Bullard Confirms Fed May Have Lost Control Of The Market

Tyler Durden's picture

Three months ago, in the aftermath of the Fed's March rate hike we reported on what we thought at the time was a shocking development: instead of tightening, financial conditions eased. Dramatically. So much so, in fact, that Goldman chief economist Jan Hatzius wrote about it, saying that the "the Fed's 0.25% rate hike had the same effect as a 0.25% race cut!" and adding that "this was not the reaction the Fed wanted."

In short, Hatzius said that the Fed appeared to have lost control of the market.

Two months later, as financial conditions continued to get looser, Goldman doubled down, and asked - again - if Yellen has lost control of the market, and warned that only a "policy shock" may be left to normalize the market's "reaction function"to what the Fed was saying... and doing.

Now, moments ago, St. Louis Fed President James Bullard effectively confirmed that Goldman was right, and admitted that the may have indeed lost control of the market when he said that:

FED'S BULLARD SAYS FINANCIAL MARKET REACTION TO MARCH TIGHTENING HAS NOT BEEN GOOD, WOULD HAVE EXPECTED YIELDS TO RISE WITH POLICY RATE

* * *

The yield curve has collapsed since The Fed started hiking rates...

 

And as Bullard spoke the markets started to break down...

With VIX up nearly 4 points today.

But don't worry: should things go south fast, Bullard has a solution for that too:

  • FED'S BULLARD SAYS NEED TO CREATE POLICY SPACE IN GOOD TIMES IN CASE NEED MORE QE IN FUTURE

Translation: time to start trading on QE4

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
cossack55's picture

Just 1 more....just 1 more.....get some

BaBaBouy's picture

Another Fed NothingBurger ...

Eat ~~~

mtl4's picture

Keep shorting the VIX, best trade going.........while it lasts.

J S Bach's picture

Does anyone every ask the pertinent question of "Why should 'The Fed' be in control of ANY market"?!

We live in an idiocracy.

Beam Me Up Scotty's picture

"Bullard Confirms Fed May Have Lost Control Of The Market"

Losing control of the market would impy that the "market" was never the "free market" we were led to believe.  That one quote says it all.  We are slaves to the whims of the Fed.  The Fed controls the value of the dollar, therefore, they control the value of your labor.  Loss of control of one's labor is slavery.

 

Creative_Destruct's picture

Creeping central planning, as evidenced in the language.... as if the Fed should EVER "have control of the markets."

The fact that Goldman asks this, obliquely or directly, indicates that they believe the Fed is an underperforming henchman of theirs.

 

kliguy38's picture

LOL nobody gives a shit you fochers......this pig is Waaay too long in the tooth...You Fed ponzi pumpers have distorted so many assets that we've all lost track.....I DONT GIVE A SHIT

overbet's picture

"Why should 'The Fed' EXIST"?!

gatorengineer's picture

To make Joo Bankers rich, next question?

EHM's picture

It's got what pigs crave.

MEFOBILLS's picture

Here is an example of a central bank buying debt, essentially a debt jubilee.  

http://www.huffingtonpost.com/entry/5953bc5be4b0326c0a8d0cc2

This doesn't make "markets" happy, but it does improve living circumstances of regular citizens.

Here is an example of living space increasing, and well being improving by not "immigrating" low wage third worlders:

http://www.unz.com/isteve/without-immigration-tokyo-more-than-doubles-ho...

The FED and its focus on the markets... this notion would be a joke if it wasn't so tragic.  The stock market is not the economy, it is a finance casino.

Jim Sampson's picture

Here comes the exciting part!

Keyser's picture

Are you getting that tingling up your leg? 

Paul Kersey's picture

The Fed can create infinite amounts of money out of thin air. They can just give that money to some other Central Banking entity, like the Swiss National Bank, for instance. The SNB can then take that money and buy $80 billion worth of U.S. stocks. Oh, wait a minute:

"The SNB owns about $80 billion in US stocks today (June, 2017) and a guesstimated $20 billion or so in European stocks.

They have bought roughly $17 billion worth of US stocks so far this year. And they have no formula; they are just trying to manage their currency.

Think about this for a moment: They have about $10,000 in US stocks on their books for every man, woman, and child in Switzerland, not to mention who knows how much in other assorted assets, all in the effort to keep a lid on what is still one of the most expensive currencies in the world."

If the Central Banks choose to manage the markets, they can manage the markets. Hell, the BOJ has been managing the Japanese stock and bond market for over 35 years, with no end in sight. One can only guess as to the extant a command economy, like China's, is managing its stock and bond markets.

Paul Kersey's picture

Remember, not since the Bloomberg audit has there been any audit of the Fed.  The U.S. Federal Reserve Bank is truely a puzzle palace.

Beam Me Up Scotty's picture

So is their balance sheet really 4 trillion?  Or is it 40 trillion?  Or 400 trillion?  Dollars could be as plentiful as grains of sand on a beach, but if you think they are relatively rare, you will be willing to accept they have some value.  They could truly be valueless right now, but we all still have the illusion they still have value.  Once the masses figure out they are worthless, watch out.

LawsofPhysics's picture

"Full Faith and Credit"...

that is all...

DjangoCat's picture

And, wait for it... the Swiss National Bank is a private institution working under licence to manage the value of the swiss franc.

runswithscissors's picture

Sometimes ya just gotta hava burger!

Osmium's picture

I wonder if 3X leveraged guy is nervous yet?

Overleveraged_and_Impatient's picture

Nope. This is a pre-meditated drop being allowed by the President's Working Group on Financial Markets in coordination with the Fed. There are a lot of bears getting excited today so that means next week....

 

(The rest is up to you)

BringOnTheAsteroid's picture

You assume that the powers that be who you rightly claim control the markets have the long term plan you speculate.

Why you are going to get wiped out is very simple. There is vastly more money to be made on the downside now than the upside. And that is not even where the story ends.

There will be a vast fortune to be made on the way back up once the plug is pulled, the losers are shaken out, and virtually all assets can be purchased for cents on the dollar. 

It's so simple, so beautifully simple.

We plebs who would like to go short cannot because we need to know the time the plug is being pulled (which we don't) so tonnes of money has been made fleecing shorts on the way up since 2009.

The bullish plebs like yourself have been drawn in by the never ending pavlovian response of buying the dip, fostering the unshakeable belief that this sucker is never going down.

Then - bang. It happens. Asset prices collapse in the greatest conflagration in financial history. All those who are on the inside have managed to accumulate vast fortunes on the way up, vast fortunes on the way down (knowing when to go short) and stand ready to swoop in and buy up every remaining asset on earth. It's leverage magnifying leverage and all timed to perfection.

When? The insiders know. You are not an insider.

You and I may dream about owning an investment property. These psycopaths dream about owning and controlling the entire world. Such is the delusion of grandeur.

It's all so simple, so beautifully simple. 

Best of luck.

Bryan's picture

The Fed has been trying to control the market?  You don't say.

semperfi's picture

let me fix it:

Bullard Confirms Fed May Have Succeeded in Throwing The Market Under The Bus As Planned
adr's picture

Remember Bernanke saying they would never monetize the debt? 

Now they will never stop monetizing the debt. 

The old world ended for good in 2008. With our fake president in 2009 we entered the fake world. Where the LGBQTBBQ controls the narrative and swinging your dick in a ladies room is a sign of courage. 

I didn't see the wormhole we went through that took us to the mirrorverse, but it had to be there. 

DjangoCat's picture

Didn't someone say there had been an accident at CERN, causing a break in the reality bubble.  Nothing has been the same since.  The mirrorverse began then.

Implied Violins's picture

Careful. That 'ladies' comment could get you thrown in jail in Canada.

Overleveraged_and_Impatient's picture

LOL. Please. Honestly people, we all know what's going to happen should shit truly go off the rails.

*EMERGENCY FED MEETING*

Yellen: "We have now seen fit to decrease overnight rates back to 0 - .25% and increase quantitative easting to $500 Billion per month."  BOOM, all time highs, overnight. Bears slaughtered, again.

Honestly this is just another bear trap. So June will end up being a no gain month. Big deal. We've had only one other no gain month since November. I am still holding onto 3x Long Leveraged S&P 500 until we hit 3000. It's gone this far up, they need to shake out the weak hands. My hand is not weak, it is strong. The President's Working Group on Financial Markets has everything under control. Infact they are allowing this drop.

BringOnTheAsteroid's picture

Feels certain doesn't it. 

Comfortable.

Safe.

Exciting.

You really have to ask yourself how a psychopath would think. What would be more exciting for a psychopath. This relentless pattern of down a bit, up more, down a bit up even more or a mushroom clound where they hold all the cards, all the power, all the money.

Choose wisely. 

Dg4884's picture

Perfect time to end this unauditable, unchecked, american wrecking ball.

markar's picture

Who could have known multiple rate hikes and unwinding a 4 trillion dollar balance sheet would roil the markets?

lester1's picture

Bullard knows darn well that the federal reserve's Plunge Protection Team will step in and buy stocks when the market crashes. Just like they did in summer of 2015 when they reversed and 500 Point drop in just 15 minutes!

 

The Federal Reserve works for the wealthy elites. They are mandated to keep the stock market artificially propped up while Main Street sinks into an economic depression.

Overleveraged_and_Impatient's picture

Exactly. I mean cmon people. Look at election night (aka my Last night as a Bear.)

We had futures down to 2020 only to pop right back up by the opening bell. I mean HELLO!? Do people still think there's a chance at a stock market crash? This is all completely fixed.

BringOnTheAsteroid's picture

A crash is all part of the plan.

It's just so perfectly simple. If you are on the inside going short now will net a vast fortune and that is all these poeple care about. 

Then assets become cents on the dollar and the greatest transfer of wealth is complete.

The burning question is "when". 

ludwigvmises's picture

The FED needs to stop micromanaging the stock market! Are we the Soviet Union now, trying to masterplan the entire economy by central planning? The FED should set rates that it thinks are best for the general economy and for controlling inflation. It should NOT care about "good stock market reaction"!!!!

lester1's picture

The free market died in 2008. The federal reserve's quantitative-easing and covert stock buying program have basically brought the market back as a zombie. It's not a free market.

LawsofPhysics's picture

"The free market died in 1971 when the last connection between money and reality was severed" - FIFY

 

Some might argue it was actually 1913...

flyingcaveman's picture

And in 1913 they were probably papering over the shit they did previously.  Why else start the fed if all the banks were solvent?

zzzz88's picture

like everything else, when we realize something wrong, it is too late.

the central bank game is very very close to the end. 

why?

because too many people put their faith in central banks. 

 

jmack's picture

The crash is coming, but fed will step in,  US debt beyond 40 trillion within 10 years...

surfvin's picture

Maybe at 4 in the morning you fux should dump billions of dollars worth of treasuries.

scoutshonor's picture

Unfortunatly there will be plenty of pain to go around.  I think that the 3X long guy might end up being the lucky one--rather like the person at ground zero when the big one hits.

 

Survival might actually suck in the reset days.

LawsofPhysics's picture

LOL!!!!

The Fed has never been more efficient at transfering real wealth to it's owners via currency debasement!!!!!!!

 

They have NOT "lost control" until all Federal reserve board members, employees, and shareholders lose their fucking heads...