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"Dear Fed, It’s Time To Lean, Or Leave"

Tyler Durden's picture




 

From Bloomberg's Richard Breslow whose recent pieces have been spot on.

Dear Fed, It’s Time to Lean, or Leave

At long last we’ve reached April’s FOMC day.

Interesting that while almost everyone agrees on what the statement will/should say, there is no clarity on what the members, especially the core members, are really thinking.

Communication policy -- the professed desire for "transparency" - and the crutch of “data dependency” crutch have turned market participants into great Fed staffer clones but not the Board Governors.

I for one think this is a golden opportunity for policy makers to lean the right way.

Not that I am unsympathetic to concerns about weaker than forecast 1Q economic numbers, or the the tenuous global situation. But given the Fed has QE everywhere (just today the Riksbank extended their QE), it really must consider that today represents a chance to move toward normalcy without anyone thinking they are going to get (overly or even mildly) aggressive.

Just today BlackRock was quoted as predicting an emerging market “taper tantrum” whenever the Fed begins to tighten. They are probably right but only as a knee-kerk reaction. Any “severe tension” or “major shock”, to quote BLK’s Amer Bisat, is likely to be followed by tactical and then strategic investors realizing what a great opportunity to get in at better levels just presented itself.

This is not 1994 because Yellen and Fischer remember that episode well. The Fed is not about to enter a sustained campaign of tightening. And everyone knows it. The rest of the world has had plenty of notice to get their ducks in a row.

Reserves held by emerging countries are at vastly different levels than they were 18 years ago. The expected weak GDP could actually help here to temper concern.

Goldman Sachs has a very interesting piece this morning comparing the causes and levels of increased corporate leverage in the US and Europe. As they say, corporates are releveraging (some would say their balance sheets are deteriorating) but showing “similar symptoms, different causes”

A big part of the U.S. equation is U.S. executives are looking at yields and realizing that to not borrow at these unsustainable levels could be a missed opportunity they will sorely regret. If you run a viable business and “investors” are throwing free money at you for future growth, why not leverage up and buy back some stock.

This is ultimately something the Fed needs to focus on and lean against.

Norway’s  sovereign wealth fund, the world’s largest (although I would argue that all central banks are now sovereign wealth funds) reported today record gains of $53B in the first quarter. Equity holdings were the driver of this. Good for them. Bad for global markets if monetary policy decisions become tied to any greater extent to the level of the SPX.

* * *

"If"?

 

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Wed, 04/29/2015 - 08:02 | 6042005 stocktivity
stocktivity's picture

Oh yeah...right.  After 6 years of giving away money to the top 1%, they suddenly stop. It's all Bullshit!!!!

Wed, 04/29/2015 - 08:04 | 6042015 Cognitive Dissonance
Cognitive Dissonance's picture

It doesn't look to me like the Fed is cornered and out of bullets. Even we Zero Hedgers are mesmerized by their every move.

Wed, 04/29/2015 - 08:10 | 6042029 kliguy38
kliguy38's picture

So what .........who gives a shit......This is not compicated. Bubble blown now bubble popped. Wash rinse repeat. Boyz make the money goin up and now they clean your clock.

Wed, 04/29/2015 - 08:24 | 6042063 NoDebt
NoDebt's picture

Surely, the Fed would never do anything to harm us.

Wed, 04/29/2015 - 08:27 | 6042070 Headbanger
Headbanger's picture

Like start a major war?

Nahhh...  That would never happen...  This week.

And don't call him Shirley.

Wed, 04/29/2015 - 14:48 | 6043683 asteroids
asteroids's picture

Nope, my rigging rates they have raised the cost of living around the planet. The recent fall of governments across Africa is the fault of the FED.

Wed, 04/29/2015 - 08:36 | 6042107 new game
new game's picture

cant clean my clock. what time is it? what clock?

Wed, 04/29/2015 - 08:51 | 6042180 mtl4
mtl4's picture

This is not going to be the same bubble popping we've had in the past because they are closing all the doors (ie electronic currency and negative bond rates) and leaving big capital nowhere to go.  When this thing finally rolls over (people lose complete faith in gov't) it will be like a supernova explosion, there really isn't anything in history to even compare it to.

Wed, 04/29/2015 - 09:11 | 6042261 indygo55
indygo55's picture

The big capital is being herded into stocks where they will be anniliated. 

Wed, 04/29/2015 - 13:02 | 6043226 mtl4
mtl4's picture

All is going as planned, isn't it?!

Wed, 04/29/2015 - 08:14 | 6042030 VinceFostersGhost
VinceFostersGhost's picture

 

 

The Fed the only part of government I see working today.

 

If we have nothing else to be thankful for, we have that.

 

 

Seem's there's something else I should add here, but I can't think what it is.

Wed, 04/29/2015 - 08:21 | 6042055 Comte d'herblay
Comte d'herblay's picture

The FED is not part of government, its powers make it the de facto unelected ruler, controlling our lives in ways that were never thought of and far exceeding the boundaries of its charter.

J Yell  is our CONgress.

Wed, 04/29/2015 - 08:29 | 6042077 VinceFostersGhost
VinceFostersGhost's picture

 

 

The FED is not part of government

 

If the Fed wanted Clinton's and Lerner's emails, they would have them.

 

Are you sure they aren't the government?

Wed, 04/29/2015 - 08:30 | 6042085 medium giraffe
medium giraffe's picture

Shh.. you'll get suicided again...

Thu, 04/30/2015 - 05:57 | 6044143 Comte d'herblay
Comte d'herblay's picture

My point is the FED is the government, not part of it.

And the unelected one at that.

Who controls the money controls the world.

William Pitt made this statement: "Let the American people go into their debt-funding schemes and banking systems, and from that hour their boasted independence will be a mere phantom." He realized the maxim that Rothschilds laid down as fundamental: "Let us control the money of a country and we care not who makes its laws."

Wed, 04/29/2015 - 09:18 | 6042277 NotApplicable
NotApplicable's picture

Ummm... the banks ARE the government. Always have been. Always will be.

To think otherwise is to misunderstand the power of the purse.

Wed, 04/29/2015 - 08:16 | 6042036 Comte d'herblay
Comte d'herblay's picture

Don't know about mesmerized.

 If anyone wanted over the last 7+ yrs to make some serious money to offset any other losses or simply enhance their own assets, all they had to do was react to the moves, which were predictable, forecast as they were by the market's historic rise nearly every day, uninterrupted by any major decline. 

Alan Greenspan started the ZIRP and NIRP a long time ago to enhance the wealh of the 1%, and that succeeded spectacularly.

If there is mesmerization, it's to this blog, which was a major error on our part for sticking with it, when ignoring it would have been a boon to our own balance sheets. Or attended to as a contrarian indicator to do the opposite of it's hourly criticism of the Fed.

 

Wed, 04/29/2015 - 08:35 | 6042101 Its_the_economy...
Its_the_economy_stupid's picture

SO you're a "blue pill" kinda guy.

 

https://www.youtube.com/watch?v=RhlXqYiTz2Q

Wed, 04/29/2015 - 08:46 | 6042137 new game
new game's picture

FUCKEN eh, this bullshit story goes back to reagans trickle down theory.

30 plus fucken trickle down years and the rich are as rich as ever and the middle class being gutted by cheap china labor and the poor are as poor as ever. the poor has become the trickle down free shit army. redistribution of marginal funds financed by the trickle down fed. all a fraud of a magnatude NEVER experienced by a DEMOCRACY that can't counter the fraud...

owned by the system, powned, ha... baaaa. sheeple, speak properly-baaaa.

 

 

Wed, 04/29/2015 - 09:09 | 6042254 doctor10
doctor10's picture

as the big banks continue to crap out they will be calling in all available capital as collateral for their derivative house of cards

watch what happens to facebook/amazon/newtflix and every other "over-valued" biotech/socialmedia company created to reservoir capital in plain sight and out of reach of the tax and regulatory juggernaut.

It'll be a REAL eye-opener for all those companies and shareholders who thought it was all going to be "theirs"

Wed, 04/29/2015 - 08:09 | 6042028 SheepDog-One
SheepDog-One's picture

Stocktivity yea it's like a drunken rapist on a 6 year spree.....but he's all back to normal now. Only fools could believe it.

Wed, 04/29/2015 - 08:14 | 6042037 negative rates
negative rates's picture

It's called trickle down, it works for them, everybody else, not so much.

Wed, 04/29/2015 - 08:03 | 6042008 Atomizer
Atomizer's picture

Someone needs to grab me a tupperware bowl and a pair of scissors, Janet needs a haircut. 

Wed, 04/29/2015 - 08:09 | 6042022 medium giraffe
medium giraffe's picture

All I could find at short notice was this chainsaw with extended hand guard and fetching gloss red paint job, but I still think you should give it a go.

Wed, 04/29/2015 - 08:44 | 6042132 GMadScientist
GMadScientist's picture

Sorry, all I've got is this bonesaw.

Wed, 04/29/2015 - 08:49 | 6042167 new game
new game's picture

rusty dull fish fillet knife?

Wed, 04/29/2015 - 08:03 | 6042009 buzzsaw99
buzzsaw99's picture

fuck bloomberg, fuck the fed, fuck goldman. they are the problem not the solution.

Wed, 04/29/2015 - 08:03 | 6042012 juggalo1
juggalo1's picture

I'm not sure I agree with your premise.  If company balance sheets shrink those assets must be shifting somewhere.  You can't have everyone increase leverage and reduce balance sheets at the same time.  Unless the excess is being consumed in writedowns and losses then the assets must still exist somewhere.  It can't just be going back on the Fed excess reserves can it?

Wed, 04/29/2015 - 08:09 | 6042025 Atomizer
Atomizer's picture

Stop being to logical. Well said BTW. 

Wed, 04/29/2015 - 08:33 | 6042091 BoPeople
BoPeople's picture

The borrowed debt-money is going to purchase stock owned by insiders ... so the money is being pumped out of the company to insiders and the company is taking on the debt.

If you define money as an asset, then you know where it has gone.

Wed, 04/29/2015 - 08:53 | 6042193 new game
new game's picture

in essence they are financing their own bonuses against future profits.

historically cheap money.

2.99% new car loan

3.5% HELOC

3.75 30 yrs mort.

WTF, telling of the value of cash.

zirp til death of dolla

ZIRP'd to DEATH

Wed, 04/29/2015 - 08:07 | 6042020 williambanzai7
williambanzai7's picture

Wed, 04/29/2015 - 08:14 | 6042034 Atomizer
Atomizer's picture

Think I'm going to throw up WB7. Lynda Carter was a hottie back in the day. 

Wed, 04/29/2015 - 08:08 | 6042021 SheepDog-One
SheepDog-One's picture

'Move towards normalcy'....big deal...we've been to full-retard, and even Simple Jack knows you can never go back from that.

Wed, 04/29/2015 - 08:14 | 6042035 buzzsaw99
buzzsaw99's picture

once you pull back the curtain and realize there is just a single hobbit controlling the whole thing you can't go back to believing in free markets after that.

Wed, 04/29/2015 - 08:46 | 6042145 mvsjcl
mvsjcl's picture

Yep. I think too much has been revealed. The market can never go back to "normalicy." In any case, that whole normalicy thing was based on the masses being ignorant--it was just as manipulated back then as it is now. Difference was, only the insiders knew it. Genie is out of the bottle

Wed, 04/29/2015 - 08:15 | 6042039 yogibear
yogibear's picture

FOMC Fed members flapping their gums.

At some point gum-flapping will be ineffective.

When the Fed loses credibility is when the free markets return and they will panic. By then it's too late.

It will take some time. 

Wed, 04/29/2015 - 08:17 | 6042044 buzzsaw99
buzzsaw99's picture

the fed has zero credibility with anyone on any subject

Wed, 04/29/2015 - 08:15 | 6042040 keremetski
keremetski's picture

Currently, she is a bag holder. In very near future, she is a witch ( hunted ).

Wed, 04/29/2015 - 08:17 | 6042043 BoPeople
BoPeople's picture

I wonder if back in 1929, after the Fed and banks had created a decade of free and misallocated money, people got together and said: "this has to stop" and they started on the road to reforms that eventually led to the Glass Steagall Act in 1933.

The bankers and elitists have thrown another drunken orgy for themselves at the expense of real people. Now someone has to be the adult and clean up after them.

Unfortunately our politicians and media were invited to the party this time and photos of them were taken dancing naked with hookers on top of the bar... so they have been compromised and do not have the guts or maturity to do what is right.

Wed, 04/29/2015 - 08:25 | 6042069 venturen
venturen's picture

I wish this is what the Bloomberg article said!

Wed, 04/29/2015 - 08:24 | 6042064 Wm the Shrubber
Wm the Shrubber's picture

The fact that Breslow can even contemplate "normalization" demonstrates that he remains captive to outdated thinking.  There can be no normalization as there is no return to "normal".  The Fed will make feints in whatever direction they deem to be politically expedient and buy them more time, but we are moving unavoidably towards a whole new economic/societal phase.  And at present it doesn't look very promising!

Wed, 04/29/2015 - 08:49 | 6042170 mvsjcl
mvsjcl's picture

The shrubbery knows!

Wed, 04/29/2015 - 08:25 | 6042067 venturen
venturen's picture

What difference does it make....ciitdel et al own the "market"...FED Chairmans are their bitches! Just ask bend over Ben!

Wed, 04/29/2015 - 08:26 | 6042073 SheepDog-One
SheepDog-One's picture

Watch as they report GDP at 3.5% or so just to flip everyone on their head for half a day....gotta keep em on the edge of their seats Ya know!

Wed, 04/29/2015 - 08:27 | 6042076 Seasmoke
Seasmoke's picture

What would I do with with all this cheap paper I was given , when the bubble pops?
Well of course I would buy up all your assets for pennies on the dollars !! Isn't that what Mr. Yellen meant when she said all deadbeats should have bought more assets !!!

Wed, 04/29/2015 - 08:31 | 6042086 Its_the_economy...
Its_the_economy_stupid's picture

unintended consequences bitchez.

all manipulation is unintended consequences

Wed, 04/29/2015 - 08:47 | 6042150 GMadScientist
GMadScientist's picture

Pssst. It's not just the manipulation; unintended consequences are at the heart of any real analysis of economics.

Wed, 04/29/2015 - 09:52 | 6042456 El Hosel
El Hosel's picture

"Pssst. I want to throw up everytime the Fed's "handing", "owning", "rigging", of the "Markets" is called "manipulation"... It is what it is, and maniplutaion does not begin to explain it.

Wed, 04/29/2015 - 08:37 | 6042110 goldenbuddha454
goldenbuddha454's picture

.2% gdp growth can only mean RALLY MARKET RALLY!

Wed, 04/29/2015 - 09:18 | 6042281 NotApplicable
NotApplicable's picture

I think Janet will choose to lean... on all of us, of course!

Wed, 04/29/2015 - 09:22 | 6042292 q99x2
q99x2's picture

FREEZE stock prices and close the markets or did they already do that.

Wed, 04/29/2015 - 09:34 | 6042347 Fun Facts
Fun Facts's picture

This article contains the invalid assumption that the FED is in any way interested in the well being of America and Americans.

The FED is a private malevolent predatory corporation, part of a network of mafioso criminals out to usurp the wealth of the world for the exclusive benefit of their anonymous foreign shareholders.

Wed, 04/29/2015 - 09:48 | 6042435 El Hosel
El Hosel's picture

F T F... eom

Wed, 04/29/2015 - 10:09 | 6042536 texas economist
texas economist's picture

I encourage all who are following the Fed to read my article on Common Sense Economics. Very few understand the dynamics of Federal Open Market Committee decisions. Please visit my blog and share the link.

http://quillian.net/blog/gaming-the-fed/

Wed, 04/29/2015 - 10:16 | 6042567 Atomizer
Atomizer's picture

Didn't read it. Good job in sharing the obvious outcome. 

Wed, 04/29/2015 - 10:52 | 6042702 teslaberry
teslaberry's picture

everyone knows this game of redistributing wealth to the top will go on until war begins, civil and international. the first nations to go to war on their own territory lose, the last nations to have war on their own territory win.

 

stalin knew this lesson well. the british but really it was the  americans who betrayed stalin for a whole 2 years from 42 to 44.

 

russia did almost all the work of dying on ONE front and was incensed with roosevelt and churchill because they duped him for 2 years.problem for stalin was he started a fight before having a solid lockup with the u.s. and britain. so really he was in no negotiating position with the u.s. to demand from  them a second front be opened. 

it's almost always best to be the last person in a fight. and that includes civil war. which is why our dhs is modeled after the stazi and other fascist entities. there will be no civil war in the united states. not before at least 10's of thousands are disappeared. 

the so called 'reset' is not going to happen for many decades if at all. and when it comes it will be something different than what people expect entirely.

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