... And Nothing Else Matters

Tyler Durden's picture


While the headline-chasers will allocate cause to effect for every twitch and ditch in asset prices, JPMorgan's Michael Cembalest appears to agree with us that nothing else matters but central bank balance sheet expansion. As we discussed earlier in the week, major central banks have injected nearly $7tn into world markets since 2007 and while the obscene rise in gas prices should somewhat self-limit the print-fest, it appears not before another bubble has burst as central bankers feel safe on this path given their microscopic focus on their own inflation-measures. Whether it be asset-reflation, boosting bank capital, pulling forward consumer demand, or government-reacharound financing, Cembalest sums up: super-easy monetary policy supports markets right now, prompting his question: "Who knew that unlimited money printing would be such a clean and simple solution to the world’s problems? I would love to read a book called “Reliable Central Bank Exit Strategies”, but I don’t think it has been written yet. Enjoy the ride."


Michael Cembalest, JPMorgan: Nothing Else Matters

As far as markets are concerned, I don’t think anything has mattered this year other than the 2 charts below. The first shows the rise in select central bank balance sheets and the second shows why central bankers feel safe doing it: low inflation. The goals: generate positive inflation in regions beset by deflation (Japan); boost bank capital and avoid insolvency by unlimited lending against a liberal definition of collateral (Europe); provide a lifeline to households, and pull forward future demand for consumer durables (US, UK); finance governments so markets don’t have to do as much (everywhere); encourage investor risk-taking by devaluing cash savings (also everywhere); then wait for private sector to recover. The caveat: stop if there are signs of inflation.

As shown in the second chart, inflation looks pretty tame, although like the disclaimer says, “past performance is not indicative of future results”. On commodity prices, central bankers see them as mean-reverting, and generally disavow connections between monetary stimulus and demand-based commodity price increases.



We have only one question: "If a 20% rise in global stocks required a $2 trillion expansion in aggregate assets, which also took EUR-Brent to all-time record highs and WTI to over $107 $108, where will the next 20% come from, and how will the economy fare with $150 WTI?"

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Thu, 02/23/2012 - 15:35 | 2190068 John Law Lives
John Law Lives's picture

Wow. I guess this must be bullish for earnings... (not)!


Nymex Crude Future      107.75    14:15 PM

Dated Brent Spot          125.56    14:25 PM

Thu, 02/23/2012 - 15:40 | 2190096 alien-IQ
alien-IQ's picture

Crude at 108.05 @ 2:37pm...and climbing.

Oh the joy:-(

Thu, 02/23/2012 - 15:41 | 2190104 redpill
redpill's picture

The irony is that after this all comes crashing down, it won't matter at all anymore.

Thu, 02/23/2012 - 15:55 | 2190178 GOSPLAN HERO
GOSPLAN HERO's picture

Silver, beotchezoids!

Thu, 02/23/2012 - 15:55 | 2190193 catacl1sm
catacl1sm's picture

Silver is on a tear, but oil is going parabolic!

Thu, 02/23/2012 - 16:01 | 2190220 bdc63
bdc63's picture

A sabor rattling nuclear Iran will have that effect every time ...

Thu, 02/23/2012 - 19:41 | 2191144 Hard1
Hard1's picture

So close, no matter how far
Couldn't be much more from the FED
Forever trusting who we are
and nothing else matters

Never opened myself this way
Life is ours, we live it our way
All these Bills I don't just say
and nothing else matters

Trust I seek and I find in you
Every day for us something new
Open mind for a new QE
and nothing else matters

never cared for what they print
never cared for what they know
but I know

Thu, 02/23/2012 - 15:44 | 2190109 John Law Lives
John Law Lives's picture

Amazing how Wall Street gets called out by Nancy Pelosi re. high gas prices yet nary a word is said about the Great Chairsatan and his compatriot central bankers for flooding the markets with fiat currency.

Thu, 02/23/2012 - 16:43 | 2190446 AustriAnnie
AustriAnnie's picture

Nor does Pelosi mention that anytime she mentions energy issues, she's thinking about getting rich, not what is good for the little people:


Thu, 02/23/2012 - 15:59 | 2190211 bdc63
bdc63's picture

I'm really surprized this isn't getting more attention/reaction.

Do we REALLY have to wait for the next consumer spending and sentiment numbers to come in before there is any reaction?

What the hell is going on?

Thu, 02/23/2012 - 15:45 | 2190124 pkea
pkea's picture

As Ben describes it, it is all TRANSITORY.........FOR DECADES

Thu, 02/23/2012 - 15:54 | 2190184 lemonobrien
lemonobrien's picture

life is transitory.

Thu, 02/23/2012 - 16:04 | 2190256 bdc63
bdc63's picture

try telling that to Soutwest Airlines, and Consolidated Freight, and FedEx, and Dominos Pizza, and ....

Thu, 02/23/2012 - 15:37 | 2190082 Nothing To See Here
Nothing To See Here's picture

I just want to say that that Snorg Tees model on the left banner is smoking h0t. Would she be Greek, I'd be glad to have her work for me, and I would not even ask her to pay for her job.

Thu, 02/23/2012 - 15:40 | 2190098 CvlDobd
CvlDobd's picture

The brunette? iAgree.

Thu, 02/23/2012 - 15:45 | 2190126 Clayton Bigsby
Clayton Bigsby's picture

Snorg tees?  Crap!  All I got was Kyle Bass... Lemme refresh

Thu, 02/23/2012 - 15:55 | 2190192 brooklynlou
brooklynlou's picture

I keep getting Obama :-(

Thu, 02/23/2012 - 16:02 | 2190239 John Law Lives
John Law Lives's picture

I keep getting a Wells Fargo ad...

Fri, 02/24/2012 - 08:59 | 2192256 natty light
natty light's picture

Better her than Fred Thompson's grill.

Thu, 02/23/2012 - 15:38 | 2190083 Deep79
Deep79's picture

We can print oil too, right?



Thu, 02/23/2012 - 15:55 | 2190188 bdc63
bdc63's picture

if only ...

Thu, 02/23/2012 - 15:40 | 2190085 pkea
pkea's picture

How the JPM choke on its own greed... I bet they are pissed off that they can have it all crude over 150 and SP at 1500 and running all their departments to death to make it happen....As in the previous guest post says, something will happen.

Thu, 02/23/2012 - 15:51 | 2190164 ekm
ekm's picture

Copycat of 2008. Over-storage, economic collapse. It goes to a point that they either turn off the crude oil riggs or dump the stored crude into the market.

Of course they will dump it. Crude at 35, same as in 2008.

Thu, 02/23/2012 - 15:39 | 2190091 silverserfer
silverserfer's picture

I gotz to gets me some of dat fiat shiat! Right neoh! Where do I need to stand underneath to make it rain?

Thu, 02/23/2012 - 15:39 | 2190094 ekm
ekm's picture

Referring to the previous post of the rigged market running out of suckers, I'll try to reiterate again:

All that money creation has gone to PRIMARY DEALERS=PLUNGE PROTECTION TEAM.

These people have bought out all the market. The problem: NO MORE SUCKERS. They're stuck with BAC shares.

Both CNBC and Bloomberg are trying very hard to lure suckers. The problem: the former suckers are retirees that want to preserve what they have and not risk again like 2008.

If it goes like this for a little bit longer, NYSE may run out of business since nobody will be trading. Hence, somebody must trigger a collapse like in 2008 with Lehman to get some trading volume, otherwise Timmy G and Benny B will takeover NYSE, CME and AMEX as too big to fail.

Thu, 02/23/2012 - 15:41 | 2190107 pkea
pkea's picture

I wonder is there extra bonus to any cnbc anchor luring unknown investors to buy into financials? roll my eyes

Thu, 02/23/2012 - 15:46 | 2190132 ekm
ekm's picture

Thx for commenting.

They get to keep their jobs. That's enough of a bonus in this depression.

Thu, 02/23/2012 - 16:00 | 2190222 John Law Lives
John Law Lives's picture

These two claim the S&P 500 is getting cheaper.

This article sounds like a cattle call for those about to be slaughtered.


Thu, 02/23/2012 - 15:42 | 2190111 alien-IQ
alien-IQ's picture

all the suckers are out looking for second jobs just to pay for the gas to get them to their first jobs. They have no money left for the casino to take. It's all accounted for...and then some.

Thu, 02/23/2012 - 15:45 | 2190128 ekm
ekm's picture

Thx for commenting.

Here in Toronto I'm seeing a lot of seniors at McDonalds and Tim Hortons. They're slow and people get upset. I feel bad.

Thu, 02/23/2012 - 18:04 | 2190800 grid-b-gone
grid-b-gone's picture

HFT and Crays let them make their money 10 S&P points at a time.

No more having to drop 5% overnight to buy low and risk moving more buyers to the sidelines.

Noon balloons almost every day.

Green sticks almost every week for those that only check account balances weekly. Same for monthly statements.

The Temple Grandin market is in full force. Keep them calm and moving in a constant Fibonacci arc.

Fri, 02/24/2012 - 14:21 | 2193406 Mariposa de Oro
Mariposa de Oro's picture

There are plenty of suckers in my immediate vicinity.  They rave about their investments, 401k, IRAs, etc and how much money they're making.  When I try to tell them what's actually going on and that they need to protect themselves, they tell me I'm an idiot and shout me down.  These guys are in their sixty's and looking forward to retiring in a couple of years.  When they end up penniless, I'll just have to laugh.  I'm kind of looking forward to seeing their faces when they realize they've been ripped off just like I told them was coming.

Thu, 02/23/2012 - 15:40 | 2190100 It is a bargin ...
It is a bargin my friend's picture

So you telling me Metallica have been right all this time, shit man, thats a trip

Thu, 02/23/2012 - 15:44 | 2190120 ekm
ekm's picture

Oh, lovely you reminded me of that one. I miss that song. Youtube tonight.

Thu, 02/23/2012 - 17:27 | 2190678 pods
pods's picture

Well when this bubble pops toss in King Nothing too.


Thu, 02/23/2012 - 19:57 | 2191181 ekm
ekm's picture


Thu, 02/23/2012 - 15:41 | 2190108 Kastorsky
Kastorsky's picture


At surface, it appears we have stumbled upon the largest terrorist organization in the world and have found original documents tracing its funding to the Secretary of the Treasury and the Chairman of the Federal Reserve, two of the top financial officers in the US

Thu, 02/23/2012 - 16:34 | 2190383 earleflorida
earleflorida's picture

thanks, kastorsky

more fodder,... http://www.rense.com/general70/leo.htm

The Story of Leo Wanta: "The $27.5 Trillion Man" __ gary szymanski -- 3/26/06

Note: Brunei's "Istana Nural Iman" is the world's largest palace in the world --- 2,152,780 sq.ft. of floor space,... and home to Sultan Hassanal Bolkiah


Ps. FWIW ___ my site computer  was just attack from K's page view

Thu, 02/23/2012 - 17:24 | 2190664 chubbar
chubbar's picture

This will expose 9/11 for what it was, a cover up of monstrous proportions to conceal this operation. I hope the Bush's are packing their bags.

Thu, 02/23/2012 - 15:46 | 2190119 CrashisOptimistic
CrashisOptimistic's picture

"If a 20% rise in global stocks required a $2 trillion expansion in aggregate assets, which also took EUR-Brent to all-time record highs and WTI to over $107, where will the next 20% come from, and how will the economy fare with $150 WTI?"


This has become the desperate meme -- that oil is up because of economics, not geology.  So they conclude it must be monetary policy or the always popular speculators (who actually may be the only thing holding it down).

They astonishingly ignore that oil spiked summer of 2008 before there was any such thing as Quantitative Ease.

Well, I can't blame them.  They are frantic.  They can't bear the thought of powerlessness.  They can't bear the thought of all their economics education having been a waste.

They particularly can't bear the thought of the party being over.


Thu, 02/23/2012 - 15:47 | 2190139 Tyler Durden
Tyler Durden's picture

Either case, it's bad news.

Thu, 02/23/2012 - 15:49 | 2190148 CrashisOptimistic
CrashisOptimistic's picture


Thu, 02/23/2012 - 16:49 | 2190485 Flakmeister
Flakmeister's picture

Given the todays theme, shouldn't that be iNod?

But seriously...

Two trillion dollars thrown at the oil patch in the past 8 years and production is flat....

ZIRP, i.e. the majors basically playing with *free* money cannot increase production...

The last major field to be found with the potential to be exceed 1,000,000 bpd is an engineering nightmare fraught with cost overruns... Between the toxic levels of H2S and the horrific conditions in the Caspian, is it no wonder that Kashagan is derisively called "Cashisgone"


Thu, 02/23/2012 - 17:14 | 2190611 CrashisOptimistic
CrashisOptimistic's picture

I've been monitoring Kashagan.  What a cluster fuck.  RDS is playing hardball now.  They aren't writing any more bullshit checks and are standing down and Kazahkstan is looking frantically for a scapegoat so they can get money flow again.

Overall result.  The big barrel flow delayed AGAIN, and every day of delay, another field declines somewhere.

FYI Flakdood, I'm watching Hugo's tumor pretty closely.  There is about 250K bpd that could be resurrected short term there.

In fact, if there were ANYWHERE to, in Tyler Durden's words -- "liberate some crude", that's the place.

Thu, 02/23/2012 - 17:38 | 2190722 Flakmeister
Flakmeister's picture

Yes, Venezuala is the next wildcard.  Look for the Monroe Doctrine to rear its head....

Me thinks that Iran becomes part of the Indo-Sino oil sphere with a quid pro quo on Venezuala....

Remember that the Sudan has already been divvied up...

Thu, 02/23/2012 - 17:45 | 2190739 grid-b-gone
grid-b-gone's picture

Starting at 10:30 and specifically at 12:30, a discussion of oil.

Jeremy Grantham speaking on bubbles and sustainability.

"Since 1982, we have never found as much oil as we have pumped."

Jimmy Carter, for all his other failings, wanted to move toward a permanent oil solution in 1980. Humans and U.S. hubris being what it is, only a sustained, economically choking price of gasoline will get us to take alternatives and conservation seriously. 

People want to dismiss and discredit peak oil just as they do most warnings that involve change. 

Sammy Hagar's "I can't drive 55" from 1984 is all the cultural commentary needed on oil.

$6/gal gas beats every analysis for getting people to take action to conserve oil and energy.

And even before that point, your average voter will fall for Gingrich's $2.50 gas promise, giving Drill, Baby, Drill one last try before resigning to the fact that not ever bubble reverts to the mean.

Even the Fed is incapable of thinking things through. That's why they ignored double-digit housing price increases from 2003-2007, yet print like crazy to "proactively" get ahead of the resulting weak economy. Human nature may affect Phds even more, because they concoct better rationalizations for doing what they wanted to do all along.

Thu, 02/23/2012 - 22:58 | 2191620 Dane17
Dane17's picture

Sorry dude never reference jimmy carter early in your post if you want anyone to read it.

Fri, 02/24/2012 - 14:23 | 2193438 Flakmeister
Flakmeister's picture

Sad but true....

Prophets have always left a bitter taste in peoples mouths....

Thu, 02/23/2012 - 15:56 | 2190197 Jim in MN
Jim in MN's picture

Oh, Lord how funny it will be when they find out that more liquidity actually SLOWS the economy.


Ha ha ha...ouch

Thu, 02/23/2012 - 15:59 | 2190209 ekm
ekm's picture

"They astonishingly ignore that oil spiked summer of 2008 before there was any such thing as Quantitative Ease."

Sir, COCAINATED EASING is the very story of the Fed. That's the only tool they have. Since creation they've done only that. The term was created to name a massive "debt printing during a compressed time period like 9 months", rather than the "continuous debt printing". So, I'd say your statement is stlightly incorrect.

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