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Goodbye Greenspan/Bernanke Put, Welcome Bernanke/Yellen Collar

Tyler Durden's picture


"Remember the Greenspan/Bernanke put?" BNP's Julia Coronoado asks, well "welcome to the Bernanke/Yellen collar." As some expected, Coronada notes that there was substantial discussion in the December FOMC minutes about concerns about financial stability stemming from QE, and the role it plays alongside progress on their dual mandates in making monetary policy decisions.

As we noted, a number of participants stated concerns over small-cap multiples and cov-lite loans - and that shift to comprehending the costs of QE - as opposed to simply the 'apparent' benefits implies a regime change in the reaction function from a put under the market to a collar around the market - capping what was, until this point, thought an endless upside by many.

Via BNP's Julia Coronado,

The staff conducted a survey of the 17 FOMC participants over the inter-meeting period on the marginal costs and benefits of QE. The results suggested that "a majority of participants judged that the marginal efficacy of purchases was likely declining as purchases continue."


Among their financial market concerns, "several participants commented on the rise in forward price-to earnings ratios for some small-cap stocks, the increased level of equity repurchases, or the rise in margin credit."


In general "participants were most concerned about the marginal costs of additional asset purchases...pointing out that a highly accommodative stance of monetary policy could provide an incentive for excessive risk taking" and that "the risks to financial stability could be somewhat larger in the case of asset purchases than in the case of interest rate policy".


The Committee is not so concerned that they are not patient and data dependent, but in December the data were going in the right direction and "many commented that progress [in the labor market] to date has been meaningful, and some expressed the view that the criterion of substantial improvement in the outlook was...likely to be met in the coming year if the economy evolved as expected."


The baseline case seems to be tapering in measured steps completing QE around year-end if growth is in the vicinity of 3%, hiring continues or accelerates, inflation doesn't decline further, and financial markets stay reasonably well behaved.

Simply put - the Fed will react to falling asset values that destabilize economy, "and" asset values that rise too far and too fast or are fueled by leverage that may put economy at risk.


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Thu, 01/09/2014 - 16:48 | Link to Comment Leonardo Fibonacci2
Leonardo Fibonacci2's picture

woof woof!!.......... ahhhh fuck you biatch!

Thu, 01/09/2014 - 16:53 | Link to Comment Soul Glow
Soul Glow's picture

Price fixing is so vogue.

Thu, 01/09/2014 - 16:54 | Link to Comment Manthong
Manthong's picture

Well, when the 10 year hits 4%, she will be wearing market cuffs.

I still think that’s a white Kevlar helmet she is wearing.

Thu, 01/09/2014 - 17:03 | Link to Comment knukles
knukles's picture

A private bank owned by the privately owned bankers responsible to nobody manipulating markets as they see fit for their own benefit.

Lordie, Lordie, Lordie, the time of the Anti-Christ has arrived.

Thu, 01/09/2014 - 17:12 | Link to Comment NotApplicable
NotApplicable's picture

"Financial Stability" = "One More Day of the Ponzi"

Thu, 01/09/2014 - 17:24 | Link to Comment nope-1004
nope-1004's picture

I don't get why anyone would "analyze" Fed minutes.  Anything that is given to the public is obviously a bunch of lies.  Why waste your time analyzing bullshit?

All you have to do is look at the evidence.  QE is forever until dollar demise.  There is no other way to foot the bill for the USG deficit and Treasury purchases.

This pig is going down eventually.

Thu, 01/09/2014 - 17:43 | Link to Comment flacon
flacon's picture

Well, they need to give a "little" QE - pump the markets, reduce QE - tank the markets, give a "lot" of QE - pump the markets, reduce QE - tank the markets, give "hyper QE" - markets to infinity. ...... ... and the oceans will turn to lemonade like the Soviets promised....

Thu, 01/09/2014 - 18:25 | Link to Comment EscapingProgress
EscapingProgress's picture

Salty lemonade...yucky.

Thu, 01/09/2014 - 18:33 | Link to Comment Panafrican Funk...
Panafrican Funktron Robot's picture

Meanwhile, Scotia Moccata just took a massive hit to their registered gold stocks today, a whopping 63K hit.  The grand total registered stocks for all Comex depositories is now down to a mere 416K ounces; priced at the current $1227/oz, that's about $510 mln in nominal registered stock left.  Consider:

Open interest:  389K contracts, representing 100 oz each.  That's 38,900K ounces.  There is exactly 1 registered oz for every 100 oz's of open interest.

Volume today:  163K contracts, representing 100 oz each.  That's 16,300K ounces.  There is exactly 2.6 registered oz. for every 100 oz's of volume traded.

Now here is something that will really cook your noodle:

Notice the severe lack of physical settlement notices since the close of last year.  This is an exceptionally long period of time.  I think the depositories here (esp. HSBC and JPM) must have "given word" that phys is no longer a settlement option.

Thu, 01/09/2014 - 20:02 | Link to Comment disabledvet
disabledvet's picture

the Queen Mum has now asked for her gold back too...

Thu, 01/09/2014 - 17:17 | Link to Comment TruthInSunshine
TruthInSunshine's picture

Cliff Notes version: Bernanke blew one HELLUVA bubble in just about every asset class (especially if current asset values are weighed against what their FMV should be) using 5 years of RADICAL central fiat bank interventionism, and he literally can't wait to get the hell out of the burning building, bitchez.

Thu, 01/09/2014 - 18:05 | Link to Comment Carpenter1
Carpenter1's picture


Thu, 01/09/2014 - 16:57 | Link to Comment yogibear
yogibear's picture

The new face of the Fed. The dogs are howling.

Thu, 01/09/2014 - 16:58 | Link to Comment frankTHE COIN
frankTHE COIN's picture

Bernanke Electric Shock Collars for a mere 3 Bitcoins.

Thu, 01/09/2014 - 17:07 | Link to Comment yogibear
yogibear's picture

Thought I heard Yellen bark.

Thu, 01/09/2014 - 18:20 | Link to Comment thunderkiss
thunderkiss's picture

Dear ZH, please please don't include pictures of her in stories about the Fed.  I can't stand that fucking haircut.

Thu, 01/09/2014 - 16:50 | Link to Comment Ham-bone
Ham-bone's picture

The Fed can never slow or stop QE...the Fed has created massive Treasury supply for which there will never be organic demand absent a mega departure from risk into bond "safety"...

The fact that "foreign" holdings of US Treasury bonds are a record $5.65 T of the $12 T public outstanding debt (vs. $2 T Fed holdings)  and foreigners are not selling off their holdings tells you they have been reassured QE is forever...otherwise they would soon be facing large losses as yields rose and bond prices other words, on a QE taper of it's buying, foreigners would front run the exit.

Hard to believe people (everybody) don't understand the Fed now *must* print forever debate, no QE tapers or QE wind exit from hyper-monetization.  End.  Stop.  Period.

Gold, silver, commodity prices falling in this situation are ludicrous as if I told you there would be fewer and fewer dollars chasing ever growing # of assets and this would cause the price to rise...we have an inverse where ever more infinite dollars are chasing fixed and growing scarcer resources causing the price to...fall. 

That this would be accepted and peddled by economists, professors, etc. to the people show it's clearly time for me to check into the Loony bin.  How deep into the propaganda state are we to observe something and accept it is exactly the opposite as our observation.

Thu, 01/09/2014 - 17:05 | Link to Comment knukles
knukles's picture

Ah, the Sophistry of Propaganda.

Thu, 01/09/2014 - 20:07 | Link to Comment disabledvet
disabledvet's picture

"say hello to the Law of Large Numbers." forget "the earth revolves around the sun"...this teenager understood mathematically that "Planet Earth was not only round friggin HUGE and MOVING." go ahead..stand in front of a Planet Mr. MIT guy..see what happens.

Thu, 01/09/2014 - 17:33 | Link to Comment wee-weed up
wee-weed up's picture



Yeah, some fools are hoping the Bernanke/Yellen collar...

Will turn into the Bernanke/Yellen chastity-belt!

Dream on...

Yellen will QE like a loose skanky nymphomaniac!

She has NO choice!

Thu, 01/09/2014 - 17:35 | Link to Comment Ham-bone
Ham-bone's picture

ahhhh...Janet as an insatiable nympho who really can't say no...that is hot!!!  I'll tuck that mental image away for later...

Thu, 01/09/2014 - 17:41 | Link to Comment Sean7k
Sean7k's picture

Stop that! No one should have mental images like that. Sick, sick,sick...

Thu, 01/09/2014 - 17:38 | Link to Comment Sean7k
Sean7k's picture

Here's one way to think of it:

If you blew a bubble in every asset class with more money and credit than can be imagined, until real value was completely obscured, could you not then manipulate each asset class according to your preferences? You could take air out of one balloon and transfer it to another. Without a pricing mechanism and without other markets to measure against (global economy), how would you know what anything was really worth?

Asset classes, in total real valuation, may be a FRACTION of the assumed values, allowing the CB's to manipulate all of them at will. It's only money and without an actual anchor to real collateral, wealth beomes a fantasy game defined by those with the power to dictate the terms.

The academicians are just entertainment. Genius huh?

Thu, 01/09/2014 - 17:47 | Link to Comment Ham-bone
Ham-bone's picture

I like it all except I don't think they can take down asset classes once the big bubble is pumped up due to record leverage and how it intertwines accross all they can only pump fast or pump faster to avoid the unleverage monster.

Thu, 01/09/2014 - 17:59 | Link to Comment Sean7k
Sean7k's picture

So, how do you know what the leverage is? Since they provide all the numbers. Even Comex warns it could all be a lie.

Thu, 01/09/2014 - 18:10 | Link to Comment Ham-bone
Ham-bone's picture

I believe the sources I like and disregard those that don't support my Merica!!!

Thu, 01/09/2014 - 18:45 | Link to Comment Sean7k
Sean7k's picture

Looks like you have it figured out. Congrats! Except that Yeller/ mental image thing.

Thu, 01/09/2014 - 16:51 | Link to Comment Cursive
Cursive's picture

They will be as successful at "fine tuning" the "market" as the Nixon or the Soviets were.

Thu, 01/09/2014 - 18:10 | Link to Comment Temporalist
Temporalist's picture

Hey if there ever was one guy you'd want to run the entire global economy it's that dude Yellen.

Thu, 01/09/2014 - 16:51 | Link to Comment Al Huxley
Al Huxley's picture

Why can't these fuckers just give me some fucking money?

Thu, 01/09/2014 - 16:51 | Link to Comment Major Major Major
Major Major Major's picture

The price is wrong, bitches!

Thu, 01/09/2014 - 16:52 | Link to Comment vote_libertaria...
vote_libertarian_party's picture

They are just NOW noticing a bubble risk from their actions.

Thu, 01/09/2014 - 17:07 | Link to Comment knukles
knukles's picture

Applying a Heisenberg type framework...



Q:  Is the glass half full or half empty?
A:  What glass?

Thu, 01/09/2014 - 17:23 | Link to Comment El Vaquero
El Vaquero's picture

I know it's half empty, but I have no idea where it went. 

Thu, 01/09/2014 - 17:37 | Link to Comment Colonel Klink
Colonel Klink's picture

In that same vein, the Fed is cooking all their math in an RV.

Thu, 01/09/2014 - 16:52 | Link to Comment NoWayJose
NoWayJose's picture

'The Fed will react to falling asset values that destablize the economy'????  How - they can't lower interest rates any more, and how much QE is enough without itself destablizing the economy????

Thu, 01/09/2014 - 16:54 | Link to Comment FieldingMellish
FieldingMellish's picture

Why is the Fed targeting asset prices? I thought its mandate was employment (FAIL!) and stable inflation (FAIL!)? Unless... that is not their real mandate...

Thu, 01/09/2014 - 17:03 | Link to Comment Cursive
Cursive's picture


Not "stable inflation," but "price stability."  Price stability is widely interpreted to include prices for commodity and asset prices.  I mean, it's all bullshit, but that's what they say and they are really disingenous about how they measure "inflation."

Thu, 01/09/2014 - 17:05 | Link to Comment Pareto
Pareto's picture

Its the new and improved Phillips curve!  Since nobody can actually demonstrate that the Phillips Curve actually exists or applies to any economy anywhere in the world - ever - why not make up a new one.  So, its now a 3 dimensional Phillips Curve, targeting the employment - inflation tradeoff, as well as asset prices!  Its a beautiful thing.  So long as "Its What They Do, Not What They Say" (Michael Salemi, 2008) - aka Don't fight the FED remains the mantra on Wall Street, they can pump POMO and use the change in asset prices as a measurement of a Kaldor/Hicks kind of tradeoff for both employment and inflation and never really have to worry about real results since in a Kaldor/Hicks paradigm, compensation (results) can remain hypothetical and thus, never need to actually materialize.  Like counting how many fairies can dance on the head of a pin.  Awesome.

Thu, 01/09/2014 - 21:46 | Link to Comment disabledvet
disabledvet's picture

the only thing scarier than Wall Street collapsing is Wall Street going to the Moon. "this can only be modeled in Washington DC" the risk is so great. (and i mean in the financial sense of the term...not actually going to the moon...which apparently can now be done as a commercial enterprise now actually. by two companies no that is totally private actually.) In other words the Oracle of Omaha says "there's only enough gold in the world to sit inside a swimming pool"...saying to me "your gold to debt ratio had better be rock solid on all fronts too." When you have a gold standard banks are VERY careful about taking on debt...wouldn't this make Governments happy? I sure would think it would make for happy politicians, yes? In other words "the program gets budgeted so at least we have an idea where the money goes" not because we actually have the money. Have we conjured up a simply beyond imagination equity rally only to at the same time create a "debt monster" too? makes absolute sense to me...but cash flow can't just be "conjured up" either. And you want the securities business inside the bank? What am I investing in again? An AIG...even today...or Met Life or Morgan Stanley could throw off hundreds of billions in free cash flow...but if all that "flow" gets sucked into the "vortex" (that was the term used in Europe) then basically we're right back at square one...namely a cash crunch. this does not strike me as theoretical either. probably just rambling again...

Thu, 01/09/2014 - 16:53 | Link to Comment Spungo
Spungo's picture

The name's Poochie D and I rock the telly. I'm half Joe Camel and a third Fonzarelli. I'm the kung fu hippie from gangsta city. I'm a rappin' surfer, you the fool I pity.

Thu, 01/09/2014 - 16:56 | Link to Comment 101 years and c...
101 years and counting's picture

fomc chair best job ever. instead of getting fired (or imprisoned for being so fucking stupid), you get to print money.  thats why yellen was picked.  no way she lives the entire 4 years.  and she'll get all the blame for the disaster ben created.  just die, you fucking cow.

Thu, 01/09/2014 - 16:57 | Link to Comment HUGE_Gamma
HUGE_Gamma's picture

Im impressed by the photoshop skillz

Thu, 01/09/2014 - 17:00 | Link to Comment tony wilson
tony wilson's picture

that dere yellen  jewish terror ist  fella is real ugly.

i appy poly gise upfront if he not a jewish fella.


and youse ajitaters dontes go callin me anti semenetick and a german nazi cos i tell i hated adoff hilter and he was a german nazi.

i mainly hated him cos he was half jewish.

Thu, 01/09/2014 - 16:58 | Link to Comment Dollar Bill Hiccup
Dollar Bill Hiccup's picture

But WEALTH EFFECT can never be bad!

Thu, 01/09/2014 - 17:30 | Link to Comment B.J. Worthy
B.J. Worthy's picture

It's only bad when Republicans are in charge, because trickle-down is TOTALLY not the same thing.

Thu, 01/09/2014 - 17:08 | Link to Comment knukles
knukles's picture

Last trickle down I had was about ten years ago.
Some time during my last drunk.

Thu, 01/09/2014 - 16:59 | Link to Comment Rainman
Rainman's picture

The Fed hasn't yet read the obituary ...Goldilocks is dead.

Thu, 01/09/2014 - 17:19 | Link to Comment Al Huxley
Al Huxley's picture

They know, but they're doing a 'Weekend at Bernie's' thing with her.

Thu, 01/09/2014 - 17:00 | Link to Comment thetruthseeker
thetruthseeker's picture

Further proof that there is no stock market, only a rigged numbers machine that these fucking parasites of humanity control.  They have become so interventionist that it is almost as if you will never have another bear market.  That is, until you have the bear market to end all bear markets. Bernanke, Yellen, Evans, etc. should all be sent to Gitmo for their financial crimes against humanity. 

Ron Paul was/is right and Paul Krugman was/is wrong.  I finally had to quit reading Ritholtz because he kept posting Krugman articles and other pure Statist garbage.  It is a shame because I think Ritholtz is a sharp guy.  However, I can only listen to so much propaganda and obvious statistm wrapped in fake objectivism before I vomit.  Needless to say, I vomited and will not be going back to Ritholtz's website.

Thu, 01/09/2014 - 17:00 | Link to Comment yogibear
yogibear's picture

The canine club. She has much in common with Abby Joseph Cohen. The dogs of Wall Street.

Thu, 01/09/2014 - 17:01 | Link to Comment Blazed
Blazed's picture

The three Eskimos, err, I mean Schmoes.

Thu, 01/09/2014 - 17:05 | Link to Comment q99x2
q99x2's picture

Bitcoin: Last:$911

Thu, 01/09/2014 - 17:13 | Link to Comment U4 eee aaa
U4 eee aaa's picture

So they are going from a virtually fake market to a completely fake market?

Give me a break!

Weren't these the same jokers that said you could not tell if the market was in a bubble? Now they know a bubble? Liars, hypocrites and thieves

Thu, 01/09/2014 - 17:31 | Link to Comment Der Wille Zur Macht
Der Wille Zur Macht's picture


Thu, 01/09/2014 - 17:39 | Link to Comment Spungo
Spungo's picture

She doesn't have a dick, so she'll resort to fisting America. She's tapering her fingers so her hand gets in easier.

Thu, 01/09/2014 - 19:42 | Link to Comment yogibear
yogibear's picture

"She doesn't have a dick"

That hasn't been verified. Someone would have to desperate.

Thu, 01/09/2014 - 17:50 | Link to Comment moneybots
moneybots's picture

"Simply put - the Fed will react to falling asset values that destabilize economy, "and" asset values that rise too far and too fast or are fueled by leverage that may put economy at risk."


Simply put, the FED will be reacting recklessly to its own recklessness.

Thu, 01/09/2014 - 17:52 | Link to Comment Sufiy
Sufiy's picture

Just a few things to fix now

Professor Laurence Kotlikoff: The Inform Act - The True Size Of The American Debt

 Professor Laurence Kotlikoff discusses The Inform Act and the true size of the American Debt. "The country is in the worst shape than Detroit, it is basically bankrupt." China knows it and buys record amount of Gold this year.

Thu, 01/09/2014 - 17:54 | Link to Comment cheetahbaby
cheetahbaby's picture

This Yellen reminds me of my 4th grade teacher, a one Mrs. Anderson. Whenever she would walk up and down the rows between desks she always emitted a faint odor of "poo". My friend's grandmother had the same smell. Never have been able to figure it out....

Thu, 01/09/2014 - 18:14 | Link to Comment Temporalist
Temporalist's picture

It smells like a used diaper filled with Indian food.

Thu, 01/09/2014 - 18:22 | Link to Comment AGuy
AGuy's picture

Lets see:

1. Bernanke is gone and Yellen is in charge.

2. About half of the FOMC voting members changes in 2014.


Whatever decisions\analysis made in 2013 will get tossed out the window in 2014. Yellen was hired because as Barry Put it: We need a Fed chairman "that will help the american people". First it was Somers now its Yellen, both who have mentioned using negative interest rates to stimulate the economy. To believe the Fed won't ease further is a fantasy! I recall Benanke after the collapse of Bear Sterns said that the Fed will never bailout the financial sector and that Subprime was contained. Anything the Fed releases to the Public is just gibbish!



Thu, 01/09/2014 - 18:56 | Link to Comment illmatic
illmatic's picture

As Bernanke leaves office, here is a report card for the dearly departed. Pretty damning stuff.

The king is dead, long live the queen.

Thu, 01/09/2014 - 19:00 | Link to Comment Coldfire
Coldfire's picture

Those central planners of the Soviet Union who are still alive must be laughing their collective asses off. Old Yellen is the bag lady for the USD's epic fail. Fatal conceit writ large.

Thu, 01/09/2014 - 21:13 | Link to Comment ptolemy_newit
ptolemy_newit's picture

Is this a new mandate for the Fed?

Thu, 01/09/2014 - 21:35 | Link to Comment Rearden-Steel
Rearden-Steel's picture

Fri, 01/10/2014 - 13:13 | Link to Comment Drifter
Drifter's picture

No mention of QE's true purpose, providing unlimited money for the govt and keeping the bond market inflated (Fed's true "dual mandate")?

Stock market rise is a trickle-down benefit from keeping bond prices at all time highs (and yields at all time lows) via Fed purchases.  Money paid to Wall Street for those (near worthless) bonds sits in reserves or is played in the stock market (or pays bonuses).

QE never will stop, not even slow down.  Fed won't let the bond market deflate.   They'll print and buy up the entire bond market if necessary, and have a 100 trillion balance sheet, 200 trillion, whatever, it doesn't matter.

Stocks will continue rising as more of Fed's printed money is played into it by megabanks swimming in trillions of printed dollars from bond sales to the Fed (at full par plus commissions and fees).

There won't be a stock market collapse.   There won't be a bond market collapse.  

But there will be a currency collapse.   USD will be abandoned and rejected outside America, lose reserve status, and go downhill rapidly, so rapidly you won't have time to dump dollar-denominated assets ...which won't be assets anymore when they're worthless.

And it appears ZH won't see it coming either.

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