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The Next Move For The Fed: "Trial Balloning" QE4
Submitted by Dominique Dassault of Global Slant
The Next Move For The Fed: "Trial Balloning" QE4
With the idea of a Federal Reserve interest rate hike quickly fading the only real question left to ponder is what is their next move…if any?
Before that question is answered let’s consider the current economic environment in the United States. First of all Q1 GDP is likely to be much softer than current expectations. Most of the economic data point to it i.e. throw a dart at the Q1 economic calendar and you are sure to hit a soft statistical series. Key to this trend is the $88B Q4 inventory build that is not being depleted. Wholesale and business inventory data from Q1 are sluggish which is not entirely unexpected. More importantly though, Q1 wholesale and business sales are dramatically lagging this anemic inventory growth suggesting a further bulging of finished goods for Q1. This is not a good recipe for Q1 economic growth…or the Q2 outlook.
* * * * *
Furthermore the dollar has launched in Q1 [perceived Fed tightening of rates], effectively, hamstringing exports [by making them more expensive] while importing deflation from around the globe. The continual jawboning, from the Fed’s own FOMC members and Treasury Secretary Lew, that a well bid dollar equates to signs of economic strength and confidence in the U.S. economy is totally bogus. The dollar’s strength can be primarily assigned to the currency diluting policies of both the ECB and the Bank of Japan…both of which are still at the early stages of open ended debt monetization strategies. Add to that the twenty-four separate central bank interest rate cuts in the first three months of 2015 and, ceteris paribus, the dollar strengthens…especially as the world’s reserve currency [at least for now].
Moreover, Wednesday’s Federal Reserve statement was littered with dovish language. Also referenced was a hint of frustration with the strong dollar and its negative impact on exports. Consider the following excerpts …Information received since the Federal Open Market Committee met in January suggests that economic growth has moderated somewhat…export growth has weakened. Inflation has declined further below the Committee’s longer-run objective, largely reflecting declines in energy prices. Market-based measures of inflation compensation remain low. And that The Fed’s internal projections for the federal funds rate, at the end of calendar 2015, were halved further demonstrates their unease.
The simplest short term fix, addressing all of these concerns, is to weaken the dollar. The current strength of the dollar truly cuts into both of The Fed’s bureaucratic Congressional mandates. Incrementally slower economic growth is never good for employment [although the data have, thus far in 2015, been very good…although income growth is non-existent] and, as mentioned earlier in this post, a stronger dollar is dis-inflationary by virtue of both less expensive imports and by depressing the value of commodities [almost all of which are dollar denominated]…the most important of many being petroleum.
The new paradigm in the domestic economic mosaic is that the U.S. economy cannot presently withstand the headwinds of an overly starched and strong dollar. Greenback strength also has a negative offshore impact as it increases the costs of dollar based liabilities held by foreign companies/countries – which are substantial. The Fed is well aware of this dilemma and, of course, will respond accordingly as they are hostage to the financial markets.
* * * * *
Sometime after the initially soft Q1 GDP “print” expect a “trial balloon” of more debt monetization [QE4] issued by some FOMC constituent. Naturally this will weaken the dollar and immediately suspend/reverse the Fed’s dollar based concerns articulated earlier in this post. However, this will also serve to “piss” off both Kuroda [BoJ] and Draghi [ECB]…as their heavily depreciated and shorted currencies will, at least initially, sharply reverse course…and the continual game as to which global economic zone can depreciate their currency the fastest is “on”…again.
In the end, however, this is a truly pointless game. Eventually one of these infinitely diluted currencies will certainly collapse [most likely the yen] as investors finally, and correctly, perceive these actions as economically destructive. This will mightily shake global economic confidence but may, perversely, be the necessary flash point to end the serial money printing illusions of global central bankers.
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Janet Yellen has had menopause right? This is actually the most important thing to know for investing.
Yellen is an alien hybrid with no ovaries. Mare piss estrogen fucked up her nasal cavities and turned her hair to albino melamine free Snowdyke White.
She can still print..., how about a mother of all QEs 20 $Tr in 3 months :P
Yellen's been giving men a pause in their virility since her face went public as a child.
But he was such a handsome boy.
Release the Kracken!! I Give You Q EEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEE
Infield pop up................................
Vazquez is waving everybody off...........................
Caught in front of the plate...................
That ends the inning..................... the score tied zero zero.
I read the title as "Trial Baloney"...heh.
Whose' trial baloney is biggest ?
Yellen makes a goat look attractive...
THATS HARSH......I like goats
Well, you can't accuse the Fed of not having a sense of humor:
https://humoresyamores.files.wordpress.com/2012/04/fiat-money.jpg
",,,the necessary flash point to end the serial money printing,,,"
Yeah but then what? A new global currency? Woar? Both?
first you will have competing currencies for GRC (already has bugun)
then you have major world war (started already, just not full scale yet)
last, the winner (if there is one) sets the world stage for Bretton 2.0
When did QE3 end?
I keep asking, but no one wants to answer me.
Young fools.
How does anyone know since we can't have a true audit of the Feds balance sheet? They could be printing a trillion a month yet for all anyone knows--they are just telling us they aren't and everyone takes their word for it. If they aren't doing this yet, they will in the future---they will realize its pointless to tell people the truth---because we lie when things get serious.
QE3 ended when the Fed said it did. I very much doubt that Fed printing ended with it. It's a matter of what they're purchasing from and through whom as well as when, and how much. Think Belgium.
it ends in october 2014 but the Fed keeps buying bonds for 150 b$ a year, in order to maintain the balance sheet at 4500 b$
It's really too bad this country wasted so many decades building a real economy when all we needed was the Federal Reserve to print, purchase stocks and bonds, ZIRP, NIRP. Oh yeah, I forgot burp and slurp.
burp, slurp, AND CIRCLE JERK. Fixed it for you.
The balance sheet actually expanded by $50 billion by Dec 2014 when QE3 supposedly "ended" in Oct 2014. Their asset purchases actually increased after QE3 ended, which might explain how the stock market shot straight up after the Oct mini-crash.
They can not stop money printing without a monetary overhaul. The economy wants td de-lever which is deflationary, not possible in a debt based monetary system, especially one that has been going on this long.
All explained here:
http://debtcrash.report/entry/history-and-introduction
You really need to fix the spelling and grammar issues with that write up so that we can reference it to the rest of the world. Nothing kills legitimacy for the sheep than to see an authoritative informational with errors like that. That said, it is pretty good. Please fix.
Nah, nothing says "stark raving mad" like a classic Tyler Durden rant.
Riddled with grammatical errors, and one might reasonably assume, logical ones as well.
It's Zero Hedge to a "T."
In a debt-based global economy, deflation means default for governments and corporations.
QE18
All these economists and financial wizards with PhD's are following the exact same strategy as that of any 3-year old when given a piece of candy - MORE!...Are they smarter than a 3-year old? I have my serious doubts...
US has debt of over $18.15 trillion and unfunded liabilities over $150 trillion and 122 million taxpayers. And US debt and unfunded liabilities rise at $7 to $9 trillion a year at least (Kotlikoff says they rise at $11 trillion a year).
So interest rates can never be allowed to rise. Or even come close to normalization.
"No Rate Normalization During My Lifetime" BernankeQE forever.
Blink! U.S. Debt Just Grew by $11 Trillionhttp://www.bloomberg.com/news/articles/2012-08-08/blink-u-s-debt-just-gr...
Those "unfunded liabilities" are only reality if you think people will carry water for the babyboomers indefinitely; I wouldn't take that bet.
The US has wealth of $55T...maybe they can find some coins in all those cushions while they're popping pills and ordering drone strikes and such.
"Obama tax cuts"
Uhhh, what tax cuts were those?
As to carrying water for the baby boomers, I agree. I can't believe their is one person under the age of about 45 years old who isn't mad as hell that they are paying social security----money that they will never EVER see in their old years. They are just taking care of the current crop of nipple suckers.
As it was for those under 45 20 years ago. No one was or is given a choice. So stop playing their game of divide and conquer.
Scotty, the Bush tax cuts expired.... Obama extended them.
"No Rate Normalization During My Lifetime" Bernanke
No normal economy during Bernanke's lifetime.
Not only can rates never go up but they must either print moar or lower rates forever or maybe a combination of both.
Sooner or later even the FedRes will realize that the horse is staying dead.
no matter how many times you flog it.
What will come first?
An increase in current QE, or the Shale bailout?
Young fools.
Shale bailout? Don't be absurd. Those aren't union workers. Therefore, no bailout.
I agree it is the season again to determine "firsts" for this Summer Circus.
Greek bailout or bailin ?
Any EU exit.
New QE
Major Collapse (Japan, China, any PIIGS, any northern Europe, Venzuela/Brazil/Argentina/Peru)
Any Interest Rate shock/surprise.
Wow, where is the good news ?
Of all the possibilities, a student loan bailout and/or some kind of illegal immigrant bailout. Gotta protect (bribe) the voters (FSA).
I'm reminded of the exponential decay as a coin spins faster and faster just before falling flat.
I thought you were talking about the coin roller....where it circles down the funnel...round and round it goes...till it falls into the void.
And the Fakeonomy continues.
Does ISIS take requests? I can think of some good beheading candidates.
Oh the lists we could make for them!
I beleive the WE channel is looking for late night content.
They will raise rates a smidgin to keep credibility then QE what Eva foreva
Yep. Rates go up a little so they can then lower them. The Ponzi Munchkin is out of bullets. Look for her to resign 'to spend more time with family' and leave the house of cards to her successor.
Collect $200 salary as you pass GO
Ok, look. Let's say you're in the business of printing LGPP's (Little Green Pieces of Paper).
If the price of oil is low, you can print fewer LGPP's (petrodollar). No good!
However if you jawbone an interest rate hike, then the currency surges in value (the rest of the world is reducing rates to negative). So now you can print more LGPP's. But if you (clearly) cannot and will not hike rates, then you're back to oil.
So you need to hike oil prices. How? Unfortunately there's a lot of it!
To the rescue, QE(). There will be QE(4). And it will be fucking glorious. The US stock market will continue upward, accompanied by widespread poverty and cops, cops, cops.
Currency 'war' has definitely escalated. Seemingly (but they're not) random moves in all USD pairs. FX is an incredibly absurd 'market'. It's basically a live realtime arbitrage party. Interday price action offers amazing technical and momentum plays for serious $$$ with 50x leverage and consistently reoccurring trade set-ups though.
Fading CB announcements (in either direction), almost any major propaganda release offers 50+ pips on either a correctly surmised 'bias' or (my preference) a fade off the initial directional move (+/-).
It's basically scalping. May as well get what ya can while it's still around right?
YOU CAN'T HANDLE THE TRUTH!
Print more money! We can ALL be billionaires!!
Raise the minimum wage to $1,000,000,000 USD/ hour then we'll all be BBC. Billionare Boys Club that is. HAHA
only a man with 2 dicks can suffocate a pig by fucking from the nose.
I could have happily gone all day without reading that comment.
He would need two pencil dicks .... and a tough nut sack .... to stuff in the mouth breather's mouth .... I think you need some counseling !
Wonder if Steven Hawking could give us an equations for the impending economic singularity....when Warren Buffet will own everything...including the FED and his name will be revealed Mory Goldblatt and that he has found the secret to eternal life and everyone will be his serfs forever!!!
QE hasn't stopped, it's only gotten bigger, with BOJ and the ECB now carrying the QE baton.
It will be the FED's turn again soon, and it will have the same effect....that of a wealth transfer mechanism.
[from all of us to the bankster cabal]
Heads we win tails you lose.
Don't forget China. China can still print another $23T yuan and buy up the rest of Africa and South America. Do you suppose that is really the game here?
Unless US bonds go NIRP, the USD will remain strong.
Keep in mind that Europe wants a weaker Euro, so if the US goes NIRP, Europe may go even more NIRP.
And the shit show rolls on.
goes NIRPIER ?
yes and sometime referred to as a purple nirple.
And then of course there's the March 15 debt ceiling deadline that came and went and virtually nothing was reported.
Yeah, it is a bit nerply out. I mean nipply. Er nippy.
Obama Climate change jumbo balloon loan to save the planet.
/sarc
"Also referenced was a hint of frustration with the strong dollar and its negative impact on exports."
But no hint of frustration with the negative effect of FED policy on savers.
Regardless what the FED does, the down phase of the cycle will continue. 1+1 ALWAYS AND FOREVER = 2.
Moneybots - True. It's just that it becomes "2" a lot faster for some people rather than others.
The Lord Is A Monkey | Butthole Surfers
We can reclaim US Manufacturing, education, Banking, Finance and law enforcement with hiring Illegals from Central America:
- And All Your Dreams will come true S/
- POLICE DEPTS HIRING 'WORK PERMIT' IMMIGRANTS AS OFFICERS...
- 'Handing over gun and badge to somebody whose background we don't know'...
- Small-town America 'struggling to cope' with wave of new migrants...
- Illegals skipping deportation hearings spikes 153%...
What point does QE4 have? Sending stocks to recorder highs. Making the 1% even wealthier.
They can't even spend what they stole over the past six years. The free money train has made the absurd mainstream.
Corporations like Under Armour used stock to fund the $600 million purchase of two fitness apps that never made a dime and never would have. Facebook and Google have been paying billions for companies whose entire market is 1/4 of what they paid. Paying $2 billion for a company that exists in a market with a total value of $200 million makes no sense. Make it up in volume?
The insanity distortion field is enabled through QE. It needs to stop.
Stock buy back programme catch them in fraud. RICO rings a bell.
the article is right qe4 is coming
QE hasn't stopped. Printing goes on, and equity manipulation. All the old QE funding has not been called and never will be. One small aspect has stopped, the purchasing of crooked securities and US treasuries (but I repeat myself).
Author has not thought this through. US needs to issue more and more and more debt, the world market loves it, de-dollarization efforts to the contrary. And we love them to love it! Yellen cannot raise rates until she floods the market with US debt.
In the old economy, you know the one in the textbooks they gave you at school, this would be nine kinds of disasterous. In fact, Yellen raising rates would also be disasterous. Standing still is a disaster, moving one way is a disaster, moving the other way is a disaster. Fun, huh? The Shining Path of Least Resistance is to try to break ZIRP, and I guess I agree.
Hold onto your wigs and keys.
end the serial money printing...
...that horrible cereal noise... [/dinah, the langoliers]
This is BS. What is getting rather obvious is that CBs made some kind of an arrangement on timing of their QE programs as they finally realized and agreed that doing it all in parallel does not benefit anyone. So now they are doing it in “waves” or phases, that is, one after the other. While Japan and Europe are printing and weakening, US holds steady and tries to use its strong dollar for other purposes (hint: politics). One can guess that a few years forward they may trade places. This way there is at least some benefit for some countries some of the time.
You've got it. At least what they are trying to do. There is definately a triangle between Boj Fed and ECB if not more CB's. Obviously Swissie knew ECB printing was coming so it's probably even bigger.
What would you give to be in on some of these meetings. Would love.... Some fat stogies and fine whisky and get behind the wheel of the printing presses. Not to mention waxing up the helichoppers to throw money out of.
The whole Federal Reserve system is a game of Jenga.
They really don't know what the fuck they're doing or they absolutely know what the fuck they're doing. They can't raise 25 bp. HA If the market
If the market starts to trade on QE4, there will be blood in the markets right quick. THIS WILL BE EXTREMELY BULLISH FOR STOCKS I GUESS AS PLAYERS WILL BUY ALL THE THINGS.
Crack-up Boom!
At $19 Bil, I see Snapchat as substantially undervalued and a sound investment.
WHAT THE Fed should have done in the first place was put a yield target on the 10 year bond. Then they would never would have had to buy a bond as the market would have moved yields on its own. The Fed already owns roughly 45% of all Treasury bonds with maturities longer than 10 years, they can't buy anymore or they will kill all liquidity in the market.
I've seen so many smart asses .... who can't spell .... isn't it "Ballooning" ? Carry on !
I lost the fifth grade spelling bee with "baloon"