If This Was 2016's "Bullard Sticksave" Moment, This Is What Stocks Will Do Next

Tyler Durden's picture




 

Back on October 17, 2014, the market was in free fall mode, when out of the blue during an interview with Bloomberg TV, one of the Fed's alleged biggest hawks hinted that the Fed could do QE4 if the rout continued. The rest, as they say was history, and the Dow soared 400 points higher to close at 16,350....

 

... exactly where the Dow Jones surged to moments ago, 14 months later.

 

Fast forward to this morning when as we showed earlier, the familiar pattern of "selling the rip" appeared and stocks, especially the Nasdaq, were in free fall when Bullard once again spoke.  What he said basically suggested that for the Fed, current energy prices are too low, and thus unacceptable. To wit:

  • BULLARD:MKT INFL EXPECTATIONS BECOMING 'WORRISOME'
  • BULLARD: OIL PRICES UNDULY IMPACTING MKT-BASED INFL EXPECTATIONS
  • BULLARD: FURTHER OIL PRICE DECLINE DELAYS INFL STABILIZATION
  • BULLARD: IF OIL STAB AT $20 IN JUNE, WON'T REACH 2% TIL MID'17

And then this:

  • BULLARD: HAVE TO HIT A BOTTOM ON OIL PRICES 'SOMETIME'

While not as explicit a warning as his October 2014 "QE4" hint, algos quickly read between the lines, and realized that if the Fed were to escalate a line of though in which only low oil prices are preventing the Fed from achieving its energy mandate, then it is quite possible that the NY Fed trading desk would simply enter the energy market, and push oil to the "appropriate level."

To be sure, we joked that Bullard bailed out the market again, but as of moments ago it is no longer a laughing matter because in a note released by Jefferies' economist Thomas Simons, it was the Bullard comments that were again laid out as the catalyst for the ramp.

According to Simons, while Bullard had been "quite hawkish recently", his comments today "represent a significant turn in his opinion."  Jefferies adds that "Bullard is acknowledging that risks to higher inflation are quiet low given the recent developments in commodity markets."

Jefferies concludses by saying that comments suggest that FOMC’s 2016 voters "might not be quite as hawkish as we thought."

In other words, Bullard may have just hinted at the first Q(ommodity) Easing.

So does that mean that the Fed is willing to sacrifice its last shred of credibility to support and prop up commodities (read oil) and thus stocks? We don't know, but we do know that there is an uncanny resemblance between the market's action before Bullard's October 2014 "QE4" comment, and the market over the past few weeks.

But the real question is what happens next, because if October 2014 is any indication then we are in for a massive "rip your face off" rally as the market once again prices in another "Fed intervention" round.

 

... unless of course Bullard once again "misspoke", or worse, the Fed is now shooting VWAP blanks.

If it is the latter, then watch out below.

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Thu, 01/14/2016 - 12:36 | 7045965 Bill of Rights
Bill of Rights's picture

Just keep saying to yourself, " Its all real "

Thu, 01/14/2016 - 12:38 | 7045979 SumTing Wong
SumTing Wong's picture

Rip your face off is followed by face your ripoff.

Thu, 01/14/2016 - 12:42 | 7045996 tmosley
tmosley's picture

How can the Fed push the price of oil up? There's no more storage!

What are they going to do? Dump it into the ocean?

Thu, 01/14/2016 - 12:49 | 7046023 Ghost of PartysOver
Ghost of PartysOver's picture

Price of oil in the $20/30's has as much to do with fundamentals as it did when the price reached $150 a few years ago. 

Thu, 01/14/2016 - 12:53 | 7046049 Leopold B. Scotch
Leopold B. Scotch's picture

Re dumping in the Ocean, such lunacy was tried and edured (and deepened) the Great Depression by the New Dealers, who had policies that dumped milk and killed pigs for the ditch just to keep prices up.

Never mind that standards of living improve with price drops.

Thu, 01/14/2016 - 12:59 | 7046093 xrxs
xrxs's picture

BP is pretty good at it.

Thu, 01/14/2016 - 13:08 | 7046147 Durrmockracy
Durrmockracy's picture

Investor sentiment has changed drastically in 6 months.  Maybe some sideways trading but no massive rally.

Thu, 01/14/2016 - 13:17 | 7046208 MANvsMACHINE
MANvsMACHINE's picture

What investors do you speak of?

Algorithms are not investors.

Thu, 01/14/2016 - 13:25 | 7046247 thesonandheir
thesonandheir's picture

What about Nat gas? They could buy a shit load and vent it into the air above LA.

 

Oh wait.

Thu, 01/14/2016 - 16:32 | 7047202 Save_America1st
Save_America1st's picture

it's the Bullard Algorithm

Thu, 01/14/2016 - 13:36 | 7046304 upWising
upWising's picture

ALL algo lives matter.

Thu, 01/14/2016 - 12:48 | 7046026 Osmium
Osmium's picture

No, that's what BP does.

Thu, 01/14/2016 - 14:35 | 7046648 Janet Shalom Be...
Janet Shalom Bernanke's picture

The only SWING HIGH I want to see is Bultard hanging from the lamppost in the square.   

May these criminals who have caused this country and the world so much pain and suffering, reap the whirl wind from the wind they have sown.

 

 

Thu, 01/14/2016 - 12:51 | 7046042 Urban Roman
Urban Roman's picture

Shut in Libya? One way or another.

Thu, 01/14/2016 - 13:31 | 7046277 Sam Clemons
Sam Clemons's picture

Print more FRNs for buyers of crude, but make sure the new money doesn't get to oil companies to expand production.

Thu, 01/14/2016 - 13:53 | 7046404 runningman18
runningman18's picture

They can't change real demand, so Bullard's comments are pointless. There will be no major rally similar to 2014.  The jump today is just another sign of continuing volatility trending down into the depths.  

Thu, 01/14/2016 - 20:18 | 7048359 agNau
agNau's picture

I am certain a little "disturbance" in the right place can push the price up quite easily.
We shall see if this is merely talk it up jabbering.

Thu, 01/14/2016 - 12:42 | 7045997 NoDebt
NoDebt's picture

This is just all that money coming in from off the sidelines that they've been talking about for the last 6 years.

Thu, 01/14/2016 - 12:50 | 7046035 Bangin7GramRocks
Bangin7GramRocks's picture

It's almost as if a small group of unelected people control the economies of the world. And even more strange, nobody even questions it.

Thu, 01/14/2016 - 13:02 | 7046107 herkomilchen
herkomilchen's picture

We do, at least.

Thu, 01/14/2016 - 13:20 | 7046149 giovanni_f
giovanni_f's picture

 

Example of an efficient market:

1. amazon down (unpatriotic short sellers)

2. a fed-apparachick farts (new information)

3. amazon up (price adjustment)

 

Thu, 01/14/2016 - 13:24 | 7046238 Bangin7GramRocks
Bangin7GramRocks's picture

"Gentlemen, we will hold the line on Amazon til out last dying breath." - Janet Yellen

Thu, 01/14/2016 - 13:47 | 7046375 giovanni_f
giovanni_f's picture

Three questions asked by the bridge guard to Yellen:

Q: What is your name? A: Janet Yellen.
Q: What is your quest? A: A constant plateau of prosperity.
Q: What is your favorite stock? Amazon.

(20 minutes later she was arrested and locked into into the security ward - and never came out again)

Thu, 01/14/2016 - 12:42 | 7045998 CheapBastard
CheapBastard's picture

Time for all the small retail investors to jump in, I suppose, only to get reamed without the lube when the stawk markets collapse another 20-40%.

 

Housing is next I'm afraid, some areas more then others but the ripple effect will spread the drop nationwide.

Lower oil prices have led to massive layoffs across the country, which can strain local economies with close ties to the energy sector.

North Dakota saw a 387% increase in foreclosures in 2015 with 146 properties receiving at least one foreclosure filing, but it still has the lowest foreclosure rate in the U.S. since its population is among the lowest in the nation.

Foreclosure activity jumped nearly 36% in Oklahoma last year, with 11,388 properties receiving at least one foreclosure filing.

Texas, which has one of the fastest foreclosure processes in the country, started to see a rise in foreclosure starts in 2014, according to Blomquist. "We've now seen those convert and go through the process and be foreclosed on in great numbers."

Foreclosure activity in the Lone Star State rose 15.7% in 2015, with some oil boom towns seeing larger increases.

For instance, in Midland, foreclosures increased 36% in 2015 from the previous year.

 

http://money.cnn.com/2016/01/14/real_estate/foreclosures-oil-states/inde...

Thu, 01/14/2016 - 13:27 | 7046260 daveO
daveO's picture

I'm the prefect inverse indicator. Just last night, I was thinking that the market was setting up for a nice short as it bounces and fails at SPX 1875-1900. Then this article pops up. 

Thu, 01/14/2016 - 12:39 | 7045980 SumTing Wong
SumTing Wong's picture

Oh crap, I have hyperactive (though not fat) fingers. Sorry.

Thu, 01/14/2016 - 13:21 | 7046222 hannah
hannah's picture

dorothy...you always had the power to go home.....

Thu, 01/14/2016 - 12:36 | 7045966 saveUSsavers
saveUSsavers's picture

When the fuck are these cockroaches going to get JAIL ?

Thu, 01/14/2016 - 12:46 | 7046014 tmosley
tmosley's picture

They don't.

These people get the Rope.

Thu, 01/14/2016 - 13:27 | 7046253 CHX
CHX's picture

Right, they do not and likely never will. They will be protected till the very end, and when it all blows, people will be too busy trying to survive while the real culprits will long have left the place for good, never to return. I hope they will at least be haunted by nightmares about the genocide they will have caused, while rope is what they would deserve.

Thu, 01/14/2016 - 14:45 | 7046686 new game
new game's picture

s and p opaths have little to no conscience-they could care less what is left behind...

most likey they will be happy and enjoying a new playground to bully. fall off the mery-go-round and break a leg, they fucking laugh. i know these people quite well- i worked for one. i was a money bag with arms and legs(sold new homes), thats it. zero empathy...fucking assholes beyond your imagination, seriously...

Thu, 01/14/2016 - 12:36 | 7045968 Dr. Engali
Dr. Engali's picture

 Funny how his comment came out just before the retest of the S&P 1867 low. It's almost as if they're afraid of something.

Thu, 01/14/2016 - 12:43 | 7045999 mandalou
mandalou's picture

Bullard just made noise as the fuckface and his homo tribe should not be allowed to speak when markets are open. Make them talk on Saturday.

Fri, 01/15/2016 - 08:22 | 7049719 Greenie
Greenie's picture

Sorry, Shabbat is Fri sundown until Sat eve. The tribe members are all busy then

Thu, 01/14/2016 - 12:44 | 7046009 Ghost of PartysOver
Ghost of PartysOver's picture

Coincidence?  I think not!

Thu, 01/14/2016 - 18:01 | 7047691 MrSteve
MrSteve's picture

Reconstruction, that was the theme for 1867!

Thu, 01/14/2016 - 13:41 | 7046344 Panafrican Funk...
Panafrican Funktron Robot's picture

Buying the insiders a little extra time to exit positions pre-opex.

Thu, 01/14/2016 - 12:37 | 7045969 Hitlery_4_Dictator
Hitlery_4_Dictator's picture

Anyone who trades based on a statement that never happened, is part of the problem. I blame the traders more then the FED now. They are purposely believing the lies to make money. 

Thu, 01/14/2016 - 12:49 | 7046017 mandalou
mandalou's picture

Most who BTFD are in a major shit storm. Read around the interwebs. Here is one guy who is a solid trader. A lot know who The Fly is. Not a long article but more of a prayer. He and a lot are in trouble. And you know many are close to margin calls. Anyway his desperate plea is the sound of many addicted to the drug called QE. The Fly is an awesome trader and his money management is solid so he will be just fine. It is the folks who likely under capitalized looking for their own lottery ticket will become the prey.

http://ibankcoin.com/flyblog/2016/01/14/rally-or-die-4/

Thu, 01/14/2016 - 12:54 | 7046057 Hitlery_4_Dictator
Hitlery_4_Dictator's picture

I don't care, screw these people. Greedy, self-absorbed, statists muther truckers. 

Thu, 01/14/2016 - 13:03 | 7046117 mandalou
mandalou's picture

I hope you figure it out.

Thu, 01/14/2016 - 13:10 | 7046161 mandalou
mandalou's picture

i like you. You are my new little toy.

Thu, 01/14/2016 - 13:08 | 7046150 Banker Buster
Banker Buster's picture

Yep Mandalou, the BTFD buy and holders are getting toasted right now and those counting on the fed to save them, they are retarded.  Those are the brain dead zombies, who will always lose in the end.

Thu, 01/14/2016 - 13:16 | 7046202 Hitlery_4_Dictator
Hitlery_4_Dictator's picture

Sorry but history has proven that that FED is going to save them, they always have and always will.

Thu, 01/14/2016 - 12:47 | 7046019 AdolfSchicklgruber
AdolfSchicklgruber's picture

+400?

 

 

 

Thu, 01/14/2016 - 13:03 | 7046109 Banker Buster
Banker Buster's picture

Hold on Hold on!  Hitlery, if one were to short a rally like this morning one would be devistated in such a way like an H-bomb just was detonated in their account.  So you either buy or you do nothing.  So traders are just doing what the market is doing.  If the PPT is juicing this thing higher, you get on board or you do nothing.  Anything else will result in ruin.  I hate the PPT and the fed more than anyone I know but that doesn't mean I can trade against them. 

Thu, 01/14/2016 - 13:20 | 7046217 Hitlery_4_Dictator
Hitlery_4_Dictator's picture

I'm not saying short it. I'm saying the traders are making their lies come to fruition. It's a self fulling prophecy. They know it's lies but they still trade it because they know every other scumbag trader will to. 

Thu, 01/14/2016 - 13:34 | 7046295 daveO
daveO's picture

Good traders know how to catch a wave.

Thu, 01/14/2016 - 13:43 | 7046358 Banker Buster
Banker Buster's picture

True

Thu, 01/14/2016 - 19:06 | 7046679 pebblewriter
pebblewriter's picture

"It's a self fulling prophecy. They know it's lies but they still trade it because they know every other scumbag trader will to."

You've perfectly stated TPTB's entire business plan.  It includes punishing anyone who dares to short (except when stocks are purposefully dropped to test support , as was the case this week.)

I'll bet they've got it on a plaque in the Eccles Building.

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