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A Big, Fat "Policy Error" Or Worse? Find Out Tomorrow

Tyler Durden's picture




 

On Tuesday, the day before Yellen's historic rate hike, the S&P closed at 2,043. Today, the day after a Fed announcement which everyone cheered overnight as simply fantastic, perfect, "dovishly goldilocks", and countless other superlatives because it sent the market surging, the S&P closed at.... 2,042. In the process all the euphoric gains from the widely telegraphed Yellen announcement and press conference have been completely wiped out, not just for stocks...

 

... but also for the most "sensitive" asset class in recent weeks, junk bonds which suffered a bruising wipeout today.

 

... and then there is the one asset class that has so far slipped through the cracks, but which will be very closely scrutinized in the coming weeks now that rates are rising: leveraged loans.

 

All of which begs the question: did algos finally figure out precisely what we said first thing this morning, namely that the market completely ignored what was a hawkish hike..

Yesterday, in a carbon-copy response to what happened in December 2013 when the Fed announced the Tapering of QE, stocks first sold off then, as if to validate the Fed's decision as being accurate, saw a dramatic buying surge which pushed them to close just off the highs. With bonds and gold selling off while the dollar rebounded, the Fed could not have asked for - or engineered - a better reaction, while markets, as Bloomberg's Richard Breslow points out, 'chose to hear the parts of the statement and press conference that they wanted to."

 

That was the easy part. The hard part now is how to ween the market away from the old narrative, the one which has pushed the S&P to record highs over the past 7 years on bad economic news, and to renormalize the market's own "reaction function" to that of the Fed. The problem is that from day one there is a major discrepancy between the two: as previously observed, the Fed did not deliver the desired dovish hike, and kept its 2016 year-end fed funds rate unchanged at 1.4% suggesting 4 rate hikes in the coming year, and which as Breslow notes means "being less dovish than the meeting previews suggested is now a sign of bullishness on the economy." This sets the Fed on a collision course with the market because "with the market pricing fewer hikes than the Fed suggests, someone is going to end up being wrong. If we do get four hikes next year, markets (read equities) will need to deal with a hawkish surprise. If the Fed is forced to backtrack, there goes the full-speed ahead theme."

 

What this explicitly means is two things: bad economic news is no longer good for the market - after all the dominant paradigm now is one of strong dollar=strong economy=strong S&P (ignoring that the stronger the dollar, the worse the earnings recession sets up to be, the sharper the full economic recession), and that as Breslow concludes, the "Fed needs to focus on the real economy and get out of the QE mindset. I suspect that will be easier said than done."

... and that as a result, what Yellen has done, now that the kneejerk reaction is over, is policy error, pure and simple? To be sure, the pancaking of the 2s30s screams "error" and an imminent global deflationary wave:

 

Or maybe it has nothing to do with the Fed, and everything to do with tomorrow's quad witching. We warned about just this in last week's "Beware The "Massive Stop Loss." Recall:

[The Fed's rate hike] falls at a peculiar time—less than 48 hours before the largest option expiry in many years. There are $1.1 trillion of S&P 500 options expiring on Friday morning. $670Bn of these are puts, of which $215Bn are struck relatively close below the market level, between 1900 and 2050. Clients are net long these puts and will likely hold onto them through the event and until expiry. At the time of the Fed announcement, these put options will essentially look like a massive stop loss order under the market.

And what is the number one rule about broken markets? All stops get taken out.The irony will be if, regardless of what the Fed does, the subsequent move is driven not by the market's read through of monetary policy but by the "pin" in this massive $1.1 trillion option expiry, the biggest in many years, one which if recent market action is an indicator, suggests the stop loss strike level will be taken out in the process setting the "psychological" stage for market participants who will look at the drop in the market, and equate it with a vote of no confidence in what the Fed is doing, potentially forcing the Fed to backtrack in less than 2 days!

This is how we concluded:

"The irony will be if, regardless of what the Fed does, the subsequent move is driven not by the market's read through of monetary policy but by the "pin" in this massive $1.1 trillion option expiry, the biggest in many years, one which if recent market action is an indicator, suggests the stop loss strike level will be taken out in the process setting the "psychological" stage for market participants who will look at the drop in the market, and equate it with a vote of no confidence in what the Fed is doing, potentially forcing the Fed to backtrack in less than 2 days! "

If so, tomorrow's already illiquid expiration may be an event for the ages, one which may culminate with a Kervielesque-rate cut just days after the historic first ratae hike, only this time the Fed can't do a 75 bps rate cut in response to one panicked futures trader, so 25 will have to suffice.

Or perhaps it is neither the Fed, nor tomorrow's market technicals, and the reason is an old and familiar one. Dennis Gartman.

This is what the "world-renowned commodity king" said in his overnight letter:

What then do we make of this? How then are we to invest? What then are we supposed to do? ... All we know is that the trend remains upward and it was for that reason that although we were cautious and recommended openly that it was wise, ahead of the Fed’s to become neutral of equities (a position obviously we wish we had not taken, with the benefit of hindsight), we did not and would not recommend being short of the equity market. As we have said for years, and shall say as long as we are able to write TGL on a daily basis, in a bull market there are only three positions that one can have: Aggressively long of equities; modestly long of equities, or neutral of them. As of earlier this week, ahead of the Fed meeting, we advocated neutrality. Now we have to suggest the middle course once again. We’ve really no choice.

 

There we sit this morning, knowing yet again that these things do not end well, but knowing too that it is better to be modestly long than otherwise.

The rest is history.

So tune in tomorrow when, if the JPM "Gandalf" is right again, things are about to get very exciting.

 

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Thu, 12/17/2015 - 17:54 | 6937024 The Pope
The Pope's picture

QE18 is still on schedule.

Thu, 12/17/2015 - 17:56 | 6937035 Hitlery_4_Dictator
Hitlery_4_Dictator's picture

They have to finish the FEMA camps and place thier supplies in tactical positions, then it's o nand crackin'. Watch this video, the reporter is pissed

http://www.theblaze.com/stories/2014/07/30/news-crew-booted-from-state-p...

Thu, 12/17/2015 - 18:24 | 6937132 Tall Tom
Tall Tom's picture

That News Crew stumbed onto a Dark Site.

 

Most likely the prisoners housed there will be disappeared after their torture.

 

 

Thu, 12/17/2015 - 18:30 | 6937143 knukles
knukles's picture

WWC&LS?
What would Cramer and Liesman Say?

 

                                                   Run!

Thu, 12/17/2015 - 18:35 | 6937168 FreeMoney
FreeMoney's picture

Uh....I thought keeping the rate at zero for seven years was the policy error?  How the hell do you unwind without unwinding?  Some stuff will have to change.

Thu, 12/17/2015 - 18:54 | 6937257 Mr.Sono
Mr.Sono's picture

So this article indicates Black Friday event? Let's wait and see if this will be a bloody Christmas.

Thu, 12/17/2015 - 19:04 | 6937303 Captain Debtcrash
Captain Debtcrash's picture

Anyone who looks at this chart  will know without a doubt stocks are going to have a negative reaction to the rate hike, END OF STORY.

Thu, 12/17/2015 - 20:37 | 6937686 johngaltfla
johngaltfla's picture

Not until 2016. We finish the year within 1% of today's close.

Then?

TSHTF.

Thu, 12/17/2015 - 20:58 | 6937752 herkomilchen
herkomilchen's picture

Depends on whose perspective you are taking and what the goal is.  All policies are necessarily erroneous because having a policy implies forced manipulation of free markets and actual prices.  This is why forcing the rate to 0 for seven years was an error.

However, in the Fed's perspective as a manipulator, this current raise will be revealed to it to be an error with respect to its goals of continuing the fake impression of a healthy economy.

Thu, 12/17/2015 - 23:25 | 6938113 Remington IV
Remington IV's picture

Leveraged Loans =   GARBAGE

Thu, 12/17/2015 - 18:31 | 6937147 Hitlery_4_Dictator
Hitlery_4_Dictator's picture

I think the news guy was really confused, most likely a sheeple just doing his job, when bam, stone walled. He really could not understand why he could not be allowed in. Total shock and then anger. I bet he's awake now. 

Thu, 12/17/2015 - 18:41 | 6937194 Tall Tom
Tall Tom's picture

Oh you can bet that he will be back...

 

And not filming a Powder Puff story on Grant's Cottage.

 

Hopefully his bewilderment will spark some of that investigative reporting that is far too rare.

Thu, 12/17/2015 - 19:18 | 6937370 Fidel Sarcastro
Fidel Sarcastro's picture

Let Janet & Co. make all the fuck ups they want if it brings us volatility. My algos are killing it. 9 of 10 winners today...mostly SHORT. 99% of you think it's not tradeable - you're wrong.

By the way, f*ck the Fed!

Thu, 12/17/2015 - 19:25 | 6937399 August
August's picture

More likely the prison is housing a few thousand recently arrived "Syrians".

A few months of regular meals, pumping iron, and fresh ID, and they'll all be ready for release.

Thu, 12/17/2015 - 18:41 | 6937192 Boing_Snap
Boing_Snap's picture

That was a year ago, a fine piece of Fascism though.

https://www.youtube.com/watch?v=3V8mo7WQVpI

It's high time we get our government employees to understand they serve [wo]man, a return to Common Law, as opposed to the Statutory world of the legal society, that supports their corporatations with enforcers.

Know the difference between, man and person, lawful and legal, and you're on your way to being free.

https://www.youtube.com/watch?v=f4f3k_y1_OI

Thu, 12/17/2015 - 18:48 | 6937238 Hitlery_4_Dictator
Hitlery_4_Dictator's picture

I know it was a year ago, still extremely relevant. Just goes to show you they are still in prepare mode, but it may be almost complete. 

Thu, 12/17/2015 - 21:15 | 6937797 saratogaprepper
saratogaprepper's picture

That's about 10 miles from my place.

Thu, 12/17/2015 - 21:25 | 6937825 Hitlery_4_Dictator
Hitlery_4_Dictator's picture

We got a cerial down voter here. Strange.

Fri, 12/18/2015 - 03:31 | 6938355 Lore
Lore's picture

ZH occasionally attracts a mentally ill type. They can't comment meaningfully, so downvote everything and clutter up the board to vent frustration.  Another guy seems to enjoy posting porn.  Might be one and the same person.

Thu, 12/17/2015 - 21:56 | 6937907 AdolfSchicklgruber
AdolfSchicklgruber's picture

State police demanded they turn over the footage??? IN YOUR FREAKING DREAMS COP! Time for a shootout. We can settle the fallout in the forum of public opinion. WE ARE SLAVES ON A PLANTATION. If massa don won ya ta take no pick shus of da big house den yous betta not take no pick shus. Else he's gwine to give you a lashin.

 

 

Thu, 12/17/2015 - 18:01 | 6937055 HedgeAccordingly
HedgeAccordingly's picture

OPEx coming. And a break under 2000 spx opens window to all kinds of fireworks. http://hedgeaccordingly.com/2015/10/were-headed-for-a-crash-spy.html

Thu, 12/17/2015 - 18:10 | 6937089 Bloppy
Bloppy's picture

Can't wait to see the Millenial traders crushed to bits, they have no idea how to get through this in one piece.

 

 

Before arrest, hated CEO Martin Shkreli gave generously to Democrats

http://tinyurl.com/j3n2ovv

Thu, 12/17/2015 - 18:22 | 6937124 Ballin D
Ballin D's picture

Cash has been a pretty comfortable home for my tiny slice of wealth over the last year and its only feeling better now. I suspect my millenial nest egg beat most portfolios over that window.

Thu, 12/17/2015 - 20:35 | 6937676 Zorrohodge
Zorrohodge's picture

I'm with you , also put a chunk in bitcoin at the start of the year wish I'd done more but 90% return not bad on what I did 'invest'

Thu, 12/17/2015 - 18:48 | 6937239 Short Change
Short Change's picture

How is this in any way surprising?  The fed started to remove easy money liquidity and equities were punished as a result.  Who didn't see that coming?  Oh yeah, all the people who have been trading a broken market for the last decade... 

Thu, 12/17/2015 - 20:48 | 6937719 sun tzu
sun tzu's picture

I'm surprised he was arrested. I guess he's not in the same club as Corzine.

Thu, 12/17/2015 - 21:12 | 6937765 dreadnaught
dreadnaught's picture

seems you are keeping a secret from us. He gave generously to Republicans too; Why would you choose to hide that fact?  

Fri, 12/18/2015 - 01:58 | 6938293 Breezy47
Breezy47's picture

He gave 4 to 5 X the amount to dems than Reps FWIW...

Thu, 12/17/2015 - 23:51 | 6938159 TheReplacement
TheReplacement's picture

Millenials did not cause this.  Save your wrath for elder generations who have been in the process of bringing this about for decades now.

Thu, 12/17/2015 - 18:13 | 6937097 Bananamerican
Bananamerican's picture

Like that saudi dude, Janet Yellin just trip-fucked the DOW

Thu, 12/17/2015 - 20:35 | 6937673 Beam Me Up Scotty
Beam Me Up Scotty's picture

"Trip-Fucked".  I think you just coined a new phrase!!

Thu, 12/17/2015 - 20:44 | 6937713 Jacksons Ghost
Jacksons Ghost's picture

+ 1 million. Laughing my ass off at my desk. Epic post, will be the stuff of ZH legend. I have to know, were you sober when you posted this gem?

Thu, 12/17/2015 - 18:18 | 6937121 jomama
Thu, 12/17/2015 - 18:49 | 6937241 doctor10
doctor10's picture

99% of what is being written about the "rate hike" is a load of steaming &*it.

Credit is useless to the average Joe. Thats why its cheap. Nobody can use it. Regulation, taxation, licensing and legal tort threat has shut down all small business competition to the big boyz. That's precisely the way the big boyz want it.

The "rate hike" is simply the fee Fed.Gov is charging the big boyz for having kicked out the competition and helping to implement their monopolies.

that's all.

Thu, 12/17/2015 - 21:41 | 6937869 WonderDawg
WonderDawg's picture

Wrong on many levels. This isn't about the interest rate you pay on your car loan, this is about the liquidity that's going to have to be pulled from the system to effect the rate hike.

Thu, 12/17/2015 - 22:11 | 6937937 Bob
Fri, 12/18/2015 - 02:37 | 6938333 joe90
joe90's picture

Who downvoted this?  The huge increase in excess reserves has been a theme here over the years and those that accumulated as a result of QE are the winners and it isn't a zero sum game.  I'm picking no break just yet, it happens when the insiders have their ducks in a row but not so soon after the announcement to allow the dots to be connected.

Thu, 12/17/2015 - 22:28 | 6937979 wisebastard
wisebastard's picture

$10,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,.00

Thu, 12/17/2015 - 17:54 | 6937028 Aussie Battler
Aussie Battler's picture

Dow reacted like a drunk idiot cheering as the punch bowl was eased away.

Reality awaits.

Thu, 12/17/2015 - 17:55 | 6937029 Fester
Fester's picture

I hope something breaks tomorrow.

What a great Christmas present.

Thu, 12/17/2015 - 18:11 | 6937092 GartmansTaint
GartmansTaint's picture

IIIIIIIIII'mmmmmm Dreaaaaming of a... Black Christmas?  

Thu, 12/17/2015 - 19:46 | 6937486 jerry_theking_lawler
jerry_theking_lawler's picture

I'm dreaming of my January and March puts paying off handsomely...along with some vix calls to deck the halls.

Thu, 12/17/2015 - 18:48 | 6937146 buzzsaw99
buzzsaw99's picture

that's the comment i was looking for. kudos. solly, market bloke, options no good. you come back tomollow, bring moar money.

Thu, 12/17/2015 - 19:06 | 6937307 Dig Deeper1
Dig Deeper1's picture

Nothing will be allowed to break unless the breakers break too.

Thu, 12/17/2015 - 20:36 | 6937684 Beam Me Up Scotty
Beam Me Up Scotty's picture

Exactly.  Markets will just close.  Sorry folks, parks closed.  Moose out front shoulda told ya.

Thu, 12/17/2015 - 19:10 | 6937326 mtndds
mtndds's picture

I am going out on a limb and saying the market will break to the upside tomorrow.  

Thu, 12/17/2015 - 17:55 | 6937033 yellensNIRPles
yellensNIRPles's picture

zzzzzz... zzzzz... zzzzzz.... 

Bring it on. Until then I'm fucking tired of the guessing. 

Thu, 12/17/2015 - 17:56 | 6937039 Guitarbill
Guitarbill's picture

Mr. Algo says WHAT!?

Thu, 12/17/2015 - 17:58 | 6937051 Rainman
Rainman's picture

Three-Card-Monte detected

Thu, 12/17/2015 - 17:57 | 6937045 Soul Glow
Soul Glow's picture

This and the Fed has only begun to drain their balance sheet back on the market.  

Thu, 12/17/2015 - 18:00 | 6937052 Conax
Conax's picture

I read that and pictured a nasty boil being lanced..

Gaaaaah..

Thu, 12/17/2015 - 19:40 | 6937468 Miffed Microbio...
Miffed Microbiologist's picture

Well you know what happens after a long bout of prairie dogging.

Miffed

Thu, 12/17/2015 - 18:01 | 6937056 44MagnumPrepper
44MagnumPrepper's picture

CALL IN NEINPAT

Thu, 12/17/2015 - 18:01 | 6937057 Not_Pictured
Not_Pictured's picture

The policy errors happened a long time ago, rising rates simply exposes them.

Thu, 12/17/2015 - 18:58 | 6937072 The Pope
The Pope's picture

Policy 'initiatives' (which happened a long time ago & are still happening) made a lot of old school jewish banking families rich to the point of controlling THE WORLD today & bringing about death & decay. Rising rates simply exposes the next step in the process.

 

~There, fixed it. (Downvoted by the Rothschild's! Oh my oh my, I'm trembling)

Thu, 12/17/2015 - 18:02 | 6937061 Ghostdog
Ghostdog's picture

No worries, Fed Mouthpiece Hilsen-scrotum will explain that what she meant to say was, it was dovish, tomorrow

Thu, 12/17/2015 - 18:03 | 6937067 Comte d'herblay
Comte d'herblay's picture

One man's Policy error is another man's floor.

Thu, 12/17/2015 - 18:04 | 6937069 CaptainMoonlight
CaptainMoonlight's picture

Great video from a Marine and patriot. It's time to fight.


http://beforeitsnews.com/politics/2015/11/civil-war-national-guard-being...

Thu, 12/17/2015 - 19:01 | 6937284 The Pope
The Pope's picture

"It's time" ~ for idiot ass 'Marines', 'Patriots', & other sychophants to wake the fucking fuck up

Thu, 12/17/2015 - 21:43 | 6937871 logicalman
logicalman's picture

To the domestic enemy?

At least I think that's what you are getting at.

 

Thu, 12/17/2015 - 21:50 | 6937894 overmedicatedun...
overmedicatedundersexed's picture

Trump on Omnibus budget deal (also called the elite free money shower with plenty for illegals and immigrants from the ME) the GOP are ass wipes but I repeat myself:

"If anyone needed more evidence of why the American people are suffering at the hands of their own government, look no further than the budget deal announced by Speaker Ryan. In order to avoid a government shutdown, a cowardly threat from an incompetent President, the elected Republicans in Congress threw in the towel and showed absolutely no budget discipline."

Thu, 12/17/2015 - 18:06 | 6937074 Nex
Nex's picture

High-yield will not explode because it is question of national security(oil price, geopolitical question). If someone not believe just look on monday morning what SEC do.

Thu, 12/17/2015 - 18:06 | 6937079 GoldSilverBitcoinBug
GoldSilverBitcoinBug's picture

SP500 already down at 2023 and still crashing...

No QE, no ZIRP how on Earth that thing can handle 2100 or even 2000 ? Impossible.

Maybe when crashed, a big reentry opportunity and ride another round of QE will appear: so please, crash and get pumped back, I need some bitcoin money.

Thu, 12/17/2015 - 18:12 | 6937101 Mark Mywords
Mark Mywords's picture

Holy hell. I just checked Bloomberg and yeah - down to 2023.

We don't have to wait until tomorrow. Let's do this tonight!

Thu, 12/17/2015 - 18:19 | 6937125 Hitlery_4_Dictator
Hitlery_4_Dictator's picture

I just checked and it's only down -1.75. What are you guys smoking?

Thu, 12/17/2015 - 18:29 | 6937142 GoldSilverBitcoinBug
GoldSilverBitcoinBug's picture

I have a 24/24 cotation and have a higher high at 2072 it seems to resist at 2023 for now...

Thu, 12/17/2015 - 18:31 | 6937152 Mark Mywords
Thu, 12/17/2015 - 18:44 | 6937213 Hitlery_4_Dictator
Hitlery_4_Dictator's picture

LOL I'm not a fascist, ok I might be but I think it's frozen as it's not moved in 30 mins. Something is going on. 

Thu, 12/17/2015 - 19:22 | 6937388 GoldSilverBitcoinBug
GoldSilverBitcoinBug's picture

You noticed too that it was frozen ? I think the circuit breaker got tripped !

Thu, 12/17/2015 - 19:26 | 6937414 Hitlery_4_Dictator
Hitlery_4_Dictator's picture

Now they fucking changed the numbers, LOL Down -1.25

Thu, 12/17/2015 - 20:05 | 6937567 3rdWorldTrillionaire
3rdWorldTrillionaire's picture

I'm seeing 2025 on both WSJ and BB at 7:05pm ET... 

Thu, 12/17/2015 - 18:47 | 6937234 Barrack Chavez
Barrack Chavez's picture

Crashing?

You are a drama queen

Thu, 12/17/2015 - 18:10 | 6937090 lasvegaspersona
lasvegaspersona's picture

we're going to need a bigger chart

Thu, 12/17/2015 - 18:11 | 6937091 moonmac
moonmac's picture

Will granny start knitting up her QE4 or NIRP quilt first?

Thu, 12/17/2015 - 18:12 | 6937100 Boing_Snap
Boing_Snap's picture

Three days of goosing the market pre-announcement does bear a toll.

What is technically (manipulated markets can ignore technicals easily) set up for tomorrow and overnight in the foreign markets is a smash. Both S&P and Dow closed below their 50 and 200 DMAs, after rallying above them this week. Along for the ride came the EMs, you would expect a severe correction overnight and tomorrow, however its triple witching day, end of the year for options, and the quarter is finalized on the open for alot of instruments and funds.

So if the foreign markets take a powder, and the powers that be can't make the futures dance to their tune it could be a very bad day to be long the equities. If they can make the open work for them, the action later in the day should reflect the technical smash that is due.

Will be a good day to observe tomorrow, might see some serious losers coming out of the trading tomorrow in the near future.

 

Thu, 12/17/2015 - 18:13 | 6937104 NaiLib
NaiLib's picture

Not an "error"- It was all deliberately. Popping bubbles is what they do when appropriate.

Thu, 12/17/2015 - 18:16 | 6937110 ghostzapper
ghostzapper's picture

Intentional and deliberate "policy error".

I had FX and PMs sniffing out the real message well before stawks with stawks ripping for a couple days to the ATH setting up a nice opportunity to go the other way.  Not so sure now with this close today though they did stick it right on a very relevant level at 2042.  Let's see what Da Boys come up with before 9:30AM for an attempt to "ramp it and camp it".  

Come on Russy, come on up towards that 50 day so we can maul you again.  

Thu, 12/17/2015 - 18:18 | 6937117 CHoward
CHoward's picture

History is being written right this moment.

Thu, 12/17/2015 - 18:18 | 6937119 minitrue
minitrue's picture

Rule 48 tomorrow morning?

Thu, 12/17/2015 - 18:21 | 6937127 Tyrone Shoelaces
Tyrone Shoelaces's picture

If I like my rate hike, can I keep my rate hike?

Thu, 12/17/2015 - 23:54 | 6938161 motorollin
motorollin's picture

Your rate hike will be inflated away.

Thu, 12/17/2015 - 18:24 | 6937131 Consuelo
Consuelo's picture

 

 

"There we sit this morning, knowing yet again that these things do not end well, but knowing too that it is better to be modestly long than otherwise."

 

Here I sit all broken hearted, trying to Shit, but I only farted...

Thu, 12/17/2015 - 18:27 | 6937140 Inthemix96
Inthemix96's picture

Oh the shark babe, has such teeth dear, and it shows them pearly white, just a jack knife has old mac heath babe, and it keeps it, ooh owt of sight.

You know when that shark bites, with its teeth dear, scarlet billows, starts to spread.

Fancy gloves though, wears old mac heath babe, so theres never, never a trace of red.  Down on the side walk, ooh sunny morning uh ha, lies a body, just oozing life.

Someones sneaking round the corner, could that someone be mac the knife?

:-)

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

Fri, 12/18/2015 - 01:56 | 6938289 Manipuflation
Manipuflation's picture

I did my damage today.  I would love to chat you up one day brother.  It would be a privledge to do so.  I bought both gold and silver today.  I still have some cash left and now I want Al Bundy's old Dodge.  That is an old joke from back in the late 80's/early 90's from a show named "Married With Children".  You know, back when I was still cool yet.  I would be cool again if I get Al's old ride.  It almost has to be GrndMB on the license plate.

 

  http://www.dodgepedia.org/2008/03/dodge-on-tv-al-bundy-edition/

 

We as ZereoHedgers have to save one of these cars.  I can wrench but I don't know anything about paint or body work.  That car is legend.  

Thu, 12/17/2015 - 18:31 | 6937150 paint it red ca...
paint it red call it hell's picture

Bare down for the pain in equities you peons, there will be no quick reversal in FED policy. The masters of the universe have spoken.

Priorities now dictate irreparable damage to IRA's, 401K's and pension funds. Only through investor pain can TPTB sell the idea of government takeover and management of retirement funds. And only through substantial losses can government confiscated investments be guaranteed with treasury bonds issued by and owned by the FED or FED proxies.

Time is ripe for more losses wrought of corruption to get passed along to the ultimate underwriter of corporate malfeasance, the bag holding public.

Fri, 12/18/2015 - 02:35 | 6938330 mr. mirbach
mr. mirbach's picture

This is asymetrical warfare to show the millenial crowd that you can only trust the Gov't with your investments using O'bama's MyRA. 

Fri, 12/18/2015 - 08:37 | 6938555 paint it red ca...
paint it red call it hell's picture

What they will be shown will not induce youth's favor toward the government. Youth will be supporting elderly that could otherwise have supported themselves but for SS looted and the financial gaming allowed.

Fri, 12/18/2015 - 07:28 | 6938488 slowimplosion
slowimplosion's picture

Anyone that has substantial assets tied up in the stock market deserves everything that is about to happen to them.

Fri, 12/18/2015 - 08:26 | 6938541 paint it red ca...
paint it red call it hell's picture

No they don't.

Trust has been broken, pensions have been looted, and government sponsored retirement accounts have limited options. The system has been gamed while savers are held down.

Thu, 12/17/2015 - 18:32 | 6937154 magnetosphere
magnetosphere's picture

hmm, i thought the s&p options expire at 3 pm CT, why does jpm dude say in the morning?

https://www.cmegroup.com/education/files/faq-eq-hours-and-limits.pdf , bullet #2

Thu, 12/17/2015 - 18:32 | 6937155 Motorhead
Motorhead's picture

Or worse?  Come on, man, everything will be fine...just fine.

Meanwhile, the Silver Bears seem to have been hibernating far too long.

Thu, 12/17/2015 - 18:34 | 6937164 gatorengineer
gatorengineer's picture

Anyone want to do a shot every time the market "breaks" tomorrow.  could be Epic.......

 

Is tomorrow the first day that we get to clearly see Bots that work for the dark side?  how fitting with a star wars movie out....

 

I am your father...... Janet (in a good james earl jones voice).....

 

Full disclosure, modest EDZ position...... got stopped out of more shorts yesterday.

 

Thu, 12/17/2015 - 18:39 | 6937182 tarabel
tarabel's picture

 

 

Janet has no father.

She was hatched from a Ouija board.

Thu, 12/17/2015 - 18:35 | 6937167 Bear
Bear's picture

The excitement will not start on Friday .... but on Black Monday

Thu, 12/17/2015 - 18:36 | 6937170 wizteknet
wizteknet's picture

Until the dow looses 2000, which I doubt there isis nothing to worry about, lol...

Thu, 12/17/2015 - 18:36 | 6937172 Tall Tom
Tall Tom's picture

Double down Yellen.

 

Raise those rates again...tomorrow.

 

Stay your course. Do not cut and run.

Thu, 12/17/2015 - 18:43 | 6937178 GoldSilverBitcoinBug
GoldSilverBitcoinBug's picture

.

Thu, 12/17/2015 - 18:40 | 6937186 Dark Daze
Dark Daze's picture

This is the end of the fed.

Thu, 12/17/2015 - 20:25 | 6937632 WorkingClassMan
WorkingClassMan's picture

Some R.E.M. song...

 

It's the end of the fed as we know it...

It's the end of the fed as we know it...

It's the end of the fed as we know it...

..And I feel fine!!!!!

 

 

Thu, 12/17/2015 - 18:41 | 6937191 fowlerja
fowlerja's picture

My hair would also turn gray  ...if I had just opened the interest rate pandora box....

Thu, 12/17/2015 - 18:42 | 6937199 1835jackson
1835jackson's picture

Central banking never works.

Thu, 12/17/2015 - 18:57 | 6937265 Who was that ma...
Who was that masked man's picture

Central nothing ever works.

Thu, 12/17/2015 - 19:53 | 6937525 o r c k
o r c k's picture

See Nothing  Say Nothing. 

Thu, 12/17/2015 - 21:05 | 6937770 Who was that ma...
Who was that masked man's picture

Be nothing.

Thu, 12/17/2015 - 18:44 | 6937215 In.Sip.ient
In.Sip.ient's picture

Sorry folks... this was no policy error.

And it wasn't an error the last umpteen times its been

done in a recessionary environment.

 

This is necessity and CYA on the part fo the FED

 

Pure and Simple...

 

 

Thu, 12/17/2015 - 18:58 | 6937268 FreeNewEnergy
FreeNewEnergy's picture

Imagine, the fed wants to do this four times next year.

Break out the popcorn and champagne. It's gonna be a party for freedom lovers.

Fri, 12/18/2015 - 05:15 | 6938423 orelius
orelius's picture

Pass the freedom fries!

Thu, 12/17/2015 - 18:59 | 6937276 moonmac
moonmac's picture

I would print up a mountain, lower rates so easily.
If that's what it takes me Wall Street, to show how much you mean to me
And I guess that it's just the shyster in you, that brings out the crook in me
I know I can't help myself, you're all in the world to me

It feels like the last time, feels like the very last time
It feels like the last time, it feels like the very last time

I have crimes of a lifetime, printed money so foolishly
But now that I bound you, together we'll make history
And I know that it must be the shyster in you, that brings out the crook in me
I know I can't help myself, you're all my eyes can see

And it feels like the last time, like it never did before
Feels like the last time, like we've opened up the door
Feels like the last time, like it never will again, never again

Open up the door, won't you open up the moral hazard door…

Thu, 12/17/2015 - 19:06 | 6937311 Dark Daze
Dark Daze's picture

I honestly don't know what I would do without ZH, or without a handful of other patriots that are committed to getting the truth out.

And the truth, as I see it is that in all my life I have never witnessed such an outrageously incompetent performance on the part of all elements in this. The Obama adminsitration, the Fed, the Pentagon, Lockheed Martin you name it, they are all in there like dirty shirt trying to wring the last dollar out of the system before it collapses.

I hope they are caught and hanged. It is the very least they deserve. 

Thu, 12/17/2015 - 19:08 | 6937321 aliki
aliki's picture

the monetary & fiscal policies are not independent of 1 another - can't run infinite debt @ anything more than zero but need to go negative to balance out the math. only other way is for overall tax revenues to exceed spending levels. that however is impossible because whenever they start to converge, new spending requests come in and are immediately granted. can't escape math or gravity - her liftoff is in a plane too overloaded with debt so it has no choice but to crash eventually ... especially since it constantly being "re-fueled" with more debt in mid-air.

Thu, 12/17/2015 - 19:10 | 6937332 humanstakeaction
humanstakeaction's picture

What's all this policy error talk? Any policy created by a non-market mechanism is by defintion, an error. When did Tyler go all Milton Friedman?

Thu, 12/17/2015 - 20:37 | 6937688 herkomilchen
herkomilchen's picture

Of course.  Tyler is just using the colloquial vernacular as part of donning mainstream glasses to forecast the mainstream perspective.

Thu, 12/17/2015 - 19:20 | 6937379 mendigo
mendigo's picture

I think it is very possible that the initial positive reaction was orchestrated. Many have an interest in extending the scam a little longer. Long enough to goldman the retail clients.

Thu, 12/17/2015 - 19:24 | 6937401 buzzsaw99
buzzsaw99's picture

+1 - i call it the "rate hike ipo".

Thu, 12/17/2015 - 19:38 | 6937460 El Hosel
El Hosel's picture

Possible! To say the least

Thu, 12/17/2015 - 19:46 | 6937489 Dr. Engali
Dr. Engali's picture

Of course it was orchestrated. There was only one way assets were going to go on the big day.

Thu, 12/17/2015 - 20:14 | 6937595 Baby Eating Dingo22
Baby Eating Dingo22's picture

It was absolutely orchestrated

That initial 2 pm dip was nothing but the algos getting synched

Once in gear, they were ready to spread the goldilocks gospel buying everything and feed the euphoric confidence in the Fed we're all supposed to feel

Anything less and policy change may have been questioned

 

Thu, 12/17/2015 - 19:31 | 6937434 RealistDuJour
RealistDuJour's picture

WOT???

Zero has practically been begging for a rate hike and now that it happens it's a bad thing?

I r confused.

Thu, 12/17/2015 - 19:39 | 6937465 css1971
css1971's picture

ITYM "daring them"

Thu, 12/17/2015 - 20:30 | 6937566 herkomilchen
herkomilchen's picture

"Bad" in the sense the consequences of a meaningful raise will appear bad because it will burst an artificial bubble revealing the ugly realities of previously mis-allocated capital and stolen wealth.  Left alone, painful but healthy readjustments would ensue.  Honest people know this to be a good and necessary thing as it is the road to genuine recovery.

However, this is bad in the eyes of the Fed and mainstream media.  The Fed is a manipulator pursuing its own agenda to enrich and empower its owners and partner government at the expense of the population which it can only do in conjunction with manipulating the money supply.  Thus, the Fed will react by scrambling to "fix" this painful state of affairs with even more money printing.  This continues the wealth extraction while simultaneously anesthetizing people, worsening the fundamental economic problems while burying them deeper.

Thu, 12/17/2015 - 23:01 | 6938067 ISEEIT
ISEEIT's picture

Yep.

U R

 

Thu, 12/17/2015 - 19:36 | 6937443 El Hosel
El Hosel's picture

I say bring it, this "Market" has been a real drag ever since Hank Paulson rode off into the sunset with his 240 Million tax free war bucks. At least when Hank was the Federal supervisor of market trading operations the market went both ways....

    Lets see some damn 6s

Thu, 12/17/2015 - 19:34 | 6937447 lester1
lester1's picture

Sell stock and move to cash positions now.

Thu, 12/17/2015 - 20:00 | 6937549 css1971
css1971's picture

HEATHENS! BLASPHEMERS!

Get out there and BUY THAT FUCKING DIP!

Thu, 12/17/2015 - 20:13 | 6937593 Nexus789
Nexus789's picture

The Fed is a long run policy error. Over a hundred years. 

Thu, 12/17/2015 - 20:25 | 6937633 henry chucho
henry chucho's picture

They should have hiked rates 3 years ago,when WTI was trading at $100,and the Dow was at 12,000,so there would have been a margin for error,and there was still some sanity left in the markets..Hiking rates now,with WTI at $35,and the Dow at 17,500,is only going to insure massive defaults in the energy sector,and show just how damaging QE really was..

Thu, 12/17/2015 - 20:31 | 6937647 FrankieGoesToHo...
FrankieGoesToHollywood's picture

.

Thu, 12/17/2015 - 21:06 | 6937772 Psquared
Psquared's picture

We are going to have the recession, or possibly depression, and then structural reform and recovery we should have had in 2007-2010. Despite the constant yapping at Yellen (first for keeping low rates and now for raising them) she recognizes that higher rates are the only way to eliminate the moral hazzard, speculation, imbalance, and flat out corruption that ZIRP and QE have brought us.

Thu, 12/17/2015 - 21:15 | 6937795 Pogo5187
Pogo5187's picture

When in doubt, stay out.

Real simple.

Thu, 12/17/2015 - 21:18 | 6937807 Nanur
Nanur's picture

Give everyone zero interest, let them load up on debt, then start raising rates... why would this be considered a "policy error"?

Thu, 12/17/2015 - 21:22 | 6937819 Who was that ma...
Who was that masked man's picture

Janet Yellen:  "Does this rate hike make my ass look big?"

Thu, 12/17/2015 - 21:31 | 6937844 10mm
10mm's picture

I like big ass, but not on her.

Thu, 12/17/2015 - 23:02 | 6938073 ISEEIT
ISEEIT's picture

LOL...

Closer to the truth than some "folk's" imagine.

Thu, 12/17/2015 - 21:29 | 6937834 ChargingHandle
ChargingHandle's picture

Hmm. The data is curious to say the least...especially the leveraged loan 100 index. This really could be something...a catalyst for algo-mayhem of sorts. 

Thu, 12/17/2015 - 21:29 | 6937836 kaboomnomic
kaboomnomic's picture

Just looking by those chart? The current "remedy" (done by JA/EU?) NIRP.

 

So.. i just wait, before that yellen burns her (is it her or his? Couldn't tell from photos) hair, while announcing it...

Thu, 12/17/2015 - 21:40 | 6937862 Youri Carma
Youri Carma's picture

How exciting!

Thu, 12/17/2015 - 21:40 | 6937864 pull-it
pull-it's picture

pull it

- pull-it

Thu, 12/17/2015 - 21:44 | 6937877 Arthur Schopenhauer
Arthur Schopenhauer's picture

The EFFECTIVE overnight borrowing rate has risen from zero to a little above zero.

Fri, 12/18/2015 - 09:00 | 6938617 Lady Jessica
Lady Jessica's picture

Accepted.  But remind me how big that US government debt is now (plus recent Omnibus bill, mind)?

Thu, 12/17/2015 - 21:56 | 6937908 inosent
inosent's picture

In terms of a trade, the stops likely to explode are the shorts on the other side of all time highs. Those will be the ones to gun for.

Thu, 12/17/2015 - 22:26 | 6937973 Celotex
Celotex's picture

Given the vast value of the options expiring tomorrow, I don't think even the Fed has the juice to be able to push the markets around too much, at least tomorrow anyway.

Thu, 12/17/2015 - 22:40 | 6938011 shankster
shankster's picture

97% of 'Americans' don't realize they're only cattle on the big corporate big government farm. But if they were to realize it..I wonder if they would even care?

Thu, 12/17/2015 - 22:51 | 6938033 ISEEIT
ISEEIT's picture

Turbulence (volatility) is likely tomorrow. Fuck, end of month flows alone are disruptive if you aren't fairly sophisticated about it. The criminal gang that runs 'china' has been reporting some positive 'economic news'

(ha-ha)..

This shit is confusing EVERYBODY.

K?

Every-fucking-buddy. Obviously even the fucks who pretend to be 'in charge' of it.

Personally I'm hope-in on commodity crash. That's my book. USD rips and shit gets haywire..

I doubt the plug gets pulled tomorrow though.

They aren't ready.

2016 will be enough to test the very definition of sanity.

Thu, 12/17/2015 - 22:54 | 6938043 Atomizer
Atomizer's picture

Dear Karl Denninger, 

I know you read this site. Good job my friend. Stop baiting them, have been bashing those folks over here. It's beyond criminal at this point. This must all come to an end. Keep up the good work ;) 

Start using that ban hammer to exploit the obvious. 

http://market-ticker.org/akcs-www?post=230972

This interconnects in a indirect fashion to Zerohedge viewers. You will understand shortly. 

Thu, 12/17/2015 - 22:56 | 6938053 Still Losing Money
Still Losing Money's picture

In the photo accompanying the story, is that smellen yellen telling Congress how big a dick she intends to cram up our collective asses?

Thu, 12/17/2015 - 22:58 | 6938059 V for ...
V for ...'s picture

I'm looking forward to Friday. I know 'they' will put up a flimsy paper fight and flight.

"This above all: to thine own self be true,
And it must follow, as the night the day,
Thou canst not then be false to any man.
Farewell, my blessing season this in thee!"

(Shakespeare)

Thu, 12/17/2015 - 23:02 | 6938070 atlasRocked
atlasRocked's picture

My guess is the FED already knows the economy is collapsing.  Remember Yellen recently implied they had no research to show the current policies have ever worked, when she said they needed to do some research on currrent policies.   Another FED president has also said this, Bullard.  So it's fair to assume the FED presidents know what I easily found with Google:  ZERO success stories - all failures - for stimulus.

  (http://www.zerohedge.com/news/2015-12-16/us-manufacturing-pmi-plunges-lo...)

So the FED reasoned:  Let's raise the EFF rate, then we'll blame the collapse we already know is coming on the raised rates, then we can lower them again. With this tactic, we and our salary payers, the politicians, can't be blamed for the catastrophe already underway, the catastrophe we knew would come when we started printing money. We didn't want to lose our jobs, so we avoided the correct decisions. We can say 'we tried', but the economy just wasn't recovered enough yet, and the corrupt Washington leadership will keep our big salaries flowing.   As long as we say "we tried", the bribed voters will give us more rope to hang them with.

This is like 1937, when they tried to balance the budget, and found the economy was weaker than ever.  My sense of human behavior, based on Harding's rapid recovery, no recovery in the 1930s, and what I see now, is all "stimulus" is detrimental, weakens, the private sector.   Humans change behavior to capture the printed "stimulus" money INSTEAD of creating vital new products and methods.  Or worse yet - do nothing at all (see "employment" numbers).

The FED can deny culpability with this rate hike attempt:  "We can claim we had no idea why the collapse happened - play stupid - again.   We can blame the economic collapse that we already know is coming on the well-intentioned rate hike, not the prior 40 years of known, bad money policy."

 

http://www.zerohedge.com/news/2015-12-17/philly-fed-collapses-lowest-feb...

Thu, 12/17/2015 - 23:05 | 6938080 ISEEIT
ISEEIT's picture

U best be anonymous.

Thu, 12/17/2015 - 23:10 | 6938095 V for ...
V for ...'s picture

No. S/he can write. We are not full on nazionist.

Money talks; principles are timeless. Bullshit walks.

Get off your knees.

Do NOT follow this link or you will be banned from the site!