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Bonds & Bullion Surge, Stocks & USD Purge As Fed Credibility Questioned
It appears faith in The Fed is falling. A disastrous Empire Fed print (following weak Japan growth overnight) has led to a decidedly risk off move this morning. The move seems to signal like a "QE4"-on trade (USD down, bonds bid, PMs up) but the equity market weakness suggests trust that the recovery hope The Fed keeps spewing just is not there... in other words - for stocks, "bad" news is no longer good news as the narrative begins to break...
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Corrupt, criminal, crony Fed had credibility? In which universe?
Just in Hell, which most are living in.
It appears faith in The Fed is falling.
So who are we going to invade to fix this?
If Silver breaks above $15.60 it would confirm an inverse head and shoulders....likely 10% upside from there
http://www.goldsqueeze.com/analysis/inverse-head-and-shoulders-shaping-u...
The one you are living in right now, no problem cause it's almost over.
Bad news is no longer Good news? WTF? say it Ain't so...
Oh yes please say it it so. Beacuse never has it been more simple to call a peak in the equity markets than right now.
With so little liquidity in the bond market, and if buyers like China stop showing up, the Fed could raise interest rates and do QE at the same time. Talk about a queer monetary policy
QE infinity save any minute.
in case anyone could possibly forget
https://www.youtube.com/watch?v=0akBdQa55b4
Go ahead, hike it!
What's worse for the FED, a rate hike going into a recession or no rate hike and the same recession? The Bernanke over played his hand. If the FED had stopped this insanity in 2012 before Housing Bubble 2.0 inflated along with the further inflation in equities Janet would he sitting on 3% FED rate without the housing inflation of the last few years. Consumers might be spending a little more if they weren't being crushed by housing costs.
But now it's to late. The world realizes the bankers have no clothes.
Doubt faith in Fed is failing. How many times we seen real bad economic data and initial reaction is stocks fall only to see green in the session, look at last week -30 and close green. Let's wait to see if close below 200 dma before declaring faith fail.
fire, you are missing the point. Bad news used to send stocks soaring, as investors assumed the Fed would rush in with free/cheap money. Now people are selling bad news. We all know that the PPT will rush in now and buy like crazy to hide the fact that people are selling. What's different is that people are now selling bad news, forcing the PPT to keep coming in.
balanced, the point is lost of faith in fed. as you said ppt or someone is going to buy which restores faith in fed. Declaring lost faith in fed is premature. When they announce QE4 and market tanks, that's when you get lost faith in fed.
So, THAT'S what we're waiting for?
Do you trust the fed? do you know anyone who trusts the fed?
NYSE still closed, too soon to make calls
Dow 1450 BTFD
"1500-1600 gets the fat cow to turn on the printers. Sooner we get there, sooner we get another Trillion from the US Taxpayer."
(internal memo at GS Trading desk)
Nothing another year of $79 Billion per month of QE can't fix.
Abject insanity, but watch them do it.
Probably more. They'll have to come up with something stealth. Bullish for tar and feathers.
Yeah - gotta' Greece the wheels of prosperity. Who will be the next Belgium, I wonder?
$6.50 on gold is a surge?
In the price of gold, $6.50 is like one of those four inch tsunamis that hit Hawaii a couple of years ago. Yeah, they were technically tsunamis. But in the grand scheme of things they meant nothing.
Yup, and what's his name Druckenmiller put 20% of his money in Gold, in a fucking paper Gold ETF!
That's not Gold! It's a Mortgage Backed Security or a Credit Default Swap!
Why doesn't this Druckenmiller buy physical?
I bet he has tons of it, just not for your ears!
Probably can't get it delivered.
Because it's heavy, and needs to be protected from theft, kind of like a human life.
So there's a paper market based on trust, remind you of anything? (*cough fiat cough*).
It's like those old Japanese Parents whose children are too busy to come visit them; so they hire complete strangers to come visit and pay them to do so.
"It's like those old Japanese Parents whose children are too busy to come visit them; so they hire complete strangers to come visit and pay them to do so."
End of days!
Well, if all he is interested in is making fiat, GLD is OK if you can move in and out fast.
If you are looking to perserve value, GLD is not so good.
Its like buying GLD options, and taking any profits and buying physical. If you think stuff will go squirrely, but not right away its not a bad plan.
Because physical gold in serious quantities has HUGE transaction overhead in $ and time, PLUS big holding overhead.
Coins are best for physical, cannot buy & sell millions of USD in coins easily + quickly.
According to Macquarie Research:
Deflators of the world unite
Impact on the US & Global PPIs
Pressure to export overcapacity in flat trade=devaluations
- US wholesale inflation could get worse over the next twelve months. PPI ex Food & Energy stands at only ~0.5% YoY, although it slightly accelerated in July. It is likely that regions with the greatest need to export domestic over-capacity (China, Euro, Japan and Korea) will accelerate export of deflation.
- As discussed (here), China is between a rock and a hard place and unless global cyclicality and trade recovers (an unlikely occurrence, in our view), the pressure to devalue Rmb will remain unrelenting. China’s US$ import prices into the US are already falling at ~1.2% and have been negative for six months. Given latest Rmb devaluation, it is quite likely that the index of China import prices (US$) will fall by ~2% or more.
- At the same time, the Eurozone and Japan are also increasingly exporting their domestic over-capacity and deflation into the US. Germany’s import prices into the US are currently falling by ~2% and have been negative for seven months whilst Japan’s import prices are falling by ~3%.
Low supply of US$ adds further pressure
- Inability of the US to improve its velocity of money (i.e. encourage consumers and businesses to accelerate spending and investment) and associated slow growth in global trade (volumes rising by less than 2% vs. historic average of ~6%), implies that supply of US$ remains exceptionally low (close to zero vs. average growth between 2001 and 2013 of ~15%, refer here and here).
- This in turn has a tendency to push US$ exchange rates up (DXY and US TWI), causing further expansion of deflationary pressures and erosion of commodity indices, feeding through global supply chains. Apart from an outside chance of much faster than expected nominal GDP growth rates leading to higher US Current Account deficits, supply of US$ can only expand via QE4.
Challenging choice for the Fed
- As the latest revisions of the US GDP shows, not only was this recovery the most muted on record but perhaps most importantly the US has a challenge accelerating nominal GDP growth rates above the 3%-3.5% range (here). Given the US’ overall leverage of ~3.5x GDP and need to continue leveraging in a more sustainable fashion, it is nominal rather than real GDP growth rates that matter. The objective is to keep nominal GDP as high as possible and real interest rates low. Deflationary pressures are therefore not constructive.
- Whilst the Fed seems desperate to get out of zero range-bound policies of the last seven years and is constantly shifting its public decision goalposts (first it was unemployment, and then it was broad measure of under-employment, followed by wages and inflation etc), it is just as much between a rock and a hard place as China is. It is the classic case of damned if you do and damned if you don’t. As long as it is accepted that deleveraging is no longer possible, then what is needed is QE4, not a rate rise, but currently the hurdle for QE4 is higher than doing nothing or raising rates and then walking them down again.
- The above implies that deflationary winds could get stronger and volatility rates higher. We continue to prefer commodity consumers and markets with significant domestic liquidity (i.e. India, China, Taiwan & Philippines).
FED will raise the FFR just to get off ZIRP regardless of economic data because they now understand that ZIRP is destroying financial markets and business models and corporate investing PLUS creating HUGE asset and malinvestment bubbles.
Problem is that they should never have gone to ZIRP to begin with, and then they compounded their blunder by keeping ZIRP for far far far far too many YEARS - classic example of socialist proletariat-pandering academic imbecilic behavior, ie Bernanke.
FED, and especially Bernanke, are crisis AMPLIFIERS, not fixers.
Short term it has been very profitable.
Tomorrow the weekend starts somewhere.