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Investors Dump Stocks For Safety Of Bonds & Bullion In Yellen's New "World Of Confusion"
There is really only one clip for this week - so full of chest-beating "I told you so"-ism early on, only to have hope crushed by an old granny's confusion - it's an oldie but a goodie...
What did Janet Do?!!
- Copper -3.1% - worst week in 2 months
- WTI Crude - biggest 2-day drop in a month
- Silver - biggest 3-day gain in 4 months (best week in 4 months)
- Gold - biggest 3-day gain in 4 months
- US Equities - worst 2-day drop since Sept 1st
- VIX biggest daily jump in 2 weeks (above 50DMA for 22 days - longest period since October)
- China Equities - down 4 of last 5 weeks, lowest close since Feb 2015
- German Equities worst day in a month
- 30Y Yield -15bps - biggest 2-day drop since Jan 6th 2015
- 2Y Yield -13.7bps - biggest 2-day drop since March 2009
Since The Fed unleashed the world of confusion...
Gold and The Long Bond ripped 2%, S&P dipped 2%
Futures gives us a decent view of the action in the last 48 hours (note the weakness overnight and the opening US ramp by the algos back to VWAP)..\
At 1515ET on Quad-Witching, NYSE Broke but the market did not do what it was supposed to...
XIV and SPY are slowly starting to converge...
Look at the noise in VIX today (and post FOMC yesterday)...
On the week, a mixed picture - Small Caps only ones to cling to gains...
Some context for the moves - failed breakouit of key resistance... and a close below support
Very ugly week for financials...
This is not helping...
Treasury yields have collapsed in the last 2 days (with 30Y catching down today and notably flattening the curve) closing the week modestly lower in yields...
The US Dollar ende dthe week unchanged after being dumped yesterday and overnight but "rescued" mysteriously by a very active JPY seller (cough Kuroda cough) today...
Which created some equity momo off the open but that failed as Europe closed...
Commodities ended the week very mixed as The Fed's inaction sparked degrowth selling in crude and copper and PMs surged...
Gold jumping to 3 week highs... (seems like someone knew something on Wednesday)
Crude roundtripped all the way to unch on the week... from growth hype to no hope...
As Oil Vol and the underlying recoupled... (hedges on the ramp lifted and forcing coinvergence)...
Charts: Bloomberg
Bonus Chart: S&P still 40 points rich to the Fed Balance Sheet...
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Worst Black Friday eva
So what took them so long? What is different today compared to yesterday, Same idiots at the steering wheel, same banksters in charge, same lies and deceit.
It just takes a while before people wake up, let's hope now is the time.!
"investors"? what are those?
Some sort of software from what I gather.
With gold up and dollar unchanged, this put China and Russia in awkward position ? Just thinking aloud ?
Brown friday.
Gold: A barbarous relic for barbarous times.
Get yours today while quantities last. (Because they won't)
Im WAAAYYYY ahead of you there! My Financial Advi$or told me the best move was to put everything into paper gold, because it's lighter and I can pack it up and run faster when the $hit hits the fan! Suckers!!! Keep your pockets weighed down with that heavy ass metal gold and silver stuff! I'll beat you all to camp FEMA!
And be the only person there with their own personal supply of toilet paper!
;-)
tradition!
Gee, it's like people don't believe in the FED anymore or something.....
Yeah, after they did so well with the housing market crash/no recession call.
Who runs Bartertown!?!?!
(edited to add) Banzai needs to photoshop an image of Master Blaster with Yellen as master...
(through gritted teeth) Master Blaster runs Bartertown.
Who runs Gartman town?
That would be Tina Turner.
After easily jawboning the Fed into inaction, world finance leaders and dovish pundits were seen sporting “QE” T-shirts:
“I Want QE” from “I Want Candy” by Bow Wow Wow/Strangeloves
I know a Chair just over 5 feet
When stocks decline, she can't be beat
She's got everything to take us higher
Set late summer markets on fire
I want QE, I want QE
Go to see her when the Dow goes down
Ain't no finer dove in town
You're my gal, rescue my CAT calls order
So sweet! You’ll take my month above-water
I want QE, I want QE
New highs out of reach? She’s your abettor
I’d like my QE wrapped in cheddar
Someday soon they’ll crash the Shanghai
Then I'll have QE all the time
I want QE, I want QE
I want QE, I want QE
hate watching people get hurt
does this mean I am a good person?
That depends. When someone announces or proclaims themselves to have human empathy or to be a good person randomly it could be a red flag.... just sayin. I imagine you are smart enough to know the answer to that question you just asked.
Depends on which people you hate watching get hurt...
Also depends on if you just like to see them die.
I'm picturing a FEMA camp-sized cage match to the death with pick-axes and flame-throwers between the Luciferian Bankers and Government Whores.
If you hate watching that there is something seriously wrong with you...
I would pay top dollar for that! Are you ready to rummmmmmmmmmmbbbbbllleee! Nothing like seeing Jamie Dimon skull fuck Mr. Yellen with a flame-thrower.
Yeah, the dope doing the dead lift coulda' gotten seriously hurt.
I have passed out and hit the deck HARD....it ain't that funny.
That looked like it seriously hurt, landing head first into the dumb bells. And the guy filming laughs after it happens.
I don't like to watch, either...but as a Biologist, I don't mind participating - especially when the organism I'm working with serves no vital function and has zero morals. Then, all manner of fun experiments suggest themselves...
Careful ... that's how the Nazis started... ;)
Name a single non-human organism that destroys other organisms for giggles. Yeah, you could say that just about all other organisms have some natural moral code higher than your own.
No, just that you are not a sociopath.
No. That does not mean that you are a"good"person.
There needs to be a moral hazard so that people stop doing that which is destructive. People who behave foolishly need to experience consequences for their actions in order that they learn not to harm others.
Those people need to experience pain and I enjoy watching that as I know that they will learn from the painful consequences..
once again in the last minutes of trading some "bargain hunter" rushes in the push the down up to avoid a 2%/300 plus point loss....
and the action in Silver every since it entered trading in NY was fucking stupidly obvious...
FUCK WALL ST SCUM AND DEATH TO THE MONEYCHANGERS.........
Hang 'em high!
Just wait, they'll bring in NIRP, QE4, and deposit fees for whatever NIRP is.
They still have to seal the exit doors to the financial system first.
And to think that just a few short years ago we all thought that a paper fiat money system was the most EVIL crime ever perpetrated upon humanity. Makes you wonder what they will come up with next.
Other than Agenda 21 of course....
I’m normally with you, KS, and not sure if you trade, but in this case a 30pt Dow ramp in the last 15-min bar on a big down session as traders exit shorts is rather muted, if they’d gotten to VWAP, 120 pts more, that’d be different, but as is I’d give it only a “2” on a scale of 1 to 10 in shameless closing ramps we’ve seen this year. For OPEX, could’ve been much worse …
look KCF,
starting from the FACT that all this shit is FRAUDULENT in every way shape and form, there is no sliding scale for this kind of fuckery....
and no i dont trade and would never participate in this rigged fucking edifice...
of their paper games i shall have no part...
have a good one...
No offense intended, for me a post-dovish Fed triple-digit dump sans VWAP is actually mild progress, but everyone has their own perspective. Perhaps I'm a glass half-full guy and you're a broken glass guy, perfectly reasonable. Carry on, and enjoy your weekend.
(P.S. - today was the first day both CNBS and Bloomberg (and FoxBus, but they always do) spent the first 2 FULL HOURS of their show openly and thoroghly criticizing the Fed. Yes, I realize they suck, are in bed with sponsors, etc., but 3 yrs ago this would have been unthinkable . . . perhaps in 100 yrs we'll see change ...)
This is BIG progress. Bob Pisani tried to spin it as "off the lows", but he was not convincing. Not even himself.
And around lunch time I was scared this shit-show would be turning green... So I kind of feel some "hope". And "change" (something might have changed since yesterday?).
Let's see what happens on Monday.
On August 21 (also options expiry), after a big down day, the indices were pretty much at the same level as today and then it got quite ugly after the weekend...
Dow Jones was 0.5% higher at 16,459.75 (today 16,384.58)
S&P 500 was 0.7% higher at 1,970.89 (today 1,958.03)
Nasdaq was 2.6% lower at 4,706.04 (today 4,827.23)
Now with the FED officially being exposed as a clueless chicken, this could get fun.
Let it sink in over the weekend. And then DOW minus 2'000 points. Come on, you can do it!
Much agreement, signs of progress and some hope. As a daytrader the one business-as-usual aspect was the typical big down open seen today:
a) Post-open shorts are tortured until at least noon, often till 1:15 and until the wick of the prior day’s candle is approached, actually the best place to enter short
b) CONSTANT backups to VWAP occur, with prices going nowhere all afternoon unless you hold till 3:40, and even then you’ll get less than on a standard day unless you entered at 3:00 a.m.
Big up days, by contrast, tend to have a small 10:15 pullback, rocket through 12:45 virtually uninterrupted, then often provide a 1:30 or 2:00 re-entry through 3:30 to complete the ramp. Love it if this could change, but I suspect it’s systemic, and has to do with pension institutions remaining net long at all times.
Seriously, isn't this the kinda thing that people in "free" societies "protest" over ? You know, with marches and sit-ins and signs. To "force" the "free press" to actually "cover" it--at least visually ? No ? Really ? Just "NO"? As my battle of Okinawa veteran Father would say -- "good god uh'mighty".
The Fed done fucked up one too many times.
One?
Isn't one enough? (sarc)
There is nothing "confusing" about Yellin and the FED.
They have no intention of normalizing rates or exiting their toxic balance sheet for years and years to come. If they did, the FED itself would be insolvent.
The FED Worked themselves out of a job. Instead of ensuring that govt doesn't spend too much or increases the supply of money too much... the FED actually forced corruption into the system at least back to 1999. So why have private federal reserve owned by stockholders?
This is why we had the American Revolution.
This is why we have deep seated feelings of resentment toward Lords and Courtiers. Of course they waged a propaganda campaign to over turn or bury our feeling here in the USA.
Today we have Lords and Courtiers positioned within the FED, US Congress & US Lobbyist.
Propaganda is effective, Aye Whot?
- Iraqi War I
- Iraqi War II
- Era Confiscation of Cash & Property, dissolving Property Rights
- 2009 Bailout of the Banks that brought down the world
- 2015 Going Cashless & Charging more Bank Fees for all your Transactions,... you know since that is better democracy and liberty
Hey, why did we go to fight in WWI, WWII, and Vietnam?
Why did we get a Central Bank called the US Federal Reserve with Private Stockholders... if not to keep the Federal Govt and State Govt from spending too much, holding too much debt, and increasing the money supply too fast?? But if there is a Banking Crisis, then this Criteria is forgotten and overturned??!!!
Well why do we suffer Monopolies in the USA and... we never study or discuss Monopolies and how they can assume different forms like Transnationals married to the US Federal Govt ... or like the US Private Federal Reserve who has manipulated Interest Rates for 16 years.
What confussion?
It makes perfect sense.
US debt was downgraded yesterday.
A de facto downgrade.
A-
a spot of good news(yes,really)...just did a google search,and found out canned goods can last awhile longer than their stated exp date(from 3 to 6 yrs longer)...fyi...just keep them in a cool dark place,and undented....just some priceless advice that i freely give to my fellow ZH bro's(and sistah's)...have a good weekend,let's hope for darker news next week....xoxoxox...RP.
A lot, lot longer.
My parents were teenagers in the 1930's depression and hoarded.When I was clearing the house after they
passed, there were 30 year old cans of all kinds in the attic that were perfectly edible.
There were also cases that had exploded.Probably dented ones/defective canning ones.
Ya,...um, don't eat the exploded ones.
Just some friendly advice.
The last word on food storage life comes from the Mormons
Up to 30 years for beans rice and even canned goods... enjoy!
https://www.lds.org/topics/food-storage/longer-term-food-supply?lang=eng#4
You are totally and completely full of shit.
There have been properly canned good that are 50, 75, NS 100 YEARS OLD. . . . that have been found to be perfectly safe and edible.
There will be loss of nutrients, i.e. taste. But I'd say just smell it first, taste it after cooking, and then add some maple syrup/honey and some spices if need be.
Definitely worth picking up cans along with your other food. Even better if you can get some mason jars and learn to can what you grow in the garden. It's not too hard. (Although someone may be able to tell you if this is just as good as canning, I've only used the glass jars but I think the idea is the same since you're sanitizing and then forcing all the air out.)
I grew up in a lathe and plaster farm house. Don't spice things to cover the taste up. The oncologists credited slightly too old food for my grandfather's stomach cancer. Depressions pay dividends for generations.
As long as the seal is intact, canned goods are safe to eat indefinitely. Taste and nutrition will decline but bacteria don't magically appear in a sterile envrionment. The only way for them to get in is if there's a tiny puncture in the can, in which case the seal won't be intact.
You and your facts.
But remember tomato soup - the acid in the tomato will eat the seal, and they only store about 2 years even if canned at best. Maybe glass is your last option for storing tomatoes.
The Chicken Noodle soup I tried that was 15 years old was you definitely want crackers.
Don't store gasoline near the crackers, the smell impregnates right through the plastic seals..
"a spot of good news(yes,really)...just did a google search,and found out canned goods can last awhile longer than their stated exp date(from 3 to 6 yrs longer)."
Cereal, too.
Actually cans last until they bloat. Other than that the taste and firmness of vegetables are the only thing hurt by longer storage. Just keep them as cool as possible and 20-30 years is quite possible.
-300...+300...the new normal.
Suddenly these high numbers no longer even phase me. Probably not a good thing.
Yep, Just like when a million was alot, then a billion, then a trillion, next a quadrillion, etc...
A funny money fiat paper parade, backed by nothing but "faith" and she is soon to be gone.
When this fat lady belts out a tune it will be ear spiltting!
Just think if all of that money had been printed in one dollar bills.
We wouldn't be able to move.
Bsn zeros, commas, and the letter L.
Ban not "bsn." The candle went out in me cave.
An interesting way to go up 6 point on a big down day.
https://finance.yahoo.com/echarts?s=LNKD+Interactive#{"allowChartStacking":true}
Is that what they call preparing the market? Looks like some big volume exits.
Actually how about 60% - DJX is an option chain on the Dow Jones Itself. Hope you have lots of calm nerves.
A-trisket, A-taskat, a green fiat basket....
And the band played on..... hey, hey
Love And Rockets - Ball Of Confusion
Melissa Francis just called Yellen "delusional"
Anyone at the BlowHorn calling someone else delusional is pretty fuckan rich.
They invented the word...
ZIRP --> NIRP ---> "NO EXIT"
This is leading to the new No Exit policy...which means...there is no exit from the trap.
The market notices this now.
Missy Francis looks like she just fucked the entire production crew...and on camera, she looks like she's hungry for more...
Cue coordinated Monday morning PM slam stat!
What would have the carnage looked like with a rate hike?
If/when rates are ever increased voluntarily then the market will see that as an attempt to exit the trap.
Until the short term rates are increased then we go deeper in the hole the FED is digging for the world economy.
The markets are becoming "self aware".
According to Macquarie Research:
https://app.box.com/s/hx16540dwpct4uj5h5iohxsa4197zozd
Time for a policy U-turn?
Back to the future: British Leyland
From conventional QEs to more unorthodox policies…
- As discussed (here and here), we do not believe that investors are likely to benefit from acceleration in growth rates, trade or liquidity and indeed on the contrary, negative feedback loops from EMs to DMs imply that neither would be able to support global growth. Secular stagnation is the key explanatory variable (here). The deflationary pressures from overleveraging, overcapacity and technology shifts can be either allowed to work through economies or the public sector needs to continue resisting via expansionary policies.
- Since ’08, monetary policies were doing most of the lifting with limited participation by fiscal authorities (bar China). In other words, in the absence of either private or public sectors driving higher velocity of money, it was Central Banks that were supplying incremental liquidity to preclude contraction of nominal GDP and avoid stronger deflationary pressures. However, marginal utility of incremental injections has been declining (witness much lower impact of recent ECB’s QE and increase in BoJ accommodation since Dec ’14).
- Part of the reason for monetary stimulus fading is that supply of US$ remains low. Global economy continues to reside on a de-facto US$ standard and current incremental supply is almost non-existent (depending on definition growing at +2%/-1% clip vs. average since ‘01 of ~15%). In other words, due to lack of recovery in the US velocity of money and lack of QEs, global economy is not getting enough US$ to continue leveraging.
…as efficacy of conventional monetary QE is questioned
- At the same time efficacy of continuing with conventional QE policies is being challenged and not just by independent observes but also ‘insiders’ (such as recent SF Fed paper). As velocity of money globally continues to fall, conventional QEs have to become exponentially larger, as marginal benefit declines. If the public sector is not prepared to step aside, what other measures can be introduced to support nominal GDP and avoid deflation?
- There are several policies that could be and probably would be considered over the next 12-18 months. If the private sector lacks confidence and visibility to raise velocity of money, then (arguably) the public sector could. In other words, instead of acting via bond markets and banking sector, why shouldn’t public sector bypass markets altogether and inject stimulus directly into the ‘blood stream’? Whilst it might or might not be called QE, it would have a much stronger impact and unlike the last seven years, the recovery could actually mimic a conventional business cycle and investors would soon start discussing multiplier effects and positioning in areas of greatest investment.
British Leyland failed, but it might work at least for a while
- British Leyland (formed from nationalized British car companies in the late ’60s) destroyed its automotive industry but for a time it provided employment and investment. Central Banks directly monetizing Government spending and funding projects would do the same. Whilst ultimately it would lead to stagflation (UK, 70s) or deflation (China, today), it could provide strong initial boost to generate impression of recovery and sustainable business cycle. It could also significantly shift global terms of trade (to the benefit of commodity producers) and cause a period of underperformance by our ‘Quality & Stability’ portfolio and improve performance of ‘Anti-Quality’ screen. What is probability of the above policy shift? Low over next six months; very high over the longer term.
Good to see the 'triangle trap' chart included. If that one continues to work - you won't want to be holding long into Monday LOL
Could almost feel their pain as stocks just dripped lower and lower as those trapped took their losses.
http://news.goldseek.com/GoldSeek/1442494200.php
Try making up for a past mistake and make another? That’s playing from behind, if you will, and it’s not out of the question if you know the Fed’s history:
1. Not a single post-war recession has been predicted by the Fed a year in advance, according to former U.S. Treasury Secretary Lawrence Summers; and
2. Neither of the last three recessions were recognized until they were already under way.
Incompetent or ulterior motives for policy?
Regardless, here we are with expectations ramped up for a rate hike, as the rest of the world is easing.
What’s notable for investors is that since the 2008 crash, we have not been able to achieve new market highs without central bank stimulus. Full stop.
But it’s only a quarter point…
According to a study released by McKinsey Global Institute in February of this year, global debt has increased by $57 trillion USD since 2008. With such an enormous amount liquidity in the system (M1 money supply near lifetime highs) financial markets are increasingly becoming nothing more than a currency game; and the currency game is a relative one. I print, you print, they print, but who’s printing more and where is capital flowing in and out of? Within this context, a quarter-point rate hike would be much more than simply symbolic.
As we have seen since late 2012, the rise in the U.S. dollar has had major implications on global markets, whether it be currencies, commodities or interest rates. A rate hike would equate to further USD strength and will accelerate the deflationary spiral we have witnessed over the past few years. Raising rates into a slowdown could also place the U.S. firmly on a path to recession in 2016.
Conversely, no rate increase does not meet the expectations set by the Fed and will re-inflate commodities in the immediate term. Arguably, it pulls forward the possibility of QE4 as well.
So it seems the Fed finds itself in a self-imposed conundrum here: make a policy error and raise into a slowdown, don’t raise and openly recognize growth is slowing. Which brings me back to my previous point: since 2008, no new market highs have been achieved without central bank stimulus.
As always, government remains the No. 1 risk to financial markets, and I will change my views as the facts change.
“The Federal Reserve is not currently forecasting a recession.” – Ben Bernanke (January 2008)
US Credit Rating downgraded to A- by intelligent people worldwide.
Adjust your portfolios accordingly.
Yellen has a hard time seeing the future,,,she has a hard time seeing over the top of the FOMC board room table without sitting on two Manhattan telephone directories.
What would Yellen have to pay to get a Male Escort to wine her, dine her, and bed her in New York City or DC??
Those are wealthy towns, expensive, but the people will do anything for money.
And obviously Yellen will do anything for money too including sticking a big giant dick into the ass of the Middle Class, the infirm, and the Elderly to say nothing of the young and innocent.
Marie Antoinette Yellen - Fits Very Well!!
"Let'em Eat EBTS!!" - Janet Yellen 2012
"So what if they are Congressmen or Senators, it's not like they can do anything to me!!" - Janet yellen 2014
"Fucking Congress can kiss my ass!! I don't have to tell them SHIT!!" - Janet Yellen 2015
"Well if I heard the question correctly, I think everyone now has an EBT Card so that they are able to move forward in our Economy." - Janet Yellen 2015
It's hard to say how much Yellen would have to pay to get a Male Escort to wine her, dine her, and bed her in New York City but she could get an estimate by calling NYC Dog Walkers.
http://www.nycdogwalkers.com/
Did you actually go through their prices? OMFG!
Those people fighting for $15/hr are too stupid to be a dog walker?
Define stupid? Never mnd; you just did.
What about changing her/his diaper? Oh that is right she/he is not part of ObamaCareLess; therefore she can get it all for nothing. Obama would blank the diaper.
No need to speak like that; Bankers do what Bankers do; look after themselves. Just like a Real Estate mogul looks after his interest. To have real hope and real change you must look for one who has not much to gain except that which the masses would gain. Ben Carson would be a recent example.
Ben Carson is a complete, utter idiot.
He makes Donald Trump look like Albert Einstein.
Obvious your measure of intelligence is stupidity; therefore I would agree with you based on that standard.
Yellens magic 8 ball keeps telling her to try again.
I'll have two Manhattans.
Walk softly and carry a big stack.
The stick to, for defending the stack. Teddy merely implide the stack. :)
Plug in the same gum jawing from Bernanke. Aug 31, 2012.
Fuck You Bernanke!
The FED is in unchartered waters and way above it's ability to turn the US economy around. Back in the 80's Congress and the Executive Branch relinquished their Economis Policy responsibility to the FED by mandating the FED consider US unemployment as a factor in determining monitary policy. Now making matters worse, the Fed is considering the health of the World Economy in their determination of US monetary policy which is INSANE. Why should we increase our overall debt to help Europe or China on the backs of US taxpayers, retirees and our children ?? When the implications of Fed manipulation sinks in it will tank the stockmarket and cause civil demonstrations against the Fed and Washington. Inflation is no longer a threat to be considered. Deflation is here to stay because Emerging Naions, with modern machinery and cheap labor will always overproduse manufactured goods and the Fed will always print fiat to accomodate foriegn nations to our detriment.
Land Of Confusion https://www.youtube.com/watch?v=1pkVLqSaahk
Good old times!
"Oh Superman where are you now? When everything's gone wrong somehow?" Do they mean Bullard? Or Bernanke? Or Greenspan himself? I have to say, Phil Collins was quite a visionary.
The only one ever known as "The Savior of the world" is Jesus; and He is, but saved from what you ask. Look only in the mirror of your life in relation to do not lie, cheat, steal, covet, or honor your parents and the picture becomes quite clear.
It's funny that after a really unexpected "market behaviour" after yesterday 2pm.
All of the sudden on CNBC "Closing bell" you hear stuff like:
- "we thought they are gonna raise"
- "are you saying the monetary policy isn't real??"
- "very disconnected from the real economy"
- "they're at the end of the road here"
- "who's the buyer on the dip?"
- "they [the FED] know nothing! They know nothing more or less than you do, Steve, it's a joke!"
- "I don't think they could have moved"
Never heard a discussion on that channel go down that road.That should have been censored.
IMO, something has changed over the past 24 hours.
Let's see what they say next week. If the truthiness continues that means the masses will jump on to the safety bandwagon and all hell will break loose in short order.
BTFD......lol
GOY LIVES MATTER
Sunday PM Asia gold market to open DOWN 60 bucks....betcha...
I'll take the other side of that trade.
What are we going to bet now?
After a year of taking all the hate on the chin I bet you guys as much as myself while not gloating are feeling somewhat vindicated calling the ball on physical gold ownership!!!
www.teamramgold.com/about-us
I just feel happy to be healthy and out of debt and living with good people. I don't want to feel vindicated since there may be some really ugly situations aside from that.
the temptations - ball of confusion
https://www.youtube.com/watch?v=QmRsWdK0PRI
.
"no body interested in learning,
but the teacher.."
.
this one too.
https://www.youtube.com/watch?v=-9poCAuYT-s
Oligarch theories alive and well. Now even NYT is joining the bandwagon quoting research from conservative groups..
http://mobile.nytimes.com/2015/09/15/us/examining-who-runs-the-united-st...
What is wrong with the Fed?
QE was working until 2011 when the Fed did not have the guts to cut it off.
We could have had a different monetary policy and a different result.
http://michaelekelley.com/2015/03/27/the-kelley-monetary-policy-rule/
Part of the problem is the failed Fed inflation target.
http://michaelekelley.com/2015/02/11/fed-inflation-target-is-abnormal/
Now Gold is Good!
I imagine Yellen shocked some people (I don't know how they could be shocked) about the state of the economy. May be they bought the low unemployment story and figured the economy is back on track. Yellen just made it apparent to these kind of people the economy is not in good shape at all. Sure it's not a free falling depression, but it's decelerating with the economy being very fragile and really I don't expect ZIRP or QEs to create a economy that can lift off on it's own, so the gold buyers now see.
If ZIRP and QEs didn't fix the economy in span of 6 years, what's another 10 years of ZIRP and QEs. It's not going to work except make more bubbles and make existing bubble bigger. For this reason I think emerging economies are better off long term, because the US I imagine will be stuck in the abyss of ZIRP and perhaps more QEs for longer time until the Fed raises rates which will cause a recession, or markets force it to raise rates. I don't think the Fed will have a sobering turnaround in policy out of it's own volition, because they're stuck in Keynesianisque alternative reality. Until then I wouldn't expect the US economy to turnaround on it's own. Not surprising that NIRP pops out now, because ZIRP seems to be failing.
go FAZ
Projection: ZIRP continues for years; QE4 initiated next year.
Doubleplus good.
For a few k you could put together a complete business in a shed. All the tools and inventory ready to be built. Wrap it up nice and tight. Worse case you give some young person a turnkey way of life a few years down the road.
The mother tools are very well priced these days.
Kind of spooky out in stock land today..previous 3 sessions were kind to stockholders..then today you get your teeth kicked out...what is going on...my guess..Wall Street earns money during volatility..their algos are much too quick to handle this type of trading compared to ourselves...you know the "fastest gun in the west mentality"...
Would you like to know why we are in th predicament we are in?
Which would you choose, a free Hershey bar or a 10 oz silver bar?
https://www.facebook.com/MarkDice/videos/983991974979522/?fref=nf
10oz bar every day all day. But wait, if it was a 10oz Hersey bar, I dunno. Wait yeah, go with the silver.
According to Bank of America Merrill Lynch:
https://app.box.com/s/2x1jqc1901tv8v00mbqnqjfbu8rrqzzp
The HY Note
Global growth concerns spread from us to Fed
A slow moving train wreck
Today’s Fed decision was the second worst outcome for risk markets, in our view. We have written on numerous occasions that if the Fed didn’t hike rates today initially markets would rally modestly before selling off. The realization that global growth concerns are not only real, but very dangerous right now should cause a risk off environment. And with no room to cut rates, we question the Fed’s ability to manage any further slowdown through what would have to be QE4. However, we can’t see how additional quantitative easing will help, as the goals of QE have already played out: the banking system has recovered, rates are low, investors have driven debt issuance and asset prices to uncomfortable levels, and the housing market has recovered enough to not be a concern.
Furthermore, lower rates don’t help high yield at this point. Whether the 10y is at 2.20% or 2.0%, does the asset class really look all that more compelling? Not in the slightest. In fact, outside of hiking while sounding very hawkish, not hiking and sounding very dovish while expressing concern about the global economy may be the worst thing that could have happened today.
We have been saying for months that the global economy is weak and the Fed’s dovish disposition today only bolsters our view. Europe is about to enter QE2 as inflation and growth remains poor. Japan and Brazil were just downgraded. Commodities remain under pressure and we think, at some point, the narrative could turn from a supply driven story to a demand driven one. Domestically it becomes harder to argue that a strong dollar and the lack of inflation can be viewed as transitory and this headwind is continuing to hurt high yield corporates. Manufacturing is uneven, consumer spending hasn’t improved in a year, and 2014 real median income was down 6.5% versus 8 years ago (and down 7.2% from the 1999 level). Although auto sales remain strong, we would expect as much given low gas prices, an aging fleet and the fact that auto loans are one of the few places in the economy where it’s easy to obtain credit.
Additionally, high yield corporate earnings remain incredibly weak, with yoy earnings growth negative for the first time since the recession (even ex: commodities EBITDA growth is only slightly positive). Leverage is at all-time highs (again, even ex- commodities) and the High Yield index is more globally exposed than it has ever been (35% of the market generates 45% of its revenue from outside of the United States, and that doesn’t include Energy, which is globally exposed despite not realizing significant direct sales abroad).
Not only are earnings weak, but there has been next to no capex investment, debt issuance has been massive, and buybacks and dividends have driven equity valuations as CEOs and CFOs, afraid to invest in organic growth, have chosen to buy growth instead. And as a result, recovery rates are 10-15ppt below historical norms and defaults and downgrades are creeping into the market. Although we understand many will say its just commodities, is it really? What started as coal weakness 18 months ago became coal and energy weakness. But it wasn’t really just the commodity sectors, as retail was also already weak. Now it’s the commodity sectors, retail and wireline (but definitely not all of telecom). The situation almost seems unbelieveable, as everything that seems to go wrong is explained as being isolated (AMD, well, of course semiconductors are in a secular decline) and treated as a surprise (Sprint).
In our view, the makings are there for a risk off environment for some time to come. For non-commodity spreads to be 400bp tighter than in 2011 makes little sense to us. Replace Greece for a much bigger problem: China. Replace Washington dysfunction and debt downgrade with uncertainty about monetary policy and EM weakness (though we may see Washington dysfunction very soon between this fall’s budget talks and the presidential race looming). Replace US QE with European QE. Additionally, replace strong earnings growth and margin expansion in 2011 with no earnings growth, a stronger dollar, and higher leverage today. Replace decent liquidity back then with poor liquidity now. And replace the fears of a double dip recession with the potential for fears of a global recession. Though this last point has yet to play out, we think it’s only a matter of time before investors begin to feel as bearish as we do.
The Fed had an opportunity today to hike rates and begin to build a cushion should the global slowdown be so severe it can’t be ignored. Instead, they chose to wait. In our view, this has left them in a predicament as now the rumbles of never being able to increase rates will become even more exaggerated, and when they ultimately do, we think it will be more painful than if they had gone today. We expect as a consequence for there to be more market volatility, more uncertainty around the Fed’s motives and belief in the economy, and therefore more downside risk. Most importantly, however, the acknowledgment of weakness only bolsters our view that we are in the midst of the beginning of the end of this credit cycle, and we warn investors to tread carefully not try to be a hero into year end.
Now is the time that investors need to be managing risk rather than looking for alpha. 1 or 2 names will destroy the performance for what has otherwise been a good set of holdings. Remember what many have forgotten over the last 7 years, credit returns are skewed to the downside. The best case scenario is to earn coupon and the ultimate payment of principle. The worst case scenario is 40, 50, 60 or more points of loss.
We’re in the midst of watching a slow-moving train wreck, and in our view the Fed confirmed as much today.