"The Tide Is Going Out" - JPMorgan's Dimon Warns QE Unwind Could Be Far Worse Than Fed Hopes

Tyler Durden's picture

Janet Yellen confidently stated at the last FOMC press conference that The Fed will start unwinding its massive balance sheet "relatively soon" and Patrick Harker, the Philadelphia Fed president, has said the process will be so dull that it is equivalent to watching paint dry.

Not everyone agrees...

Louis Crandall, an economist at Wrightson Icap, said at the time:

"When they [the Fed] launched QE, they were confident about the direction of the impact but cautious about projecting the precise magnitude. They should be even more cautious about estimating the impact of unwinding the portfolio, as they have even less control over the outcome."

The unwind will be lumpy for sure...

And today, none other than JPMorgan CEO Jamie Dimon poured some more cold water on The Fed's complacency at this 'storm in a teacup'. Speaking at a conference in Paris this morning, Bloomberg reports that Dimon warned...

“We’ve never have had QE like this before, we’ve never had unwinding like this before."

 

“Obviously that should say something to you about the risk that might mean, because we’ve never lived with it before.”

 

“When [the unwind] happens of size or substance, it could be a little more disruptive than people think."

 

“We act like we know exactly how it’s going to happen and we don’t.”

Central banks would like to provide certainty but “you cannot make things certain that are uncertain,” Dimon said. All the main buyers of sovereign debt over the last 10 years -- financial institutions, central banks, foreign exchange managers -- will become net sellers now, Dimon said. Investors are listening closely to policy makers to determine when and how central banks will start reducing their balance sheets. A global bond rout spilled over into equities last week on signs that central banks are taking a more aggressive stance.

“That is a very different world you have to operate in, that’s a big change in the tide,” he said. “The tide is going out.”

Will "the tide is going out" be the "the music stopped playing" quote of this collapse?

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shizzledizzle's picture

AHAHAHA! A brave new world where it's either the best it's ever been or ending. This fucking clown. 

auricle's picture

Jamie knows the fed cannot stuff their MBS unwind without impairing CB new MBS issuance. There's no market for that kind of demand. 

Arnold's picture

There is no comfort to me that the people who play this game for a good living, have no clue.

Delving Eye's picture

I don't know what these freaking clown banksters are complaining about. They're charging over 20% on consumer credit and paying a fraction of a percent on savings. They're still making a bloody fortune. 

Mtnrunnr's picture

A bloody fortune shared by an entire class of parasites starts to spread pretty thin eventually. They'll bitch the whole way to our grave and just like a parasite they'll leave us as the shit they are right before the end. Also, why does anyone think the fed, who has been given infinite power, will just let a crash happen? No way. The first sign of real stress (when yellen's bank acct flashes it's first warning sign) they'll just ctrl+P moar. Why the fuck not. It puts more of our assets into their pockets.

BullyBearish's picture

the central bankers, our gods, never call it a crash...it's an inevitable "adjustment" to keep the game going and to keep them in power...they give and they take away...we're about to go into the "take away" phase...

Glad 2B Gone's picture

"why does anyone think the fed, who has been given infinite power, will just let a crash happen"

Its part of the game.  They let it run up, attract in the sheeples at the top, sell to them ... and then let it crash and buy everything back at a deep discount.  rinse ...repeat

Erek's picture

“We act like we know exactly how it’s going to happen and we don’t.”

That confirms it. Those know-it-all assholes don't know shit! (As if we never knew.)

kliguy38's picture

BLOW ME Jamie you douche

Hippocratic Oaf's picture

Fuck you dimon!

Easy $ no more!!!

 

Now go price your shit to mkt that you havent dumped on the taxpayers!!! 

Clock Crasher's picture

"Treasury Maturity in the FED's Portfolio"

I want to see the "Treasury Maturity in China's Portfolio" chart!

ElTerco's picture

Oh they have a clue -- theft without consequences. Now that they are going to have to change their theft strategy, they are upset. No worries though; I'm sure they'll find a way.

espirit's picture

When the tide goes out, the tidal pools will contain sharks until there is only one left.

It's not going to be you Jamie.

jsgibson's picture

If the tide goes out, be prepared for the hyperinflationary tsunami that follows.  Don't be one of the fools out on the beach.

cougar_w's picture

I like your metaphor. Clever. But I honestly don't think it's going to be inflation that overtakes us. What has them worried is the implosion/evaporation of money. Money/wealth is burning up in deflationary destruction probably at the tune of $10B a day, globally. That is the tide they are swimming against, and have been since 2008. As consumer spending dries up and debt starts to eat up all the money people have, The Fed and their ilk cannot print enough money to keep up, and certainly cannot get that money into the hands of those who will spend it.

Look around, deflation is their monster. We are in the jaws of it now, and one bad monetary misstep puts us into darkness forever.

WillyGroper's picture

" Look around, deflation is their monster."

the most striking evidence of this is in the grocery store...the necessity to live, not discretionary.

Deathrips's picture

Von mises crack up boom. You think that they will allow deflation without unleasing 2x QE infinity? I dont.

 

RIPS

sodbuster's picture

One thing people ALWAYS forget- wealth(stocks, bonds, etc) can disappear and evaporate overnite. Debt NEVER goes away!!!

Glad 2B Gone's picture

The company store will be just fine, and for the rest ... 16 tons

https://www.youtube.com/watch?v=Joo90ZWrUkU

 

Not My Real Name's picture

How can deflation "put us into darkness forever" when the central banks have a printing press?

No, the game ends not in deflation, but in a currency supernova, triggered by the fear of runaway deflation.

GUS100CORRINA's picture

"The Tide Is Going Out" - JPMorgan's Dimon Warns QE Unwind Could Be Far Worse Than Fed Hopes

MY response: It is looking like the DEEP STATE controlled by the illuminati are beginning to prepare the minds of the sheeple for the next world event. Just look at the FABIAN WINDOW. The HOT GLOBE on the right side of the window is symbolic of the next crisis. It is looking like the time for the arrival of the NEXT CRISIS is very close.

Nostradumbass's picture

Once you finally realize that jeuws - all jeuws are your mortal enemy, the veil lifts and you see what must be done. They work as a single parasitic organism seeking the total control of this world. They tell you this themselves. There will be war and tremendous bloodshed if White People are to survive.

Towards your education, freedom and the Good Fight:

 

https://thezog.wordpress.com/

http://lovkap.blogspot.com/

http://age-of-treason.com/

https://theendofzion.com/natures-eternal-religion-by-ben-klassen-book-an...

 

NotApplicable's picture

The unwind will only go far enough to scare everyone, then they will rapidly rewind and then some.

Unless, that is, the scheduled time for Armageddon is upon us.

Peacefulwarrior's picture

I would agree that the human race is not quite ready to lay claim to this just quite yet... especially cowards and FED Central Bankers? It may happen organically in due time...

According to the Book of Revelation in the New Testament of the Bible, Armageddon (/???rm????d?n/, from Ancient Greek: ????????? Harmaged?n,[1][2] Late Latin: Armaged?n[3]) is the prophesied location of a gathering of armies for a battle during the end times, variously interpreted as either a literal or a symbolic location.

101 years and counting's picture

of course they know....they've blown the bubble as big as they can. now, time to profit to the downside.  add in some more bailouts and then more QE and bankers will once again completely fuck over the bottom 90% again. unless, of course, this time is different and there are arrests and prison sentences.  LOL!!!!

Chupacabra-322's picture

The vast majority of ZH's especially the veterans here understand fully that there are no more "Bear or Bullish" markets. There's only Fascism & Ponzi.

"If central banks purchase stocks in order to support equity prices, what is the point of having a stock market? The central bank’s ability to create money to support stock prices negates the price discovery function of the stock market."?-Dr. Paul Criag Roberts

"These questions came to mind when we learned that the central bank of Switzerland, the Swiss National Bank, purchased 3,300,000 shares of Apple stock in the first quarter of this year, adding 500,000 shares in the second quarter. Smart money would have been selling, not buying.

It turns out that the Swiss central bank, in addition to its Apple stock, holds very large equity positions, ranging from $250,000,000 to $637,000,000, in numerous US corporations — Exxon Mobil, Microsoft, Google, Johnson & Johnson, General Electric, Procter & Gamble, Verizon, AT&T, Pfizer, Chevron, Merck, Facebook, Pepsico, Coca Cola, Disney, Valeant, IBM, Gilead, Amazon."
-Dr. Paul Craig Roberts

http://www.zerohedge.com/news/2015-08-28/dollar-spikes-risk-slides-after...

Glad 2B Gone's picture

Swiss time is running out ...they're going to burn down the gambling house.

blindfaith's picture

 

 

Hey Donny...where are those presidential cuff-links Obama gave you?

Batman11's picture

Were the tulip bulbs in 1600s Holland a good investment?

As long as you weren’t one of the biggest fools who got left holding the bag at the end, yes.

The lure of easy money has made the capital gains of speculation a firm favourite for four hundred years. We all love to have a flutter through real estate and hope we won’t be that biggest fool that buys at the top.

When you add debt (bank credit) into the mix, this is when things get dangerous. Investors losing their money is one thing, collapsing economies and the global financial system another.

We are missing that critical distinction between “productive” investment and “unproductive” investment when it comes to bank credit.

Productive investment goes into business and industry; it generates the money to make the repayments and gives a good return in GDP.

Unproductive investment goes into real estate and financial speculation; it doesn’t generate the money to make the repayments and gives a poor return in GDP.

The UK used to know what it was doing until it went neo-liberal with Thatcher:

https://cdn.opendemocracy.net/neweconomics/wp-content/uploads/sites/5/2017/04/Screen-Shot-2017-04-21-at-13.53.09.png

The bank credit pours into real estate and financial speculation.

The US has never really had a clue:

https://cdn.opendemocracy.net/neweconomics/wp-content/uploads/sites/5/2017/04/Screen-Shot-2017-04-21-at-13.52.41.png

1929 and 2008 stick out like sore thumbs; bank credit going into financial speculation and stocks (1929) or real estate (2008). Leveraged financial speculation with bank credit.

To understand the problem we would need to understand money and debt, but we don’t.

“…banks make their profits by taking in deposits and lending the funds out at a higher rate of interest” Paul Krugman, 2015.

A 21st century Nobel prize winner has no idea, monetary theory was better in the 19th Century.

Monetary theory has been regressing since 1856 as progress isn’t always in the forwards direction.

“A lost century in economics: Three theories of banking and the conclusive evidence” Richard A. Werner

http://www.sciencedirect.com/science/article/pii/S1057521915001477

Batman11's picture

US companies have borrowed money to engage in share buybacks.

Is this productive investment?

They haven't got a clue.

Batman11's picture

People do like to have a flutter on real estate and our Central Bankers, who are supposed to provide financial stability, are not on the ball.

The early 1980s see the beginnings of financial liberalisation and the late 1980s sees the following crises, e.g. US S&L crisis; UK, Japan, Australia, Canada and Scandinavia real estate busts.

More financial deregulation leads to 2008; the Euro-zone crisis; Irish, Greek and Spanish real estate crashes.

2008 is just another real estate bust, leveraged up and transmitted internationally by complex financial instruments. As the global bust hits the Euro-zone, it crumbles.

Australia, Canada and Scandinavia are queuing up for their second real estate bust.

They still haven't got it.

Australian and Canadian Central banks are now talking of tightening because they have no idea what they are doing.

Bill of Rights's picture

Great copy and paste job... now what is your opinion?

Batman11's picture

I noticed things weren't quite right in 2008.

"How did that happen?"

The "Black Swan" shit didn't cut it, so I looked into it.

The above was helped by the work of Steve Keen and Richard Werner.

The inquiring mind is not dead, they are just thin on the ground.

 

RLE's picture

No shit...it took Jamie to say that...anyone with a pencil and paper saw that coming 10 years ago...

peopledontwanttruth's picture

He could of said it to ten years ago but he's been busy getting his bunker ready and spending hundreds of millions that he received in this "wind" up stage.

Albertarocks's picture

As much as we love to hate Dimon for his gigantic part in all this, and for his gigantic part in the manipulations (admitted) in the silver markets, this time he's speaking the truth.  What he's warning about is very real.  The rush for the exits will be like nothing ever seen before in global markets.  Therefore logic dictates that once everybody 'gets it', the crash will be exceedingly fast.

And that means collosal, disruptive beyond what we could imagine on a calm day like today.  Panic will ensue and that's when the banking cartel will offer up some demonic solution that would only enslave humanity further.  It's their 'solution' that worries me most.

Erek's picture

The fuk-hed isn't speaking the truth. He's just repeating what everyone already knows.

Albertarocks's picture

I see.  Thanks for clearing that up.

Glad 2B Gone's picture

They're going to burn down the gambling house. I find myself listening to Deep Purple more and more these days.

https://www.youtube.com/watch?v=ktrq5lcm7T4

peopledontwanttruth's picture

Great comment

"Come into my parlor said the spider to the fly"!

NoWayJose's picture

Oh please - we are making billions off QE - don't stop it!

The fact that they are worried about the unwind is exactly the reason it needs to be unwound!

Five Star's picture

Why would central banks continue to tighten if it starts to undermine markets?

Hint: They probably won't.

The real thing to watch is bank excess reserves which are harder for the Fed to control 

http://thesoundingline.com/excess-reserve-overhang-important-ever/

peopledontwanttruth's picture

What happened in the 20s when the Fed supplied easy money then in the 30s tightened money? Nothing just happens at this level.

http://www.sjsu.edu/faculty/watkins/depmon.htm

Cordeezy's picture

Everyone wants the free money to continue!

 

www.escapeamazon.com

 

skinwalker's picture

People tend to get very crabby every time you reduce their methadone dose.

I imagine it's similar for economies.

Lost in translation's picture

As long as Dimon's lifeless body ends up being dragged through the streets of Harlem behind a 1977 Monte Carlo, I'm ok with any unwind.

Albertarocks's picture

You know those "just married" cars with 55 tin cans dragging behind?  That's what I want to see.  Dimon and 54 others who deserve it even more than he does.  Soros for example.  And I want to hear what kind of sounds they scream out while trying to plea with "I'm sorry, I'm sorry, I'M SORRY".