Santelli Slams "Don't Ignore The Long-End... Recessionary Pressures Are Building"

Tyler Durden's picture

With 30 year bond yields set to close their lowest in 10 months, CNBC's Rick Santelli is concerned at the signals that the Treasury yield curve is sending.If yesterday's minutes from the Fed were supposed to walk back their 'hawkish' tone, then Santelli slams they are "gonna need a really big billboard" because the term structure is still flattening. "When 'flattening' is the theme, that is not painting a rosy outlook for the long-term economy," and as Santelli warns, this is when the Fed is pulling out of its extraordinary policies. Santelli screams, "the entire monetary policy side has to be under review..." and the only way you can keep the fallacy alive is "if you sell it as a 'deflationary' issue, where you can keep trying the same thing that isn't working."

As Santelli explains in this brief clip,

"if anything [exogenous] were to happen to our markets or economy, where do they go next? How do they ease? Policy should have been normalized already and we're paying a price for it."

Simply put, the central banks now need to instil a fear of deflation to enable their ZIRP for longer forward guidance.

"Don't ignore the long-end, and don't buy into deflation... it's telling you recessionary pressures are building"


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Chuck Knoblauch's picture

This retard lives in right field. Will someone please throw him the ball so he can feel included in the game.

Silver Bug's picture

Santelli seems to be the only one on CNBC that speaks the truth from time to time.

Babaloo's picture

If he "spoke the truth" he'd know that the Fed doesn't have to "normalize" before easing.  They can "always" ease more.  Buy more bonds, inject more money into the banking system.

NOW, whether it does any good or not is anybody's guess, but his assumption is wrong and would have led to weakness earlier.

zaphod's picture

Exactly, the reason you have to normalize in good times is so that the FED still has some room to play with.

But, if this time the FED already has their foot on the print petal, printing roughly the entire 2005 money supply each and every year, what is left if the economy still tanks? The only answer is print at such a stupid level that no one would accept it, forcing everyone to walk away from the dollar standard. Then the real crash comes. 

That's what you're missing Babaloo, the FED can't "always ease more" because there is a level of easing that even our corrupted markets could not handle. The FED is dancing too close to that line this time.

Carl Popper's picture

What is normal?

Right now the bond market is telling us the fed has plenty of room to ease more.

saveandsound's picture

There is no exit strategy. Period.

If "tapering" already bends the yield curve into an inverse structure then we have a problem.

So... there is going to be a little bit of correction ahead - until untapering. Untapering will be fun! Trust me.

EDIT: about yield curves

Carl Popper's picture

What is normal?

Right now the bond market is telling us the fed has plenty of room to ease more.

Babaloo's picture

If we didn't have a "good times" and I know we didn't because It said it right here day after day, then when was the Fed gonna normalize?

They scaled back QE by 20 bananas a month, so perhaps that's the start of normalization, so they could ramp QE back up by $20 billion a month and go back to where they were just last year.

SnobGobbler's picture

he still has to pretend he's dumb, what they do let him say is spot-on. Santelli has been a commodities guy for 30+ years, i know traders that change the channel when he comes on, for fear of their personal bubble popping.

BandGap's picture

He could have just said "the angle of the long-end dangle is proportional to the heat of the meat on the street".

Algosaurus Rex's picture

I don't think you have many friends here, Chuck.

TheReplacement's picture

We all wanted TK and Andy McPhail to trade him for... well anything.  He was just a whiner with the Twins.  We'd have taken a hot dog from NY to get rid of him - would have been a one for one trade.

Big Brother's picture

I remember the Twins fans threw batteries at him the first time he returned as a Yankee.

Charles The Hammer Martel's picture

Clearly you havent been reading anything on this page at all for the past 6 years. I will let time prove you wrong, but I doubt you would even notice with an idiotic comment like that. It's low information voters like you that America needs to prevent from voting.

Pareto's picture

if he lives in right field, then you don't even live in the fucking park.  asshole

fonzannoon's picture

The only reason Chuck did not play rightfield is because he could not even reach first base with a throw from 2nd base.

SokPOTUS's picture

You can disagree with his politics; and most on CNBC do; but he's spot-on with his analysis.

TheReplacement's picture

So says one of the whiniest players to ever put on a Twinks uniform.  You were an absolute bitch of a baseball player.

fooshorter's picture

Can you throw to first base yet? Guessing that has not come back yet ...

stocktivity's picture

Wrong! This "retard" is the only one of those retards that knows what he's talking about.

Wahooo's picture

Even if you threw santelli the ball, he'd drop it.

BandGap's picture

My wife never ignores the long end when pressure is building.

WakeUpPeeeeeople's picture

Yes, but how about your girlfriend? The short end?

BandGap's picture

If I had a girlfriend my wife would make sure I only saw a short end.

evernewecon's picture







Just one more thought

added afterward (an edit:)

it'd be the perfect verbage aiding the 

raising of interest rates,

n'est-ce pas?


(Assuming the aim's lower

velocity aiding the Fed's

feeding of the large banks.)




Of Currency In The Midst

Of A Mortgage Ponzi Scheme

Don't Want High Velocity

Prematurely But Do 

Expect Enough To 

Enable The Bailout To

Survive The Raising Of

Interest Rates And For

Everyone To Carry On

And Forget.



Be Unemployed While

The Adversity's Bought,

And Then Climb Back

Aboard The Pyramid

Of Privatized Markets.



It's Literally High 

Octane Reserved For Them,

Low Octane For You.


Go Ahead Be Bud Bundy With

His Wieniemobile.


Except It's Far More Car Than



Notwithstandint Hedonics.


One More Thing About Hedonics:

My Mom's Dodge Dart, Red/Taupe

Top, 250hp Was A Tank Compared

To Your Soapbox Today, The Dying

Gasp Of A Car Culture.  It's 

Automotive Content Was Far 

Greater Than The Junk Discounting

Car Cost Inflation Today.


However, If You Were To Travel

To The U.S. Sector Elsewhere,

You'd've Been Given A Dart W/

150hp And Had To Wait While

Climbing Hills.


Most In Those Sector Simply

Did Their Jobs.


Today They'd Advocate 

Democracy Here And There

And Cooperation.


As To Santelli's Comments:

it'd be the perfect verbage

aiding the raising of interest

rates, n'est-ce pas?

It's not consistent with

raising rates but affords

a blunting of any bond rout

that might otherwise ensue.



The likely aim of the Fed's

lower velocity allowing for

feeding the banks reserves

and MBS purchases, and 

supporting low rates.


Now to raise rates it has

to blunt bearish bond






Yen Cross's picture

     The retards over at CNBS need to learn to differentiate between deflation and devaluation. The price of just about everything you eat drink, or require energy for has almost doubled in the last 5 years.

     The shit gums at the Fed. are headed into the same situation Japan is in X10...

CrashisOptimistic's picture

And that's where bond yields are going. 

hobopants's picture


What we gots us here is a serious case of biflation, everday goods on their way to the moon, deleverging shit assests on their way to the crapper.

RaceToTheBottom's picture

Yep, we are a short time away from being Japan, except we have no savers.....

Spungo's picture

I need to hear Mike Norman's take on the situation!

Spungo's picture

So are you saying Chuck is a pitcher or a catcher?

NOZZLE's picture

What would have been worse,  a slow climb to DOW 10,500 or the rocket ride up to 16,500 and the body slam to probably 12,000 or worse?  i will take the former because the fallout from the latter is going to be devestating and they know it.  Not that this was not done to make it look like Affirmative Action ClownO'Nomics look like a success. 

$622 a share for Shitpotle, I mean what is that???

813kml's picture

I'm long Omni Consumer Products (OCP), parent company of RoboCop.

HardlyZero's picture

With price of beef at a new high I've read lately about a new "soylent green" that has the taste of beef, the protein of beef, but its completely organic and soy based protein.  The Soylent Corporation will have their  IPO next year.  /sarc

JR's picture

It’s amazing: The more financial information there is, the more lies there are. The point that the little guy doesn’t get from the financial media is the market is just loaded with losers…people are losing money consistently…

…here’s the truth:

The Real Market Lesson Since 2000 | SERVO|Wealth Management        

by Eric D. Nelson, CFA 2013-02-12

Investors have pulled more than $500B from stock mutual funds since 2008.  While some of those outflows have found a home with Exchange Traded Funds (ETFs), most of the exodus is a result of investor fatigue with the stock market as a whole after two brutal downturns since 2000 and the continued volatility associated with global geopolitical risks and a muted and uncertain economic recovery.

As we look back on stock market returns since 2000, it’s clear that investors have reason for frustration.  The S&P 500, an index of mostly large US “growth” companies, has only returned +1.6% annually through year-end 2012, almost 1% per year less than inflation.  A popular alternative to large US growth stocks are their overseas counterparts.  Unfortunately, developed International growth stocks haven’t performed much better, returning just +2.0% per year over the same stretch.

This disappointment has led investors to shift large amounts of wealth to the bond market.  Since 2008, over $500B in bond mutual fund inflows have mirrored the stock mutual fund outflows.  Part of this is based on the belief that past bond performance since 2000 will continue, which fails to account for the large and unrepeatable decline in interest rates over this period that has boosted bond prices.  Others accept that bond returns will be minuscule in the future as interest rates sit at generational lows, but are willing to accept these results so long as they do not have to endure another stock bear market.  In either case, the lesson many investors have taken away from the market since 2000 is that stocks are no longer a worthwhile investment due to their high risk and low returns.

But the real lesson investors should take away from this period is that to be a successful investor and achieve the entire benefit of stocks, you need to diversify broadly amongst distinct asset classes.  As Table 1 shows, the poor returns since 2000 for US and International large cap growth stocks have been the exception and not the rule…

If we look at US large and small value stocks, we see returns of +6.2% to +10.2% per year.  International developed large and small value stocks produced very similar results that were well in excess of International large cap growth stocks…

See more at:

Average Return: Wall Street’s Dirty Little Secret | Fox Business

By Matt Deaton and Damon Roberts -  August 12, 2013

… Wall Street has a dirty little secret and they are doing their best to keep it that way.  It is standard practice that whenever mutual fund companies promote their returns over the last 3, 5, and 10-year periods they use average rate of return as the performance indicator.  We have seen it presented this way for so long that we don’t even think twice about it.  The problem with using this as a performance measure is that the average rate of return does not accurately reflect how much your money actually grows.  It actually overstates the actual return on your investment, which is deceptive and leads to disappointment down the road...

A simple example will show you why.  When average return is calculated, all returns, whether they are gains or losses, are given equal weight.  In other words, a 10% return followed by a 10% loss produces an average return of 0%.  Pretty simple, right?  Using this calculation, you would assume that if you invested $10,000 at the end of the ten years, you would still have $10,000. 

The Dirty Little Secret

The dirty little secret is that this is not the case.  If you do these calculations using the actual numbers, you will find that after the first year your investment has grown to $11,000.  After calculating the 10% loss the following year, your investment is not worth $10,000 but instead is worth $9,900.  When this is illustrated over a 10- year period, the “actual return” is quite different from the average return you used to choose the investment and reveals what Wall Street has been hiding.  Rather than producing $10,000, your 0% rate of return has netted a return of just over $9,500.  In other words, your “0%” average rate of return reduced your investment by nearly 5%.

To put this another way, from 2002 to 2012 the S&P 500 produced an average rate of return of 3.058%, but during this same period of time the actual return was only 1.02%. 

You may be thinking, “Big deal.  Two percent doesn’t make that much of a difference.”  If you used the average rate of return to calculate your return on an investment of $100,000, you would assume that your account is now worth $135,150 when in reality it only grew to $110,249, a difference of almost $25,000…

koncaswatch's picture

+100 Thanks JR that's some good 'splainin' It's like the gut feeling you have about the Gov inflation rate. The mutual funds have always been about the marketing. "Your investment may not return as that shown in the example."


CrashisOptimistic's picture


Timothy Geithner

One more haiku friendly name

He started this shit

dracos_ghost's picture

Nah, Hank Paulson is the fucktard to blame. Watch his homage, err I mean documentary, "Hank - Five Years from the Brink" and you'll see that full retard does not even reflect the utter stupidity of the Little Lord Fauntleroys that caused this disaster. In fact, it gives full retard a bad name.

(FYI - If you do watch it, notice how he never mentions his 2004 little SEC rule change ass rape as CEO of Goldman. Nope, it was the poor sub-prime bastards who don't know how to save that was the problem).

tip e. canoe's picture



like a good lil' boy,

Timmah did what he was told.

question is : by whom


GoldenTool's picture

Judging by your avatar you know damn well whom.


"scientia potentia est"

Roger Shermanator's picture

"Recessionary pressures are building" would imply that the recession actually ended.  GDP and Inflation statistic fudging aside, when did this happen?

mendigo's picture

The thing i experience when i go to the supermarket doesnt feel like deflation. 


So then rather than be pissed at my rulers i shall fear falling prices

Carl Popper's picture

If the sheeple wil tolerate an actual6 to 7 percent non hedonically adjusted inflation rate (2 percent hedonically adjusted) then we canpull ourselves out of this mess in ten years  


Now go eat your beef hearts and rice.  It is just as pleasurable as sirloin tips I assure you.  Yellen says so

moneybots's picture

"the entire monetary policy side has to be under review... and the only way you can keep the fallacy alive is "if you sell it as a 'deflationary' issue, where you can keep trying the same thing that isn't working."


If it isn't working, it isn't going to work.  So stop trying to sell it.  Do something that actually works.

AdvancingTime's picture

Bottom-line much of what happens in our economic future depends on inflation or deflation. The modern economy that has evolved over the last several decades is loaded with interwoven contracts reeking of contagion. I contend that if faith drops in these intangible "promises" and money suddenly flows into tangible goods seeking a safe haven inflation will soar. Never before has mankind diverted such a large percentage of wealth into intangible products or goods and made the claim this is the primary reason that inflation has not raised its ugly head.

Like many of those who study the economy I worry about the massive debt being accumulated by governments and the rate that central banks have expanded the money supply. The timetable on which events unfold is often quite uneven and this fact supports the possibility of the following bizarre scenario. A key issue is one of timing. If the price of gas jumps to $8 a gallon overnight do you buy gas and not make your car payment? Answer, it could be months before your car is repossessed so you buy gas. It is important to remember that debts can go unpaid and promises be left unfilled. The article below delves into how and why inflation may bring economic chaos.

Carl Popper's picture

People dont attempt to escape money in a credit contraction.


People attempt to escape tangible goods in order to get money