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"Why Has It Suddenly Stopped Working": The Chart Every Trader Is Losing Sleep Over
In a must-read report which we will deconstruct shortly, Citi's Matt King (who, as a reminder, is the person whose "Are the Brokers Broken" report issued in the first week of September 2008 was, according to many, one of the catalysts for Lehman's failure simply by explaining to a largely clueless Wall Street just how broken the US financial system had become in late 2008) hits it out of the park with just one chart from his latest presentation, the chart which every market bull - whether they know it or not - is losing sleep over: has the only thing that has worked in the past 7 years, namely the central bank QE transmission channel, broken down.
Or, as Citi's Matt King notes in what may be the only chart which traders should be obsessing over, "why has it suddenly stopped working", by which he means the market's favorable reaction to central bank liquidity injections.
His question: "have central banks lost their touch" and points out that while in the past QE injections have always resulted in improving risk asset prices (in this case represented by junk bond returns), this time is different.
The answer will determine whether the next move in the market is 20% higher or lower.
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reset?
The gig is up, fantasy land is starting to curmble
Ben Bernanke has not blogged in over 2 months. Where is that man? The markets open everyday and he's talking about the face on the $20 dollar bill?!
...
...
This. I can't wait to hear from him again.
I can't wait to never hear from him again.
If everyone is on one side of the trade and front running, well who is the bag holder?
Best question ever...
The answer is: the mythical "US Taxpayer"
You know, the same Taxpayer that will simply revolt against their government when taxes have to be raised to 3000% of income, in order to re-liquify a 250 Quadrillion dollar US bond derivative market...
the rackets keep hitting the little yellow balls back and forth over the net, clearly not realizing that this tennis match is OVER.
Looks like there was a hiccup in the chart in mid-2013 too, but after several months or so it returned to "normal". Who's to say this latest disconnect isn't just another hiccup?
The bagholder is ultimately the Fed, which is owned by the TBTE banks. The Fed will buy whatever and however much is necessary perpetually to prevent nominal GDP from experiencing a sustained contraction.
The monetary base and banks' cash assets may eventually equal total outstanding loans under this debt-deflationary scenario.
The TBTE banks, insurers, pensions, and top 1-10% are already cumulatively the largest holders of US debt, and the pct will increase.
Dimon recently said, like Greenscam during Dotcom bubble-induced fiscal surpluses, that there is the risk of a lack of high-quality collateral. What a joke. The next global recession will have us back to $1 trillion plus deficits, so the Fed and TBTE banks will be flush with "high-quality" collateral to buy with trillions in fiat digital debt-money credits from the virtual ether for still more reserves/cash assets on the TBTE banks' balance sheets.
That's a good question and I get the feeling we'll find out when it falls apart.......
I think the model (linked) shows it's time for interest rate cuts (NIRP) and large US deficits to offset the decelerating core population growth...but this isn't viable politically or internationally...Ponzi is hitting the wall.
http://seekingalpha.com/article/3522366-demographics-the-real-opponent-the-fed-has-been-fighting-for-decades
https://www.youtube.com/watch?v=RtMGoU9NcMo
Yes, therefore, it's time for "All In II".
We're just a battery for hire with the QE fire
Ready and aimed at you (Jamie and Lloyd)!
Pick up your balls (Auntie Jen) and load up your cannon
For a twenty-one gun (another $3.5 trillion) salute!
For the central banksters of the world who are, and will begin, printing again, we salute you!!!
Ready?! Balls to the wall, cannon raised, salute, and FIRE (finance, insurance, and real estate)!!!
FIRE!!!
FIRE!!!
https://research.stlouisfed.org/fred2/graph/fredgraph.png?g=1VjL
"All In II" coming right up.
https://research.stlouisfed.org/fred2/graph/fredgraph.png?g=1Vkf
Falling equity market to GDP means a coming decline in gov't receipts, which in turn means that the fiscal deficit is set to increase again.
No rate hike; rather, the Fed will resume QEternity to fund primary dealers' purchases of increasing US gov't issuances of debt to run larger deficits to prevent nominal GDP from contracting.
If profits to GDP experience a similar cyclical decline as in the past, business income will decline by ~$1.1 trillion over the next 4-6 quaters, which implies the Fed will need to print at least $1.5-$2 trillion for the next cycle, not counting bailouts or any "stimulus".
Because Baby Boomers are set to draw down en masse on SS, survivor benefits, Medicare, SSI, food stampts, housing assistance, etc., at the fastest rate of growth in history through the early to mid-2020s, gov't deficits will be increasing throughout the period as real GDP growth per capita further decelerates with revenues, profits, and gov't receipts.
More QEternity, deflation, ZIRP, and a sub-1% 10-year yield are ahead.
The new normal of financialized secular stagnation, brought to you by Peak Oil, "Limits to Growth", the end of growth and end of capitalism, Boomer demographic drag effects, excessive debt, overvalued assets, prohibitive costs of dis-ease care, and obscene wealth and income inequality.
Wait for the butthurt.
Why we're the bag holder, of course! (via a handful of proxies)
I can't wait to never hear anyone wanting, or not wanting, to ever again hear from Bubble Ben Shalom Zimbabwe.
...in court
Wave ii up next. After a retest 1970-1990, wave 5 down will continue, Lower Lows.
http://tripstrading.com/2015/09/19/sp500-weekly-chart-2-or-5/
N/A
If it can muster a little limp dick rally above $30 I will be officially tempted to initiate a short position in DB. The charts on DB and HSBC are telling me it is possible those two are in very serious trouble.
Thanks for the heads up. DB has been looking bad since the second week of August. Looks like it wants to puke its guts out some more.
Shorting is very tricky and challenging - unless of course you are as talented, astute, brilliant, and omniscient as a cast member of Fast Money or regular on CNBC. I'll stick with waiting for confirmation. The high volume pukefest in August tipped the hand. If it tries to rebound from there and can't do so with authority then my antenna really goes up. It appears this is indeed the case. A more prudent entry would be after a low valume rampfest to above $30 or even right around $31. Not sure we see that as I'm sensing they are possibly approaching true implosion.
You have to decide if "this time is different" or just another "loading up of shorts for the squeeze-induced leg up"...DO YOU FEEL LUCKY, PUNK?
Glencore looks like it might just rip off everyones' swim shorts.
The answer is simple. if we take the fed at their word and QE3 was in fact the last tranche of liquidity added into the system, all they are doing now is reinvesting existing cash from their hedge fund as the securities they own mature. If adding liquidity to the system to buy various assets increased asset prices, simply reinvesting previously added liquidity won't have the same effect.
#REF!
Because the FED hasn't started QE4 for $159 Billion/month buying: Student Loan Debt Swaps, Mortgage Backed Healthcare Default Swaps, and Bad Auto Loan Lien Securities (BALLS), yet.
Yep, QE only "works" while they QE, so QE to infinity with subsequent collapse and reset it is.
Have you audited the Fed lately? They could be on QE 57 for all you know...
"Mortgage Backed Healthcare Default Swaps"
Fantastic.
I would have had a hearty belly laugh at this comment in 2006, but if those things exist now, I honestly wouldn't be too surprised...
QE never ended. They've been shadowing QE'ing like motherfuckers the whole time. what do you think the magic 300 Billion that Belgium came up with in Treasurys was?
And they've been rolling over interest from their books into more QE bullshit as well. They just aren't overtly stating that they've still been pumping billions into the system.
So the question from the article should be, "Why isn't the shadow QE working anymore?". If the shadow QE of hundreds of Billions isn't working then it's obvious that they will now need to "officially" announce overt QEternity in the 10's if not 100's of Trillions at some point early 2016 unless this whole shit-show takes a massive plunge before they make it to the end of the year.
But I think they want to bounce this fucker along for as many more months as they can so they can ramp up more big wars to cover their tracks with. Then they'll bust out the Ctrl-P to the moon.
sorry, but the $300B from Belgium was the Chinese.
Close, but I believe Hillary said it correct with the "peregruzka" button. Overloaded is where we are...
She thought it was pershunkula. ...
Deflation?
It's no longer working, because the Fed isn't QE'ing.
Duh. QE4 will see Dow+20% so fast it will make your head spin.
There will be no further QE anytime soon
Supply problem
They'll invent supply. Just make it up the same way they make up everything else. They'll mint that $1T coin. They'll NIRP like fly pimps. Whatever they'll just do what they want.
I'm angling for that helicopter money and dropped from real helicopters, too. I'm tired of all this dancing around and want my money dammit.
Sigh
QE3 never ended.
They've been buying up assets all along proping up valuations. What, you thought that free money had no strings attached?
Problem is, the amount needed to float the price has out passed cash flow (including the free cash), thus corporate buy backs have stalled and the Fed is cornered, being the only true buyer in town....
The only other buyers in town are also sellers, seconds later.....
They could always buy gold. That would also put fiat currency into the market.
Technically, the FED is still in QE3. Are they still purchasing MBS and Treasuries=YES! Principal interest on almost 5 trillion is a lot of money to buy with. Expanding an already bloated balance sheet is purely symbolic.
I have to wonder what happens the next time the market takes a dive, traditionally crushing the muppets who purchased at inflated prices, but instead of the Muppets, this time it's the fed and corporations with their buy backs holding the bag?
Maybe it really is different this time?
If this were the case, when it blows up id take a day off work, buy some fat tbones, a new scotch, some cigars and a nice cake and revel in it. For a day I'd be happier than a pig in shit that the responsible parties were earning their comeuppance regardless of the unavoidable deleterious consequences for the unfortunate little people.
<-- 20% Higher
<-- 20% Lower
The way "markets" jump around these days probably BOTH, but in which order, and how many times... we'll see. I just watch this shyte show unfold to the bitter end.
Yep, FX has been really jumpy and thin so far this month.
August was more mature price action, Sep so far is schizo.
Folks, you've got to have 2 trading plans these days, trend and non-trend. Surprisingly (if done correctly) non-trend actually pays more. But it's harder to trade because you have to have resting bids/offers and price normally screams down to your levels.
Companies that are connected will go up, the rest will not.
If you think August involved mature price action then i have some bridge backed securities to sell you.
Retail is all in ?
Clearly the ECB and the BOE needs to make up for the fed's slack.
Those blips in teh Feds balance sheet uptrend become predictable.
and by a 20% drop he means 60%
It's because, due to artificial intelligence, algos now have a sense of humor (and, having read the promise of Keynes, they found the movie lacking).
No such thing according to Draghi : its work here, says he.
But we don't need moar QE.
Well when VW goes belly up we'll know how the Euro cake will bake when Germany starts to cough.
11 milion polluting cars and how much will that cost to change those engines to regulatory standards as well pay all the fines.
BTW : It just may be that these engines will never be able to meet those standards; if their design is flawed and retro fit is not on the cards.
Now that is just the end of the road !
The VW story will vanish. Asian regulators will as usual take the money and miraculously find no problems with the cars. US auto makers are doing the same as their German counterparts so Congress will likewise take the money, pass some tough-sounding laws, and instruct the EPA to waive the fines. The lawyers will make class-action noise for a few years until nobody recalls that there was ever an issue.
Of course, drivers don't give two shits. They only worry that their luxury diesel sedan won't pass California smog tests now. I'll go out on a limb here and suggest that all those cars will somehow miraculously pass, for years to come.
Money money who got the money.
LOL! As if they are going to do anything about all those cars...Those cars will be "brought up to code" by tweaking the on-board computers to display the proper readings...just like Volkswagen did in the first place. Volkswagen will pay a 'fine' per car, but none of them will be taken off the road...the company will survive.
The emissions will remain exactly the same. The only difference will be that government will seize the profit Volkswagen made on the deception...the only ones permitted to profit from deception are government, and Volkswagen will be taught that lesson.
Hey Punch-buggy owners, don't be sad. It could have been worse. You could have been driving a GM. At least you got to walk away from your stinky car...
Maybe it's a calculated effort to eliminate foreign competition within the US and get foreign competitors accustomed to playing the '.gov kickbacks' game?
.Gov buys 23% of GM's inventory now (that they'll admit to). Sure, .gov can keep it going indefinitely with fiat, but the 'optics' aren't politically adventageous. Better for .gov to eliminate competitors for trendy reasons (dirty-ass diesels), even better if you can take out a trendy brand and replace it with a brand that benefits you.
.Gov has been going after Toyota and Honda for awhile now with the sudden acceleration issue and airbags. Maybe now it's time to pursue European makers.
I'm assuming this must be the case.
Notice also that politicians love it when large corporations go at each other. Both GM and VW must be doing this, both are equally on the hook, the Germans will shortly rat out GM for spite. That happens, the Pols go to VW and say "pay me or suffer", then they go to GM and say "I love you but pay me more than VW just did and they'll suffer anyway." Then back to VW for a bigger handout. So on and on. Could play that game a long time.
Money money who got the money.
You make it sound like a tariff. Maybe it is ...
Absolutely. It's an arbitrary tariff, like lots of other 'fines' imposed on all sorts of corporations over the last decade or so. From a political and accounting perspective, it makes sense.
Think of the multi-million dollar fines imposed on companies, like financial firms, accounting firms, energy companies, car companies, etc, yet nobody goes to jail (or maybe a couple low-level meat shields, but nobody important). It's .gov realizing it's more profitable to not establish new or increased taxes--because standardization eventually results in circumvention. It might take a year or two, but successful companies will hire good lawyers and accountants to get around fixed taxes. .Gov doesn't end up getting a lot of money, but lawyers and accounting firms do. That doesn't help Big Brother all that much. Instead, .gov has reasoned, let companies be profitable and publicize their success, then find a reason--any reason--to extort money from them.
.Gov has created a scenario where they have no choice. They expected all the money they created and dumped into markets to create even more. They expected tax reciepts to rise at a clip greater than .gov demand for it. Well, it didn't work. Maybe more money was created, but it hasn't yielded tax reciepts sufficient to keep up with .gov demand. .Gov must now get it in other ways.
Tax hikes are politically difficult, rigid in application, and can be circumvented. They also apply broadly to a number of scenarios or firms, and may not apply to those most profitable. Extortion for sentimental reasons gets around all of this and can be used when and where it's needed. It has the added political benefit of providing .gov the means of targeting specific adversaries. Pols will get more votes going after some company they can spin as deviant, dirty, or somehow immoral.
Lastly, it doesn't have to be specifically legislated like tax increases. It uses existing laws and the bureaucratic machine to identify and pursue opportunities for extortion. No messy debates or potentially devisive TV coverage.
if it stopped working - buy moar gold!
really simple
QE only "works" when economy is growing (no matter how slowly). QEs piggybacked on a weak business cycle recovery ... that is now ending.
Say hello to good old fashioned inventory (liquidation) led recession.
Out of curiosity,,, how would one know if QE worked in a growing economy when we never had a growing economy and QE.
I guess it all depends on what your definition of "is" is.
I'd offer you a cigar...
You have a great sense of humor!
How does a $1600 per week loan get paid off by $400 per week? It doesn't.
But that's okay becoz the Capital Gains kill the increased debt burden plus give you a profit!
QE won't have any hope of working if there is any Ponzi Finance.
https://en.wikipedia.org/wiki/Hyman_Minsky
Ponzi Finance is the falsification of the business school answer to, "What is something worth?"
What is something worth?
Answer 1: Cost of Production plus Profit.
Answer 2: What people are willing to pay.
I see the sense in answer #2 but in a world of free money, i.e. TBTF Banksters lending to idiots, the sky is the limit.
What is an investment worth?
Answer 1: Some function of Income and Patience.
Answer 2: See the Answer 2 above.
By using Answer 1s, prices are tied to incomes.
By using Answer 2, prices dissociate from incomes and are only limited by the Banksters and QE. Limited by the Banksters? Do Banksters get bonuses for NOT making loans? Prices are limited by QE.
How do you make a profit if your competitors are willing to continually run at a loss and take on more debt?
Ponzi Finance is the cancer that kills all the good businesses and replaces them with ... more Ponzi Finance. Ponzi Finance pushes asset values up, but those values can only be held up by more Ponzi Finance because the incomes aren't there to justify the valuations.
"Fixing the Economy" involves increasing production. Loans acquire Capital which produce goods and services which people buy and everyone is happy. How much QE is used to acquire Capital and increase goods and services? How much QE simply drives up real estate and share prices?
But what if the people don't have enough money to pay for all the new goods and services? Well, I guess you need to somehow match up all the new goods created with all the new jobs created. What if, by hiring one more guy in your factory, he could operate a machine that produced 3000 extra cars? Who's got the extra money to buy those 3000 extra cars? The one extra guy? Just sack him because clearly "the demand isn't there"? Whoops, drifting off topic now. We'll leave that for a later discussion.
Why doesn't QE work? Who is borrowing so they can acquire Capital? The existing Capitalists? Can they just acquire infinitely more Capital or do they have limits? New entrepreneurs? How can there be any new entrepreneurs? Sons of the old Capitalists? Plenty of people work hard and go from rags to riches. At what point are they ready to borrow in order to acquire Capital? Are they creating new markets or simply carving their niche in old markets - eliminating the dead wood?
Or perhaps QE is a deliberate effort to kill production. No production, no excessive consumption, no jobs, no need to travel to work ... and that is how the energy-reduction targets will be met. If so, can we at least be honest about it? And if we are producing less, then why are some people still working so hard?
http://usawatchdog.com < Great interview with Warren Pollock here!
The channel is broken because the inside money is no longer buying with the CBs they are selling against them. Once everyone is fully loaded to the short side they'll pull the plug on the PPT for a week and make trillions... Might just collapse the entire system with it at the same time. You know, because NWO or bust (more like bust then NWO).
That sounds about right. It should also coincide with some kind of false flag.
or the start of another war. it was his -> fault.
All this lame talk about a false flag. The "false flag" is not needed. Nothing but lemmings out there.
All except you of course...
Bankers,,, the lowest of the low within the species,,,
and we literally revere them.
Tells you all you need to know.
All these brilliant minds & they can't see the elephant. Debt is a huge drag on the economy and most investors know it. They are selling because the stench has finaly reached their nostrils.
Only when it blows up can we have a chance at escaping the NWO.
NWO will have all the assets and we will be serfs after it blows up
between the last time it blew up and now, they have much more control/wealth and we have much less control/wealth
they know what they are doing, corrupted system under their control, they are less fools than those whom they allow to play in their game
and it's not the NWO who are in debt 19 trillion, it's us to them, with first crack, the rest defaulted
the future is like Greece, bloodsucked dry
they'd love full blown austerity to wealth transfer what is left
IMFed
I agree with everything you said... except the austerity part. Real cuts in government spending are what is needed, not a raise in taxes. The first is what people think of when there is talk of austerity, the second is what happens...
http://incapp.org/blog/?p=2606
If "austerity" = stealing less money than anticipated, you can call me a proud Austerian.
QE 3.5....
It wasn't only leveraged QE, It was corporations borrowing to buy back their own stock. That's sort of out the window now.
Looks like the model completely stopped working between 13 and 14 on the graph, too. CTFO, dude.
Momo lost its Mojo....
Is this a rhetorical question? He isn't actually wondering why, is he?
Do any of these folks actually USE their brains to THINK? Or do they just sit around staring at charts all day?
Put the charts away guys, and go out and talk to people, regular people. Once you get a handle on how things work in the real world, all these questions of yours will answer themselves.
Local newspaper here in the northeast US had an article today in newspaper. They had been cheerleading the data for years. Today's article was wishy washy. The data shows the region is technically at "full" unemployment (under 5%). Instead of huge headlines of "FULL EMPLOYMENT ACHIEVED!", it was well the numbers are down from last year but people are still struggling. I think they know that the BS can only go on for so long expecially since there are 5 company layoff articles for every 1 unemployment numbers are down article.
Put the charts away guys, and go out and talk to people, regular people.
And look at your chart guys. It actually refutes what you're saying.
And how's that working for ya.
I WANT MY HELICOPTER MONEY!!!!!!
I PROMISE TO ATTEMPT TO BUY SOLARPANELS, A TESLA, SHOP FROM AMAZON, POST EVERYTHING ON FACEBOOK, BOOK TRIPS ON PRICELINE, BUY AN APPLE WATCH, AND SOMEHOW FIGURE OUT HOW I WILL USE SALESFORCE.COM.
I WILL NOT UNDER ANY CIRCUMSTANCES USE THE HELICOPTER MONEY TO PAY DOWN DEBT.
Can I have my free money??? Please.
lol salesforce.
You forgot Fan Duel and Draft Kings accounts.
You forgot Fan Duel and Draft Kings accounts.
Yes! Helicopter money NOW! Before Silver Eagle premiums rise any higher ...
It's shemitah bitchez, oh, and mercury is in retrograde...
But a big divergence in 2010-11 and a smaller one in 2013, and the present 2015 one is already reducing.
So why is 2015 divergence considered so abnormal now compared to the similar and even larger 2010-11 divergence?
They're cherry picking. You're not supposed to be really paying attention. I'm glad you are.
Psst....Hey Genius, go look at the chart and data again.
oh for fucks sake
http://www.washingtontimes.com/news/2015/sep/23/pope-president-to-seek-c...
something...something...theocracy...something...
Does that mean the pope is going to push for ZPG? NPG? I mean, its urgent, right? No? Or is he just gonna tell us all that we have to keep breeding and work harder and consume less becoz, becoz ...
Hint: If I shoot / impoverish four guys who drive one litre cars then I can justify driving a four litre V8. Hell, if I shoot 6 guys then I can drive a 5 litre V8 and still be one litre ahead! BUT ... it gets better than that! One person only needs one HOUSE, one washing machine, one fridge, one TV set, one set of tyres ... so the fewer people scenario crashes greenhouse emissions a shit-ton faster than all this "recycle and don't use plastic bags and you can breed as much as you like but then you have to feel guilty for being alive" bullshit.
Are we going to re-design cities so people live closer to where they work? Or do we stay with the two-hours-in-peak-traffic-or-else-two-hours-in-packed-cattle-trucks-I-mean-public-transport scenario?
Are we finally going to put an end to built-in obsolesence? You know, perhaps if people only needed one toaster per life-time then somehow the excess production could filter down to those-less-fortunate. No, don't be silly PT! Rich people NEED a new mobile phone every year and poor people don't deserve 'em! (No, I'm not talking about first-world "poor" here and yes, you're right - mobile phones are a very bad example. Let those without be happy without...) ... point being, everyone wants to combat global cooling, I mean warming, I mean climate change, when it involves making the peasants work their guts out and get fuck-all in return. Everyone wants in on the climate scam when it involves making bucket loads of money for themselves, but when you call their bluff - nup! Not gonna happen! Plenty of bullshit "excuses" (they excuse nothing) but it's just another theft. AGW only a problem when it makes YOU poorer. Not a problem when the elite have munny to make!
With all due respect to Matt, it has stopped working because QE itself had much less impact than the yen carry trade. Look at a chart of the Nikkei versus the USDJPY, and you can see that essentially all of the gains since Oct 2011 came as a result of the yen's continual debasement (along with some well-timed stock purchases.)
But, USDJPY hit an important technical level (120.11) last December 4 and hasn't been able to push past it. Nearly a year after QQE and USDJPY flatlined, NKD and SPX have actually lost value. The situation won't improve unless the BoJ starts devaluing the yen again. Period.
http://pebblewriter.com/the-cost-of-central-banks-protection/
Robert Prechter said this would happen a very long time ago.
i havent been following him because once before i was all in and it cost me dearly. i think his achilles heal is understanding what government can do, what they are willing to do, and will they do it. now i read jim rickards and he doesnt care about waves on the beach, he cares about those three things. empirical science has been entirely discredited.
This must be a joke , Traders don't give a fuck about QE , what a legitimate trader wants is half descent price discovery and real liquidity , not the damn thing creeping forever higher on hyperdriven algorithm and zero volume because of some perpetual fed sponsored bullshit.
If anything i'd be happy to short the damn thing to oblivion , if reality kicks in at some point...
I quit my job trading derivatives because of the endless QE. When the markets become honest (and liquid) again, I may return.
Until then, I am staying short and plan to stay that way....i will keep buying more puts until it blows.
Tick tock, tick tock...
The frog is about to jump out of the pot.
Eh, i love chart porn as much as my fellow Hedgers but can someone translate what I'm seeing?
chart "porn" explanation below:
The left chart are the worlds central banks circle jerking their QE injections to keep up the spooge of liquidity in the markets.
The right chart shows that the High Yield bond Yields (dirty whores) are not responding to the ass injections, indicating the CB are loosing control to maintain lower yields and are going limp.
Translation: The bull market is done, finished, finito, kaput.
Its all over now but for the crying.
the danger at the moment is a government shutdown, without spending there is no impetus to monetize. goverment is the source of jobs (HC) so the economy gets thrown into an even lower gear which brings up the subject of NIRP. QE is basically a swap, your bad assets for our good treasury bonds. what if we can't get those bonds to market in the first place? no one knows what NIRP means,
demand ought to pick up relative (restricting credit is one way of raising rates) to supply and Treasury might get tired of paying people to take their paper and put a par bid under the auction. that would be one possible NIRP policy. that kid with the hedge fund has bought 50B worth of UST on the open market, i think he knows what he is doing. NIRP will allow him to leverage that paper. of course he might also have a boating accident, the Fed pays attention to who is buying their paper.
so Gold is catching a bid, which makes sense if NIRP follows. you pay to hold fiat or pay to hold gold, gold naturally.
The Fed/Market narrative where Fed pumps money and market participants spend it to pump up asset classes has broken down because of EM risks. Its like someone taking their dad's tuition money and playing poker with it at Las Vegas hoping to win big. Now suddenly they are losing and they are afraid to put any more of dad's money into Poker.
the question of sterilization has been called into question, now the fed is worried that hedge fund kid is trying to corner the after market in treasury bonds. bernanke has always said, no problem, we repatriot those bonds with cash, and thats inflationary but we can handle inflation. the issue is confused when the bonds dont come back to us, but to spec.
TAALR fails to see why this data is so troubling: Looking at the difference of the two curves in the second graph, the delta at the end does not look any more troubling than the deltas in other parts of the graph.
Let see. Print a zillion dollars. Then rig the commodity markets lower so that the companies making them go out of business. I think even this market can understand using government licensed force to put these companies out of business. We do not eat or build with iphones or tech stocks.
Better look for a wormhole now.
Looks like the CBs tried a stealth taper and the HY threw a hissy fit. Model works fine. Just can't let the john leave the motel room.
Isn't the world supposed to end today??
Yeah, I was just getting wise to that at about the time it was supposed to happen. But when they said it was going to be a comet hit the earth at noon, well that would be impressive to pull off. It is interesting that both the Pope and the President of China are here at the same time, though. Will they be attending a midnight party somewhere?
The world can't end until we all agree it can...
This just in from Pisanni of CNBC:
People aren't buying the dip today because it's a holiday. It's Yom Kipur.
There. No don't you feel better?
I think we'll be in the 15,000's by weeks end.
I know you finance guys have your own 'levels' you watch, but for those of us who merely observe these things, seeing it go down below 16,000 will seem scary. When people see it go from the 16,000's to the 15,000's, they start seeing the losses as being in the thousands, even if it only took a hundred point drop to get there.
That's just my advice to you finance guys...you want to look at this market the way WE do, and step away from your charts and algos for a minute. If you are managing other people's money, don't be surprised if a lot of your clients start wanting out in about, oh, 260 Dow points or so.
i wouldnt say SP 15000 but its entirely possible, the bond market is broken, wheres the money going?
What is broken in the market, what has BEEN broken since 1914, and MORE BROKEN since 1933, and EVEN MORE BROKEN since 1971, and what TOTALLY FELL APART in 2008...
...is the monetary system.
Why don't you have appreciation in response to QE?
Simple.
The answer is that you can't understand what the number in the numerator means until you know what is going on with the denominator.
Where that denominator is a fiat currency based on debt of uncertain value, uncertain payment status (thanks to Mark-To-Fantasy), you, I, and the Fed have collectively very little idea what is going on with the denominator.
So, yes, some are earning Dollars/Yen/Yuan/Euros/Pounds/Rubles, and some are losing them.
But whether their losses or gains are the physical equivalent to a speck of fly-turd, or the Taj Mahal...no one really knows at any given moment. It depends, you see, on how much new debt has been created (Yellen fell asleep on the keyboard, adding infinite zeroes to someone's reserve account) or destroyed (Joe the Plumber didn't pay his last $1000 mortgage payment, causing the $1,000,000 of credit pyramided on top of it - using it as collateral - to collapse and cease to exist, throwing out BOA's, CITI's, SG's, or DB's book into default...which in turn makes all credit everywhere evaporate like spider farts in the sunlight.).
Fractional Reserve Banking, plus double-entry accounting, plus debt-based fiat money as denominator mean that any particular such currency, and every paper asset it describes, is worth infinity, zero, or someplace in between at any moment, with increasing volatility and uncertainty of where that value lies.
And that is another reason why chits of paper, based upon nothing physical, don't make good currency.
Zero Hedge - Good articles and insight - Smart readers with great commentary.
THanks
The central banks can crank up QE to infinity but I see nothing but a bunch of broke Americans. Sure, they still get out and do things. They still buy some stuff; however, the "new normal" on Main Street is much different than it was just a few short years ago.
All the printing in the world is not going to save car manufacturers, retailers, etc. They can ease all they want but the folks are either broke or close to it. That includes a HUGE percentage of Americans. We've been turned on the spit slow cooker for quite some time.
I don't know about everyone else but health insurance and business insurance is simply killing me these days. Truly "disposable" income is something in the past. Now, when folks splurge, they are literally foregoing something else.
If the current pattern of low wages, negative interest rates and inflationary necessities continue then the central banks can print for 10 lifetimes but the result will be the same: Economic Depression. Followed by......
Economic and political revolution.
laws of diminishing returns...plus all time margin levels = no more room to the upside without negative ratees.
laws of diminishing returns...plus all time margin levels = no more room to the upside without negative ratees.
bastards are now just pumping money into bancrupted and corupted governments. sure success
It is why they are buying hard assets with it.
When money velocity approaches 0, the economic engine is broken. All circulated money is new money coming from the Fed that is quickly allocated and goes dormant. In a way this is a form of equilibrium. If money velocity was 3 turns as it was in the early 90s we would have such bad hyperinflation that the Fed could not print fast enough.
However, by trapping money in dead-end cul de sacs (misallocated to hedge fund hotels, military equipment, 0.1%ers foreign accounts and pet projects) the Fed gets to choose where the money goes without the real economy interfering with the with plans.
forget NIRP how about NMV (negative money velocity, that is money goes into zero interest accounts faster than they can print the stuff)
There. Fixed it for ya.
Suddenly stopped working? When did it work?
no one wanted to follow bernankike on twitter now he died in a corn field and one one even noticed