn't know better... I'd say it's almost as if they're plucking these figures out of their collective ass.
All they need is a lousy $ 73,994,229,133 dollars and 39 cents per month.. I did the math.
That is because, apparently, you haven't seen that other South Park scene... http://www.youtube.com/watch?v=5Z6BNpSzMK0&t=14m54s
Tapering you say? Let's buy more treasuries right now! TLT+0.85%
Hell yes! Thank you Fed for leaving some of that paper for the rest of us!
So do any of you posses the ability to find out what the Fed is saying and then what the Fed is actually doing? No. Remember those secret bailouts that were only disclosed two years after the fact? Maybe you only care about the Fed because you want your guy to takeover and unleash some new scam upon the world? You still love those little green rectangles but thankfully they will be reduced to shit-paper by the time your guy gets to have a go at it.
I AM TWITTER FEED HEAR ME ROAR!
"fonestar phone-star 69 call back broker say SELL BITCHCON ALL THE WAY TO ZERO dumbass"
- as seen on http://www.engrish.com/
What does any of this information have to do with Bitcoin? That rascal Ben did not mention Bitcoin once.
//// 1st Bitcoin mention on this thread/////
Where did I mention Bitcoin? I am not talking about Bitcoin, I am talking about fake libertarians who believe their funny-money is going to rise from the grave.
@fonestar
Do you enjoy being a dick all of the time? How are those BTC's working out for you big guy?
They're working out great!
(and I am a permadick)
longer than four hours is cause for concern
This is so Bernanke can say "everything was going so well when I was leaving that we started to taper". It's just him trying to set up his own legacy as not being the failure it is.
5 bil each
"Doest he $10bil taper come from MBS, Treasuries, or both?
If both, in what %?"
the question we know the answer to, that they will never answer.
Why are so many people ignorant of the fact that the Federal Reserve has indeed been audited back in 2011? Here's the audit.
That was only for the "loans outstanding" and not the entire balance sheet. Of course all those financial firms paid back those loans, you knew they would. Troll.
It doesn't matter. One part of the Federal Reserve being audited does not equate to "The Fed has never been audited" You could've said the Federal Reserve has never had a full audit and then been technically correct (as far as we know).
It says right in the audit that the loans were paid back, that isn't the issue. The shadier part of the audit (imo) was that some banks required trillion dollar emergency loans to function. Without a central bank to rely on our entire financial system would've collapsed.
Yes it would be even more interesting to see a full audit but it's likely the majority of people viewing it would not understand it anyways. I may be a jerk but I'm certainly not a troll and what's up with people using all kinds of words incorrectly? I hear people use the word tool inaccurately so, so, so often.
So, for the last twelve months ending Jan 2014, QE would total 1.01 trillion versus 1.02 trillion....
Got it!
Just one question: If job growth this year is less than last year, how is that a strengthening labor market?
Good news though. The Congress will pass a tightened budget that will whack out a whole 25billion dollars......over.....ten years. </sarcasm>
Schiff explaining how he is still correct in 3...2...
Still buying 75 billion, so technically 75/85=0.88 x 100 = 88%, so Peter is still 88% correct.
What do you think the fed will do when the existing debt cannot be serviced or the future liabilities/budget cannot be funded? Are you going to buy all that government paper?
88% of the time hes right every time
Bernanke you little bitch, you better get down there in the basement with Yellin and start manning those printing presses like a couple of six year olds in a Seoul sweat shop, you greased up pivot man at the bankster circle jerk asshole!!!!!
Now you can go out saying your job was done and everything was coming up roses when you left, Bernanke, you worthless piece of maggot shit.
Charlatan Schiff has made a huge deal about being right on 'no taper.'
Just like other dumbasses (cough jim sinclair) you can go a long way on a 50/50 call.. but being wrong is inevitable.
Not that any of the dumbasses who follow schiff care.
http://www.youtube.com/watch?v=Tak9ODlBJgM
In investing commentary the only thing that really matters is getting timing.
You are calling Schiff a "dumbass"!! LOL. It's never been about cutting it by $10 billion here or there. His stated position is nuanced - that the Fed won't taper or, if they do taper, it will be just a slight reduction but they'll never stop QE. He's still right.
Forget it. Its James Cole. He interprets his universe on whether or not Schiff was right or wrong according to what he thinks Schiff said about tapering.
Nuanced?? The man is certainly not nuanced.
Yeah, sure, he's given himself an out on tapering. But he's been playing up the 'no taper' for a while now, his followers on here going off at Tyler because Tylers argument has said an inevitable taper and therefore Tyler has been 'wrong.'
Nuanced = Tyler's argument
Cartoon for children = Schiff
You are ridiculous. He has been right about QE so far and yes he said they could cut a few purchases but will eventually have to do moar. So your posts have no value to them.
This is more like the deficit/debt debate in my mind. Reducing the deficit does not reduce debt. Ending the taper includes reversing it's actions and getting back to 0.
So the Fed tapered by 10 billion a month. So at the end of Jan 2014, the Fed will have 1.265 trillion in QE versus 1.275 trillion if they had not?
I just want to know when they are gonna repaper the markets and withdraw that 1.265 trillion(and growing) amount?
My guess is never.
I am one of those dumbasses that predicted that the Fed will not taper, as in never. So clearly I was wrong about that. For now.
But I still think that violent market reactions to this tapering will make them pick up QE in full force again and even digitalise ever more dollars on a monthly basis.
Until something finally gives.
the game isnt over. Schiff may still be proven entirely right....
Not much of a taper...one fart and the Fedcoat ass shoots some more!
Schiff did say either no taper or they would do a small taper and then in a few months when SHTF they will shift QE to over $100B.
Lets see if he's right
In the grand scheme of things, Peter Schiff is 'right'.
Plan accordingly.
Schiff has given himself the out, that if the fed does taper, which he doesn't think it will, that it will be forced to untaper quickly. If the FED is buying 75 billion or less a year from now, then I'd say Schiff was wrong.
What if they are buying 50 billion a month a year from now and have extended the 0% pledge until Elysium?
Get it? Everyone is missing what is really going on here.
Exactly. The concept of a "taper" means that it starts wide and continually narrows, like a piece of shit, which is the appropriate analogy.
The Tapering Song: http://www.youtube.com/watch?v=sor9GzivGbk
Those bitches are tapering slower than Bernanke's hairline
The markets know what's going on. Have a look [if you're not already]. You are spot on Fonz.
I'm going to assume they untapered yesterday, and are likely sending out at least 20 billion a month via some other conduit to help pacify any "negative" reactions.
THe key to remember is that the Fed has no out.
Schiff explaining how he is still correct in 3...2...
James_Cole about to become a complete douche in 3... 2... hold, on wait a minute, he's always a complete douche.
Yellen will unTaper Bernake's headfake while giving him head on his way out.
Bernanke will be remembered as a "hawk."
Krugman already unfriended him on farcebook.
You would call 10 Billion less = "Tightening"??
- remarkably silly statement, Mister!
Look what's happening in VIX, all slamdown and short covering.
SSDD..
Tapering is seen as positive
Is it? Very interesting if true...and it may very well be. What's the market reaction again?
"Pussies" don't taper?
Say it isn't so.
I can't believe that the markets actually expected a larger taper. Who are they listening to?
Listening? No, no, no. These people are manipulating.
I gotta say, it's quite the PR blitz.
I'm callin bearish. Let's see how the markets like this. Soon as you mention the T word wall street starts having palpatations. And from this, it looks like stroke material.
They are going to find a reason to reintroduce that 10 bill.
Still pumping 75B a month.
This is not a taper, this is a headfake, an your falling for it..
they taper and so stocks roar, yields roar and gold roars, tht makes sense
The markets actually expected a larger taper. Why? What are we missing? I find it hard to believe that I'm smarter than the markets, because I certainly never expected a big cut in Fed purchases.
...implying the economy is healthy
Exactly. Yellen will up QE considerably by the June 2014 meeting. Could be as early as the March meeting. The ugly, fat lady WILL sing.
i thought yellen was a man?
so did his wife!
these 3 comments taken in context - hilarious.
nice touch hooligan ;-)
but, you guys are some damn childish!
I've heard the FED's job is to take the punch bowl away just as the party gets rockin'.
Well, Ben just dipped his fingers, flicked it on your coat, and said "Whatya gonna do about that?!!"
No Ben No. We said the market was PUNCH DRUNK. What are you doing by the punch bowl?
I thought ol' yellen was the dog they took out back and shot to put it out of it's misery.
you thought wrong
Official QE: -10 Billion
Secret QE: +20 Billion
10B?
Big Fuckin' Deal
I thought it was all about the flow, making even a small taper a disaster?
Tapers are now fabricated/controlled "disasters". It's still is all about flow, from suckers.
Why would you ever believe it will actually happen? Somewhere, someone will be taking up the slack.
You can't even buy a guy on the Forbes list for that price
They use the old push/pull plunger style butter churn, you can make some money anticipating this.
I've had one set trade trigger today already with one more on the verge
I shorted some trades for 90 days 2 weeks ago. I think there will be a another controlled correction coming, lets see.
I tried. I failed. I'm out.
Being outside of this is not a failure. If you have some cash you can play again after the taper correction.
Uh uh. And watch what happens next and what the bowl cut will be "forced" to do at the next FOMC...
Thank you Ben. Now go away and retire
TICKER TAPER PARADE - http://hedge.ly/18PkHkw
The Kev' army is bonering SPY to make the taper look like good news.
Gold and Silver is going to get absolutely MONKEY HAMMERED late today and ALL DAY tomorrow. While stocks (the real economy) inflates away!
The gold and silver charts look more like a seismograph than a trading chart. The bots had no idea how to handle this. Deflation, inflation....what do we do boss? Central planning at its finest.
Yeah I was getting motion sickness watching the gold ticker after the minutes were published. In "theory" it should end lower but who am I to know. I don't work at GS so clearly I have no clue in how the manipulation is planned.
I'm tapering too. This afternoon I'll only have 6 martini's and not my usual 7. That should help preserve my liver.
/s
This is how it works...
http://www.youtube.com/watch?v=wz-PtEJEaqY
Southpark chicken with its head cut off running around a board spewing blood-this helps the federal reserve members make their decisions.
10 yr gonna fly
How high's the water, ma? 2.871 and risin'!
What's with the 10yr spike to 2.93 and then immediately back below pre-FOMC yield levels ? Guess they had the gun loaded for tonight..
Nope.
Yield is FALLING and if it breaks down much below 2.84% (right about now), then the uptrend in yields that began in late Oct. will be over. This, combined with a failure to take out the Aug/Sep high of 2.99% means that we could be looking at a notable DROP in yields over the next 30-60 days.
Cuz yields always drop when the bond buyer of last resort takes a smoke break?
BTW, I'm not discounting your forecast. It's just really strange to see it in light of *duh, duh duh* "The Taper."
Bizarro World, FTMFW!
LOL. The forward guidance. I knew the taper would happen sometime.
It's not tightening!!!!!!!!!!!!
This shit was priced in
@Hippocratic Oaf
Short selling targets hit, then the short covering begins.
That's what a good donky punch is for
now they can stay at 75 bil for another year.
It's called the knockout game these days
@fonz
(If we believe them) then $10B less purchases a month is a definite taper. Tiny, but taper nonetheless.
I disagree my man. They increased QE just now. with their forward guidance of keeping interest rates at 0% until my balls drag on the floor when I walk, they just guaranteed they will need to buy moar.
classic "look at this hand" move. typical central planning bullshit mindfuck.
@fonz
Will they re-up QE in the future? There's a good chance of that. But, at some point, there will be nothing for them to buy. The Fed owns over 30% of current Treasury issuance as it is. Their "ledgerdemain" works because hedgies and fundies are trained to believe it. This is a desparate move and if it doesn't work and they feel pressured to increase QE, it's lifeboats time.
whether they re up it or not is hard to say. What they did do was guarantee they will be buying more than forecasted because this will continue for freaking ever. See my comment on the Hilsenrath thread. I think I explained myself better there.
Ben's "reputational cover story" has been initiated.
Start the 6 month clock to see if this sticks.
Call me surprised. Let's see where the 10 year goes. Gold Silver not falling as much as I thought.
Yeah exactly. How bonds react is the real game here. If the rates play against the dysfunctional CONgress spend until you drop party that taper won't be long lasting if they can't control interest rates using a different tool of monetary polcy. Problem really is the FED has been outed that they have no other tools and as such they've been approaching everying as someone who has only a hammer in their toolbox and therefore see every problem as a nail. This is just damage control now until they can use political considerations aka we need moar government debt to save the children since the economy is on life support right now.
Don't people realize this is just an accounting gimmick for publicity. That 10B is going to be diverted elsewhere when all is said and done probably through the shadow banking system to prop up the asset bubbles like they do now with the housing market and self-securitized loans to hedge funds to create artificial demand which in turn inflates prices.
Only 5B of this is in Treasuries.
It is the interest rates in relation to making the existing debt load serviceable that will be the ulitmate consideration for if tapering continues or not as long as CONgress keeps spending with no regards for deficits and budgets.
Hammering a nail with less intensity than before doesn't change the fact they still only have a hammer in toolbox and still view every problem as a nail. Once the oh shit moment sinks in with enough people that the FED is nothing more than a one trick pony when it comes to monetary policy and in turn the other Central Banks following the same tact then the real fun starts.
The end game just got closer
taper worm!
Markets up, gold down. This was the opportunity to show they are 'ahead of the curve' - by only giving $75b a month to obscenely rich asset flippers. Happy days.
What a fucking freak show.
The Beard who cried Wolf !!!
The Beard who cried Wolf !!!
This taper is like a mosquito biting an elephants ass....
bubbles bullish 4 lyfe
The Fed has said: economic boom. And if you overpaid or invested in the wrong thing, you lose out. Look for value, look for up and coming, quit speculating and invest.
I am surprised. We'll keep an eye on the 10-year.
Why do I have the feeling that we don't have the entire story? There is fine print and then there is what happens behind the curtain...when in doubt, pray and wait!
Possible this is to gauge the psychological effects with the out being Yellen as the captain of the ship come January if things don't go as their 'models' said it should.
Their entire front office operation is psychological, as it is nothing but a con-game.
The Token Taper. Next up: The Un-Taper.
Bernanke wanted to taper
But it was a difficult caper
To salvage his legacy
He continued his recipe
As an American public raper
Hahahahahahahahahahahahahahahahahahahahaha- what a joke this all is.
Well done komrad bernanke. You did your one "tightening" measure after 7 years of QE and rate decreases.
Token Tapir.
Tokin' Taper.
EDIT: I see you beat me to it...
Yes! Rahrahrah! My day in the sun will come ... one of these days ... one day ... the day is gonna come!
Yes!!! Gold is going to be on sale. Yes!!!
This was the September Announcement in reverse.
What is happening to the Ten Year???
LOL.
And Real Estate Contracts were at a 15 Year Low. Oh man...This is great.
Come on Derivatives meltdown. I guess the is Bernanke's way of saying "Fuck you" to Obama.
LMAO. Collapse baby collapse.
oh yeah... that $10 billion will make a big difference?!? $1.2 billion out of over $1 trillion
LOL "reacting violently" ya ok
Hey, Scrooge. It's the thought that counts.
/snarkity-snark
Well past 6.5% ? In whose lifetime?
particiaption rate only has to continue its down trend by 1 or 2% and voila! 6.5% u/e