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"The Gig Is Up"
Via Scotiabank's Guy Haselmann,
In a switch from what are typically only one-sidedly dovish comments, NY Fed President Dudley was balanced this week, even citing reasons for why the Fed would want to hike rates.
Dudley stated that “being at the zero-lower-bound is not a very comfortable place to be”, because it “limits” flexibility and has “consequences for the economy”. He said it “hurts savers”, and while acknowledging “what is happening” to financial markets, he avoided directly citing risks to financial stability. Anxiety-riddled conversations about financial instability are probably implicitly restricted to a ‘behind-closed-doors-only’ rule.
FOMC members are slowly and carefully trying to change the conversation. Yellen completely diluted away any meaning behind “considerable period” to make it all but meaningless. Bullard said to that he still “sees the first tightening at the end of the first quarter”.
A March 18th hike seems reasonable to me, since US economic improvement appears to remain on track (at least for the moment) and since the FOMC seems more anxious to begin the normalization process. Actually though, by waiting even until March, it is possible that the FOMC risks missing its window of opportunity in terms of using US economic momentum as its cover (what irony).
Financial markets are becoming agitated and disturbed by shifting government and central bank policies, mounting geo-political tensions, and rising nationalist fervor. QE has not yet ended and the Fed is likely still months away from hiking for the first time, but markets are using these factors to adjust portfolio exposures. These are hints that a larger market reaction is likely to unfold as the Fed’s policy transition approaches.
Macro signs are currently evident with steep commodity price declines, rising FX volatility, rallying global bond markets (long end), and sagging prices for low quality credits. Some investors are clearly getting out of the Fed-generated “herd” trades of recent years and saying that they are doing so because "the Fed’s balance sheet is set to stop expanding next month".
The strengthening dollar is one consequence and it has already had an impact on commodities and Emerging Markets. In turn, weakening currencies in EM countries are starting to trigger capital outflows. It may lead toward domestic central bank hikes (again) which weaken those economies and cause second-order effects.
The prolonged period of zero rates has enabled many EM-based corporations to issue debt in USD, so a weakening currency raises their liabilities and lowers the value of their assets. Such a dynamic was a source of past crises.
Any anti-globalization actions, such as protectionism, will further act as global economic headwinds. Nationalistic momentum could become disruptive via social unrest or via surprises in the voting booth. Extreme nationalist parties continue to gain in popularity in numerous European countries. Religious, ethnic and tribal conflicts are spilling across borders. Putin’s annexation of Crimea was a bold nationalistic action that hid behind a veil of protecting Russian speakers. China, Japan and India all have new nationalistic leaders who use patriotic jargon to spur structural and economic reform.
For investors, Fed stimulus has trumped all other factors. It has lowered risk premia and inflated asset prices. The gig is soon up, but investors have yet to adequately adjust. Unfortunately, they will attempt to do so with significantly compromised market liquidity. The path to normalization is made even more challenging, because Japan and Europe are in recession, and China is slowing.
Note: Pentagon comments this week about foiling an “imminent attack” was negative for risk assets as were Treasury Department efforts to clampdown on “inversion”.
I maintain that one of the best places to hide remains in 30-year Treasury bonds.
“No one told you when to run, you missed the starting gun.” - Pink Floyd
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Somebody get those Jews back in there and SELL! SELL!! No wait, I mean BUY! BUY!!
...and when I come home, cold and tired, it's good to toss some bonds on the fire...
30 year treasuries LOL
Up 12% this year.
When I was a boy, my momma would send me down to a corner store with $1 and I’d come back with 5 potatoes, 2 loaves of bread, 3 bottles of milk, a hunk of cheese, a box of tea and 6 eggs. You can’t do that now… Too many fuckin’ security cameras.
When there is blood in the streets...
Let it flow.
Retail ain't never comin' back.
Yes, retail is dead.
Buying them in January was therefore a good deal. How much more 'up' do they have left? In my opinion we need to worry about bigger fish now. I've been wrong many times before but I think we're going to remember this October for the rest of lives. The bond market is the most vulnerable. The dollar is soaring but that's because the attack hasn't happened yet. Is it coming? I think the tea leaves and reading between the lines says there's a good chance. I'm not worried about up 20% down 20% like most investors are because I have very little skin in this game. I am worried about liquidity drying up and what assets I have becoming unavailable. The dollar is the target and I don't want to be tied into an illiquid market when the balloon goes up. My bones say it's coming but never trade real money on my hunches.
Ya'know.... For the life of me, I'll bet that IF the Fed tightens, it won't be long before some BAD numbers come out and they're FORCED to EASE once again.
The only positive about raising short rates is that the pool of cash and short term investments Ma & Pa Kettle from Dubuque own is Humongoloid upon which they're currently receiving naught. Any serious (Meaningful and that's not what's being discussed as the economy is not on fire) rise in rates actually puts additional spendable funds into the public's hands which is a good thing.
And would temper inflaiton expectations.....that they want to raise so is in their mond, counterproductive.
Listen.... Best bet. Don't listen to this miasma. The Fed themselves don't know what's good or bad, the true health of the economy and financial markets or what to do.
If it was that clear, we'd not be having this discussion.
Market participants would not be engaged in the Great Debate
They're somewhere between worried and scared shitless....
And would dearly love system wide inflation to make the debt more affordable.
That don't sound like tightening monetary policy to me....
Just sayin', but WTF do I know?
Go figure
The Fed will NOT tight.... Ever!
Wondering why?
How will the US wealth survive? How will the roads, cities, employment, pension plans, government, military, and so on be maintained?
Oh, things will be fine in the Green Zone.
Putting more money into savers hands, in any meaningful way, would require raising rates to what....4 or 5%, for an extended time since we've been decimated for so long. That's to get back to a typical ROR on a 4 year CD. That just doesn't seem like the mindset. Figure they raise rates by 0.5% maybe, or less, per meeting.
Imagine what 5% rates would do to housing, autos, student loans, government debt interest....so one has to consider whether the negative effects would outweigh any positive effects for "savers".
Just seems like a giant ball of confusion.
Maybe, but inflation will be 10%.
Oh, wait...
In other words
Makes sense to me.
It's better to have printed, than never to have lived in the first place.
... some FIAT on the fire....
On this major Jewish holiday, just remember: Jesus saves, Moses invests.
C. B. DeMille collects the royalties
Careful, or the lurking Hasbara might reply to you with a nasty post.
I've found that if you put an extra J in JJewish or an extra I in IIsrael you can have uninterrupted discussions on any board, anywhere.
The PP's at Treasury must be Jewish.
Dow back to 17000 already LOL
Cramer is on right now saying never sell, only one time in his career was selling the right thing to do.
Now is the time to not panic and to BUY.
Whipped cream Jim, whipped cream.
Now that Stolper is gone Jim has no competitors was who's the best contra-indicator
There is Gartman...
James Shalom Kramer (or was it James Chaim Kramer?) is nothing but zydokommuna trash. Fuck him, I hope he burns with his ill-gotten fortune built, not on work or effort or even intellights, but built upon lie and deceit.
But but but.... Cramer is saying buybuybuy!!!
QE had been stopped and always had to be restarted again.
Nothing new.
qe not been stopped, i bet they print ever more now
Unless the Central Banks now want the asset crash as their buddies all have plenty of dollars....
Both people and governments have lived beyond their means by taking on debt they cannot repay. Over the last several decades we have created entitlement societies built on the back of the industrial revolution, technological advantages, capital accumulated from the colonial era, and the domination of global finances. Promises were made on the assumption that the advantages we enjoyed would continue.
Ever greater prosperity and entitlements were to be sustained through debt financed consumption growth. In that eerie fantasy world, debt fueled consumption was to be the catalyst to bring about evermore growth. Now reality has begun to come into focus and it is becoming apparent that this is unsustainable. The entitlements and promises that have piled up have become overwhelming. More on why this system will fail in the article below.
http://brucewilds.blogspot.com/2014/08/modern-monetary-theory-is-wrong-d...
gig, jig, whatever
Probably an intentional play on words. Get with the pogrom dude.
They thought they would gig some tbond holders but they missed again.
gig some tbond holders...
Gigging is what one does to frogs. Unless of course one would prefer the Fed's version and boil them in QE liquidity instead.
If anyone thinks inflation is not happening, I would direct them to Costco's meat department. Ground beef has gone from 2.99 to 3.29 to 3.89 since January 2014. 30% in 9 months. Live cattle futures have been bouncing between 135 to 155-160 in the same time.
But hey, broaster chickens remain 4.99.
Arguments are self-supporting, but . . . he had his choice of ANYONE to quote -- Dylan, Leonard Cohen, Stuart Murdoch, David Gedge, Mark E. Smith, Van Morrison, Neil Young, Nick Drake or, hell, even The National -- and he chose Roger (Fucking) Waters ?? !
My re brokerage company has asked us to send information to our clients that interest rates will increase next year. Coordination or collusion, the Fed's policy is done.
Guillotine the Fed!
An American, not US subject.
Calling ISIS
Rules? FASB? Why bother? The owners of the FED only have one goal, to steal your money and wealth anyway they can. Inflation has worked well for them...
Kill them!!! (wives and children fair game too, they enjoyed the lifestyles and did nothing to stop the perps!)
by B.B. King
The gig is up
The gig has gone away
The gig is up baby
The gig has gone away
You know you done me wrong baby
And you'll be sorry someday
You know I'm free, free now baby
I'm free from your spell
Oh I'm free, free, free now
I'm free from your spell
And now that it's all over
All I can do is wish you well
30 year treasuries. I'll be sure to do that once crypto-currencies no longer exist.
"since US economic improvements appears on track"....what is this guy smoking? Oh yeah, the recovery.....
correction; the US is in a recession as well its just didnt admit it yet.
I wonder what things look like if you take out the shale production boom and the banks.....
Haven't I read this before? Every year since 2009? While there are any bullets left (literally and figuratively) the won't and, more precisely, can't let this bubble pop. It would lead to revolution in China, a toppling of the Japanese government which would take a much darker turn of nationalism, civil unrest in the US and the break up of the EU. They will print until it collapses and then blame it on someone else
Not if they believe their own bullshit. Things are "on track", the recovery is for real, raise those interest rates (of course that won't affect car and home purchases), we're good to go. One also has to consider whether it is now the strong dollar rather than rising stock prices the banks want. Raise interest rates, tank the market (hedge funds, pension funds, mutual funds, etc.), strengthen the dollar (banks sitting on huge amounts of cash)....
Or go directlty to "Mad Max". Do not pass GO. Do not collect $200.
Jeezus... I have never seen a more full-on press to push a meme than 'Look out, here comes Fed tightening'... Who in the Hell are these guys trying to convince? It's every freakin' day some big bank Schmendrik or insitution comes out with their 'better get prepared' nonsense about something that isn't set to take place for (6) months...! I tell you what, let's see how far the market drops (assuming Citadel can't feed coal to the boiler fast enough...), before the Fed steps in to put a tourniquet on the $bleeding.
Some of the Fail-Safe banks are already unwinding their positions. They own so much stock it'll take them 6 months to sell out.
yes, big ships are slow to steer, us poor folk may only need a few days heads up to clear out, big banks needs months
Especially when they've been buying and holding for 6 years.
Jawboneing is all the Fed has left. They can never ever ever unwind QE or raise rates.
QE, at least as we know it, is about to disappear, man. I believe next FOMC meeting will end it. Rates won't rise then but the QE will be gone unless you can flesh out the "QE by another name" they might be doing.
What exactly stops them from doing QE4 (or 4.5)? People have said the same thing after each one
One Dollar = One Yen.
Two Dollars = One Pengo
They are already doing it via Belgium.
My guess is that is the EU with spillover because they have already bought damn near every sovereign bond in Europe. But you're right it could be quid pro quo for the Fed bailing them out with repos.
I've never quite understood why ZH is convinced that the "Belgium" buys are the Fed. Makes much more sense that its the ECB . I mean Belgium is so random, except its home to the "capital" of the Euro zone
By the way, the phrase is "the jig is up".
Resigned today!
I, for one, have always used "gig"
Definitely. 1930s Hollywood gangster movie slang. But probably sanitized now to avoid offending anybody.
The gig is still on, but the jig is almost up. Fat lady coming up soon in the program.
so, the streets should be strewn with bankster heads. what happened?
Everyone assumes the FED and gubbmint can't tighten or stop QE because their priority is to stimulate the economy and keep the system in place.
THEY'VE SAID THEY WANT A RESET FFS!!!
Assuming they actually do, why now? They've literally created $4 trillion out of thin air and given it to themselves and no one has said a peep. 90% of the people have no idea what QE is and most of the rest are cheering them on. They can do this until people riot over inflation, collapse it, and then blame the people who rioted. I see absolutely no reason for them to do that now
Aim small, miss small.
God, we even have to hear geopolitical propaganda from Securities Analysts?
Putin’s annexation of Crimea was a bold nationalistic action that hid behind a veil of protecting Russian speakers.............
BS. It was a well founded reaction to our meddling in his backyard, and I'd have done the exact same thing.
I'm starting to think Zeroshit is part of the Problem-Reaction-Solution with a whole lot of Intellectual bullshit.Its easy-all Lizards and there Allies need to be exterminated of the face of this planet once and for all,Or humanity will never have peace.
kinda ironic he's recommending long t-bonds to hide in, given bonds are also going to turn into a speculators market(if it haven't already) when everyone with a case of jitters starts piling in
maybe Bill Gross will be there to frontrun some bond dumps on them :)
The 30-yr TB? With a bankrupt government, an economy that is in a depression, and issuer of a dying-by-1000-cuts reserve fiat currency? ARE U KIDDING ME?