Bullard Does It Again, Says Market "Misread" His QE4 Comment

Tyler Durden's picture

Here we go again.

By now everyone, including 2 year old E-trade babies and Atari algos know, that the only reason the market soared from the October 15 bottom, a move which we showed was entirely due to multiple expansion and thus nothing to do with earnings and everything to do with faith in even more free central-planning liquidity (something the PBOC was all too happy to provide overnight), was James Bullard's casual "QE4" hint on Bloomberg TV.

Since then Bullard has become the punchline of every financial joke, as it has become far too obvious that the Fed will never allow even a regular 10% correction (October 15 halted the closing market drop at just under 10%).

And now that the market is at ridiculous all time highs and trading above 19x GAAP PE, far above the level when in September the IMF, the G-20, the BIS and even the Fed all warned of assets bubbles, here is Bullard once again, with a fresh mea culpa and a new attempt to jawbone stocks, only this time back down, because as Dow Jones reports, "Bullard Says Markets Misread Him In October Bond-Buying Dustup."

According to a DJ report, markets were rattled by comments Mr. Bullard made in a Bloomberg interview just ahead of the late October Fed policy meeting. He said the central bank might want to consider extending a bond-buying stimulus that was almost universally expected to end that month.

Then, after the meeting, Mr. Bullard praised the Fed's decision to end the bond purchases, and again argued in favor of interest rate increases next spring, at a point earlier than many investors and officials expect. There was sense of whiplash: that Mr. Bullard had within a short period shifted gears on monetary policy.

 

In a Wall Street Journal interview Thursday, Mr. Bullard attributed some of the confusion to the fact that many market participants didn't listen closely enough to what he said. He allowed that monetary policy making has become far more complex and thus more challenging to communicate. But he underscored an underlying consistency to his view, noting what he said about the Fed's bond-buying program hadn't altered his long-running view that short-term interest rates should be lifted off their current near zero levels next spring.

 

"If you actually go look at the [Bloomberg] interview and go look at what I said, one of the things I actually said was I'm not backing off my interest rate, my March interest view," Mr. Bullard said.

 

The idea that it might be a good idea to press forward for a bit longer with bond-buying was rooted firmly in the ominous market conditions that prevailed ahead of the October Fed meeting, the official said.

 

"Global markets were saying there was going to be a global recession. And one way for the Fed to react to that would be to delay the end of [bond-buying] and get more information," Mr. Bullard said.

 

So according to the brain behind the St. Louis Fed, a 9% drop in the S&P is indicative of an imminent global recession? And, one wonders, what does the subsequent 15% jump "say" about the global economy? Oh wait, Mr. Bullard, is only attuned to the moves down in the S&P, which are due to the market being wrong. However, when the market surges on hopes of more liqufity, the market is said to be right about an economic recovery. 

Got it.

"Maybe global markets would have been right and maybe there would have been a global recession coming, in which case we would want to have plenty of leeway to react to that," he explained. It would have simply been a "low-cost" insurance policy to keep going with what was then $15 billion per month in bond purchases, get to the December Fed meeting, and see where things stood, he said.

 

But as it turned out, the market problems proved short-lived, recession fears abated quickly, so the factors facing Fed decision making changed, which in turn supported an end of bond-buying in October, as expected, Mr. Bullard said.

Then agan, this being Bullard, it is, sadly, all bullshit:

"I'm one that wants the committee to be nimble and be able to react to data that's coming in. So maybe it's more natural for me to say we can shade our position one way or another in response to macroeconomic developments" as they happen, Mr. Bullard said.

Sorry, James, have lost all credibility, but thanks to you all those others who have been correctly claiming that it is only the Fed that impacts asset prices were once and for all vindicated.

However, it appears that the FOMC comments have finally overriden Bullard, who will have zero leeway to comment the next time the market "plummets" by 9%. As a reminder, this is what the Fed explained about the next time there is a surge in volatility:

... members considered the advantages and disadvantages of adding language to the statement to acknowledge recent developments in financial markets. On the one hand, including a reference would show that the Committee was monitoring financial developments while also providing an opportunity to note that financial conditions remained highly supportive of growth. On the other hand, including a reference risked the possibility of suggesting greater concern on the part of the Committee than was actually the case, perhaps leading to the misimpression that monetary policy was likely to respond to increases in volatility. In the end, the Committee decided not to include such a reference.

Translation: Bullard had not been given the green light to comment and lead to the market surge which wiped out all mid-October losses.  And now the Fed has explicitly warned that the next time the market swoons, nobody will be stepping in with casual, if snyde, QE X commentary.

Then again, we will believe it once we see it.

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ekm1's picture

At the very end, what Pentagon wants, Pentagon gets.

 

Anybody else (including bank lobby), get in line to beg Pentagon, or else.

LawsofPhysics's picture

Bullshit.  You gave yourself away already.  The Fed and the primary dealers coin the money that the warmongers need to stay in business.  Wake me when the bankers and other useless financial fucks are dead and the treasury is coining the money again under the watchful eye of the pentagon.  In your model the Fed/Wall Street are useless middlemen.  The MIC makes real shit, they would have cut costs long ago if what you say is even remotely true.

SHEEPFUKKER's picture

I think you meant print the money. The mint used to coin money but they ran out again. 

Bay of Pigs's picture

I'm wondering....how does ekm1 get the first comment on all these threads?

And does anyone really buy this garbage about the bank lobby he keeps yapping about? Fact is, the Fed and member banks are running the show and have been all along. The Pentagon? Seriously?

ekm1's picture

twitter. Whenever I notice zh tweets a post, if I am not busy, I comment

Divided States of America's picture

Its great to know that it takes this buffoon bullard over a month to say that the market misread his comments..Man, what a fucker.

falak pema's picture

Assuming "what a fucker" is tru, the question then is does he give orgasm? Or is he a wanker?

I think your remark is rhetorical. "Fucker" has a double meaning, like Dubya means: "Rubya out Saddam!"

Bullard would be a good name for a baloon to the moon; Bullish Bullard! Like Phileas Fogg! 

socalbeach's picture

without even reading the article I might add, since your first comment was 1 minute after it was posted.

PartysOver's picture

Pentagon can't take a dump without the Banksters money to buy the Charmin.  

Squid Viscous's picture

"give me control of a nation's money and I care not who makes it's laws (or defense appropriations)"

ekm1's picture

Correct:

Keyword:

 

GIVE ME

 

Rothchild wanted that power to be given. He didn't take it by force. It was given to him by british military

Squid Viscous's picture

really? when did they control Germany? maybe I missed that lecture in European History 101?

FYI - the quote is from Mayer Amschel Rothschild, not the son Nathan, perhaps you are confused

LawsofPhysics's picture

It has been given to the Fed and their primary dealer banks.  Exactly my point.

ekm1's picture

And it is being taken away quite subtly.

They gave it to them in the early 90s afte soviet union collapsed. People thought nirvana was imminent.

Up until soviet union fell, Fed was at the service of pentagon

Bay of Pigs's picture

What horseshit. You're not only wrong, you're delusional.

ekm1's picture

You luuuuuuuuuuuve my posts, don't you?

Keep getting educated, keep reading

Bay of Pigs's picture

Education? Haha. I would suggest that you start listening more around here and talk less.

You just got schooled by LoP. Wake up. You have it backwards.

ekm1's picture

I will GLADLY stop commenting if readers want me too.

This is a hobby for me, just entertainment

pods's picture

Well ekm, I appreciate your posts. I never understood your talk about war between bankers and MIC.

I think now I do, and I am sorry to say, you are wrong.

They are not at war with each other.  MIC does not conquer and steal treasure. They conquer and force currency on subjects. 

Been that way for a long time.

All wars are bankers wars.

In the old days, I could say that MICs could be opposed to banks, as MICs could pay troops and buy bombs and fuel with treasure.  The MIC today pays for troops and goods with legal tender banknotes.  

The only army that does that today is ISIS, and that is cause they cannot find them a central bank to loan them $$ to buy shit.  So they go old school.

pods

Arius's picture

in all fairness ekm might be into something ... if you look throughout history there is this struggle between strong military man and financial wizard, bankers types ... remember Napoleon and all the bankers around he tried to tax etc ... the same story with King of England ,,, it is really a theme throughout history....

WillyGroper's picture

I didn't get it at first either. He's been kind enuf to draw me pictures when requested.

Read an article somewhere last week that reiterated exactly what ekm1 professes. 

This is going to be most intriguing conversation at a xmas party where one spouse (Phd. history) is the most loud mouth arrogant SOB & his demure wife statistical analyst (military) that was in the thick of 911, yet could not answer why NORAD was not deployed. 

Everyone has their place in the propogandized need to know pyramid. Some are lucky enuf to learn in spite of it. 

Urban Redneck's picture

In the USSA there are only 4 offices that count (State, Defense, Treasury and the CIA) and they all have the same ambition - US hegemony.  The financialization of the economy has certainly created stresses in the relationships(in addition to the jealousy against unworthy usurpers to power via fictitious fiat wealth), but I don't see schisms (yet) when the mIc starts developing financial alternatives (beyond barter, say perhaps real commodity banking and non-debt money) then I would admit we are at the point he describes.

LawsofPhysics's picture

And the last time such power was revolked from a central bank what happened?

 

Again, you are full of shit, if not a banker yourself.

ekm1's picture

Great stuff happened. 2008 crash.

LawsofPhysics's picture

So another 2001/2008 crash?

Sorry, not going to happen, central command has made real selling impossible.  The only thing you might have right.  If you have specific credible information, let's see it.

ekm1's picture

1972 gold de-link

15 years to create too much dollars

 

Crashes every 7-8 years to mop up excess dollars:

 

1987

1994

2000

2008

Next: 2014/2015

 

Inevitable. Otherwise the world just stops real trade

LawsofPhysics's picture

I am well aware of this "analysis".  The problem now is the debt load.

In addition, you can't say that "central command" is running the markets but then say the markets will crash like before, completely contradictory.  Real world trade in dollars is in fact stopping/declining (explains dollar velocity nicely).  Does not impact the BRICS as most of their people understand and already live in poverty and operate in black markets.  'mericans are gettign a temporary dollar strength, but that dollar denominated debt will need to be rolled over soon enough.

 

Moreover, companies like PetroBras are NOT equvalent to Exxon etc.  Total ignorant to think so.

ekm1's picture

Your expectation is for piles of dead bodies on the street.

My expectation was 1 or 2 and lesson learned, which occurred last week with the elimination of the citi guy.

 

Your desire to revenge is quite human, but the system does not work like that. Washington DC is not Moscow or Beijing where such stuff occurs daily.

I only observe the system. Pentagon rules. Period.

 

LawsofPhysics's picture

Revenge is irrelevant, trade is not.  Trade requires real inputs, so does the MIC.  The Fed cannot print up real inputs and again, if the system works as you claim the piles of dead bodies will come.  Still don't see it yet.  The vast majority of paper pushers are still doing just fine. 

ekm1's picture

Let me reitereate this again: DC is not Moscow

LawsofPhysics's picture

Irrelevant.  It's a global market.

ekm1's picture

World Market cannot exist without being enforced by US Navy and Air Force

LawsofPhysics's picture

...and they burn oil, purchased with dollars.

ekm1's picture

No, no, no, no, no.

You should try to understand how the system works.

Dollars are just an accounting entry on a computer, just a transaction book item.

 

Saudis send oil in exchange for protection.

Some people on computers type in the transaction, thus creating dollars.

It is saudis creating dollars, not bank lobby

Hence, no need for gold to be used as reserve, at least until the alliance breaks.

Dollars are just booking record, nothing else

Bay of Pigs's picture

"It is saudis creating dollars, not bank lobby"

FFS, you can say whatever you want to pal, but it doesn't make it so.

So be prepared to get hammered on like a pinata when floating these theories of yours.

ekm1's picture

Theories?

I am only describing what is actually happening. That is how it exactly works

holdbuysell's picture

Yup, mankind is still bartering for real goods with real goods, only the skimming got much more pervasive.

Banksters must giggle themselves to sleep every night.

WillyGroper's picture

Keep posting ekm1.

Sometimes I agree with both sides of the debate and appreciate opposing perspectives. Interesting parallel in you experienced the fall of the eastern block as Mandelbrot did the nazi invasion of France. IBM snatched him up when others ridiculed him. We all know the roll played by that corporate benefactor. All these little electronic gadgets wouldn't exist without his vision either. 

If I've learned one thing in life...

All is not as it seems, nor do we see it all.

In all fairness pooty poot did emasculate the navy.

WillyGroper's picture

Piles of bodies are certainly a possibility especially in a SHTF scenario.

TPTB are trying hard to foment just that with division. 

Do humans ever REALLY learn a lesson?

ekm1's picture

To reiterate: DC is not Moscow, where Putin literally orders FSB to bake traitors and oligarchs in ovens alive. This actually happens literally.

 

1, 2, maybe 3 direct eliminations and lessons gets learned. DC is not Moscow, it is a lot more sublte, not raw like Moscow

pods's picture

Nothing about lampshades or incubators?

LoP is right. MIC is a way for FED to keep expanding debt.  

In the old days, military used to conquer and take treasure. Now they conquer and force the FRN on a conquered people.

If MIC has a convory of tanks, and needed fuel, how would the MIC pay for it if not for conjured money?

pods

ekm1's picture

Because conjured money nowadays is just a computer where data entry people type up numbers.

No need for sophisticated finance like rothchild of old

LawsofPhysics's picture

Again, bullshit.  Someone has to provide that refined gasoline and deisel.

ekm1's picture

I am not getting your point.

Pentagon brings oil and commodities.

Refineries and plants convert it to usable stuff

 

What are you talking about?

LawsofPhysics's picture

Exon and other international energy providers/extractors are not the pentagon.

ekm1's picture

of course they are. Who defends their assets worldwide?

LawsofPhysics's picture

Again, very ignorant statement as companies like PetroBras are not equivalent to Exxon or BP.

Please, the bankers have destroyed PetroBras equity, despite them being the largest producer in the Americas.

ekm1's picture

Ok, I am an ignorant. I accept that.

Now I see why you keep wondering. You don't understand how the banking system works.

 

It is just an bookeeping entry. It is saudis that create dollars. Bank lobby just type up the transaction on computers and manages the dollars created.

That's it. That is the point of not using gold as reserve, since gold cannot be typed in.

Arius's picture

those godamn saudis ... i knew it...