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Stocks Slide After Fed Uberdove Williams Pours Water On Untaper Hopes

Tyler Durden's picture




 

As we observed yesterday, the market action over the past weeks can be summarized with one word: untaper. Specifically, in light of recent data, the Koolaid addicts had hoped that the crunch in the economy would be sufficient for the Fed to taper the taper, and slow down its removal of crutches, which ironically means that the media should have been focusing on the real causes of the winter swoon - i.e., the tapped out consumer and not blaming snow in the winter. Alas, for all those who had hoped that Yellen would promptly shift to Untaper mode, Fed uber dove Williams has just one present: a glass of (appropriately) ice cold water.

As expected:

  • WILLIAMS SAYS ‘RECENT DATA HAS BEEN SOMEWHAT DISAPPOINTING’

However,

  • WILLIAMS SAYS POLICY SHOULD TAKE MEDIUM TERM VIEW
    FED’S WILLIAMS SAYS ECONOMY LOOKING ‘REALLY SOLID’ FOR THIS YR

Which means:

  • FED’S WILLIAMS: ‘HURDLE IS PRETTY HIGH’ FOR CHANGING TAPER PACE
    FED’S WILLIAMS SAYS NOW IS TIME TO FOR PULLING BACK QE

And keep in mind Williams is about as dovish as they come: there is hardly anyone on the FOMC who wanted the taper to taper more than Williams. End result: sharp pullback in stocks which after touching briefly unchanged for the year, have taken a sharp leg lower.

 

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Wed, 02/19/2014 - 13:39 | 4453162 Dr. Engali
Dr. Engali's picture

Makes one wonder if 2014 is the year they take the whole thing down.

Wed, 02/19/2014 - 13:41 | 4453189 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

There are going to start a crash soon. Jump in when everyone is screaming the sky is falling. Save the big boys at a bottom. Little dude gets sodomized.

Wed, 02/19/2014 - 13:51 | 4453239 Headbanger
Headbanger's picture

Once again it's time for us all to sing along...  So long and thanks for all the fish..

http://www.youtube.com/watch?v=jc6aufHz-i0

Wed, 02/19/2014 - 14:24 | 4453289 Ham-bone
Ham-bone's picture

In 6yrs time since ’08 “foreign” holders of US Treasury debt have increased their holdings from $2.4 T (Jan ’08) to $5.8 T (Dec ’13)?!? A 150% increase while the Fed sold/ did not roll $800 B in ’08 (almost entirely in bills) to it’s present $4.2 T (2.25 T, all Notes/Bonds…$0 bills and $1.5 T MBS).

So the Fed & “foreigners” have picked up $5.6 T of $7.2 T increase in Public Outstanding Treasury debt since ’08. This means Fed & “foreigners” have purchased $5.35 T of $6.2 T in new Notes / Bonds issuance & own 80% of total Public Outstanding Notes/Bonds.

The “red flag” in this "buy the cleanest dirty shirt" meme is the Fed tapering. The Fed in it’s recent QE were buying nearly all medium term Notes / all Bonds (up to their 70% limit) but on their stated exit from QE, “Foreigners” who own $5 T+ (double the Fed’s holdings) would have seen rates would be rising and prices falling absent this buyer…typical “investors” they would have been selling to front run the Fed’s exit. The Fed would have known this taper would cause a rate shock. But no selling…no yields to the moon. Rather “foreign” holdings have hit a new record high as of December.

Seems these “foreigners” are not typical “investors”. Upon the exit from the “market” of a buyer of 40% to 70% of issuance, "foreigners" are unconcerned. Typical “investors” would be concerned w/ the likelihood of losses.

What’s fascinating about the “foreign” category in the TIC reports is that it only represents where the Treasury’s are purchased and held…not the nationality or affiliation of the buyer.

Wed, 02/19/2014 - 15:08 | 4453597 silverserfer
silverserfer's picture

I buy ur bonds you buy my bonds..

I buy ur bonds you buy my bonds..

I buy ur bonds you buy my bonds..

I buy ur bonds you buy my bonds..

when in doubt, throw a zero on the end and the game continues. 

Wed, 02/19/2014 - 15:15 | 4453646 bozarking
bozarking's picture

So you're saying that the fed's secret buying of european bonds a few years back led to those same banks secretly helping prop up the US bond market? We call that a double dutch rudder where I'm from.

Wed, 02/19/2014 - 15:44 | 4453837 silverserfer
silverserfer's picture

you don't even want to know what they call that in germany.

Wed, 02/19/2014 - 13:54 | 4453242 BLOTTO
BLOTTO's picture

Absolutely Dr.E...i wonder all the time.

.

I believe 'they' have the unedited directors cut script in their hands...but its for their eyes only.

.

We can only try and follow them by using the clues left behind in - sacred geometry, numerology and astrology. They worship and follow a different set of laws whether or not we believe it...they do.

 

 

Wed, 02/19/2014 - 15:12 | 4453620 silverserfer
silverserfer's picture

its simple really, they dont want anything more than self preservation and status quo.

To be able to sit in the same chair and maintain their power. and play global chess with each other.

When your on top, theres nowhere to go but down.

Wed, 02/19/2014 - 14:12 | 4453351 Stoploss
Stoploss's picture

Seen what hawks do to doves...

 

Wed, 02/19/2014 - 13:37 | 4453164 DavrosoftheDaleks
DavrosoftheDaleks's picture

Does this mean more JPM rookie base jumpers?

Wed, 02/19/2014 - 13:37 | 4453165 mayhem_korner
mayhem_korner's picture

 

 

That thud is the sound of EMs hitting the ground like Wile E Coyote.

Wed, 02/19/2014 - 13:47 | 4453219 camaro68ss
camaro68ss's picture

Or a JPM banker, you pick

Wed, 02/19/2014 - 13:38 | 4453172 Truther
Truther's picture

BTFD

Wed, 02/19/2014 - 13:40 | 4453173 Termin8or
Termin8or's picture

"What's your prediciton for the economy? Pain!"  Clubber Lang

Wed, 02/19/2014 - 13:39 | 4453183 seek
seek's picture

I'm surprised gold hasn't reacted more strongly to this.

Wed, 02/19/2014 - 13:48 | 4453223 C4G3
C4G3's picture

Agreed, althought the PMs are acting strange today compared to the last month. Very low volume! Must be taking a break this week.

Wed, 02/19/2014 - 13:42 | 4453195 Rising Sun
Rising Sun's picture

$65B per month spent to keep these shit fucking markets up - main street is broke and starving - people of fucking suffering badly.

 

How did these misery imposing nazi's get into the White House????

 

Really Barry - fuck you in the heart!!!!!!

 

PS:  Stop governing and get the flying fuck out of the way.

Wed, 02/19/2014 - 15:32 | 4453774 silverserfer
silverserfer's picture

your barking up the wrong tree. Barry dont decide QE. Barrys masters decide that. 

You can blame Barry for everything else tho.

Wed, 02/19/2014 - 13:41 | 4453196 Ness.
Ness.'s picture

ZH posts article about stocks sliding - BTFDWBH. (BTFD - with both hands).

 

 

Wed, 02/19/2014 - 14:34 | 4453438 Ness.
Ness.'s picture

As Billy D. Williams used to say, "It works every time."

 

Thanks Tyler.

Wed, 02/19/2014 - 13:42 | 4453200 crzyhun
crzyhun's picture

ZH again ahead of the rest...I was wondering why the canyon. thanks tyler. Nobody had a clue, brieifing is still looooooooooooooking.

Wed, 02/19/2014 - 13:46 | 4453216 Judge Smales
Judge Smales's picture

I was wondering who farted at straight-up noon. Figured some big boys got the Fed minutes leaked to them, from the way the charts went into free fall.

Wed, 02/19/2014 - 13:44 | 4453210 astoriajoe
astoriajoe's picture

I still don't get why Pimco is using Bradley cooper to advertise their 'short term strategies' fund.

Wed, 02/19/2014 - 19:27 | 4454809 o2sd
o2sd's picture

NZT-48

Wed, 02/19/2014 - 13:44 | 4453211 Glass Seagull
Glass Seagull's picture

 

 

Fed totally going to untaper this year.  They're full of shit. 

#paintedinacorner

Wed, 02/19/2014 - 13:49 | 4453231 ChargingHandle
ChargingHandle's picture

When volume ticks back up the sell side will gain momentum. May into June will be interesting based on my analytics. I do not claim to be a guru, but I know enough to know when to allocate defensively. I also know you can not borrow a nation to prosperity and think the long term result will be better. 

Wed, 02/19/2014 - 13:59 | 4453275 NOTaREALmerican
NOTaREALmerican's picture

Re:  I also know you can not borrow a nation to prosperity and think the long term result will be better. 

Well, it worked from the 1950 through the 1990's.    And, while past performance isn't a guarantee of future performance, nobody really believes that past performance isn't a guarantee of future performance.

Wed, 02/19/2014 - 14:47 | 4453497 Meat Hammer
Meat Hammer's picture

I guess that depends on your definition of prosperity.

Wed, 02/19/2014 - 15:06 | 4453581 NOTaREALmerican
NOTaREALmerican's picture

Re: I guess that depends on your definition of prosperity.

The top 10% own most of the country.    Can't beat that definition. 

We've setup a society that rewarded the sociopaths and assholes for 60+ years.   Well, they won.   That's what we wanted.

Remember when the "libertarians" used to have free-market orgasms listening to Greenspan talking about the wonders of huge banks?   

Yeah, me too.   

Wed, 02/19/2014 - 13:53 | 4453245 vote_libertaria...
vote_libertarian_party's picture

The taper is on until the 10yr shoots > 3%.

 

Supply / demand equilibrium is a bitch when the biggest buyer of bonds stops buying.

Wed, 02/19/2014 - 13:54 | 4453249 NOTW777
NOTW777's picture

"SOMEWHAT DISAPPOINTING?"  ask whats left of the middle class if they are somewhat disappointed after losing everything including their way of life

Wed, 02/19/2014 - 13:56 | 4453268 NOTaREALmerican
NOTaREALmerican's picture

It's secret untaper `till death.   There's no other alternative now.

Taper would cause a drop in "growth" for generations.    This lack of "growth" would break the economic models (the range crack only turns clockwise).   This would render the wise (often bearded) economists deaf-dumb-and-blind (well, they're already dumb, but that's besides the point).    Without the wise economic advice from economists the world collaspes into a dark age lasting a 1000 years until Space Aliens - bearing an image of Paul Krugman - arrive and - after burning his effegy - destroy the planet in a surprise attack to eliminate the AntiSpaceAlienDefenseShield which they mistakenly thought was being built when they intercepted a Paul Krugman speech from the early 21st century.

Wed, 02/19/2014 - 14:00 | 4453284 I Write Code
I Write Code's picture

You mean they're tapering the taper taper?

Wed, 02/19/2014 - 14:06 | 4453323 Caviar Emptor
Caviar Emptor's picture

Ahh the biflation paradox : can't taper (deflating economy), can't UNtaper (inflating commodities and paper assets). Ouch. Always knew this was coming

Wed, 02/19/2014 - 14:21 | 4453389 LordAarioc
LordAarioc's picture

Damned if you do damned if you don't. With the housing market tanking again they have to keep injecting. TTPTB  should have kept the 10 year at its 100 year record low 1.48 for a lot longer than they did.

Wed, 02/19/2014 - 14:22 | 4453396 BeetleBailey
BeetleBailey's picture

Wheeeeeee!

 

BUY THE DIPS YOU MOTHERFUCKERS....

KEEEEEP MATRICULATING DOWN THE FIELD..YOU LONG BASTARDS

 

COME ON!

 

BUY BUY BUY!

Wed, 02/19/2014 - 14:23 | 4453403 thamnosma
thamnosma's picture

The economy is looking "solid" medium term.   Really?  

Wed, 02/19/2014 - 14:27 | 4453419 NOTaREALmerican
NOTaREALmerican's picture

Re:  The economy is looking "solid" medium term.   Really?  

For the top 10%?   Definitely. 

Wed, 02/19/2014 - 14:43 | 4453479 joego1
joego1's picture

May want to start thinking about a web site named "Zero Faith"

Wed, 02/19/2014 - 15:10 | 4453612 Downtoolong
Downtoolong's picture

“taper the taper”

Maybe they should re-hypothecate the taper, or traunch and securitize the taper.

Frankly, I’m surprised no TBTF Wall Street firm has yet introduced and marketed Taper Swaps and options. I mean, what is risk management these days if you can’t reduce it all to one single index and then write $20 trillion in derivatives based on it?

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