Bernanke Fails At Herding Cats Again As Market Simply Front-Runs The Fed... Again

Tyler Durden's picture




 

Once again, the unintended consequences (or fundamental flaw as we noted previously) remain front-and-center, just as with prior episodes of QE, we have seen the market surge into the very assets that the Fed has promised to buy (in this case into Eternity). 30Y current coupon mortgages spread to 10Y Treasuries has fallen - rather stunningly - below 20bps. An all-time record low by a mile. Homebuilders and broad equity markets are not so excited as in his failed attempts to drive people into risky assets (stocks), those 'smart' people have simply front-run the Fed's MBS buying deluge  - more than willing to sell the market back to the Fed while reaping some additional yield.

 

 

As we noted before (here) - compressing the mortgage yield to the S&P 500 dividend yield worked in March 2009 - but with multiple at over 4x higher in the S&P and rates less than half the 4% that they were then, relative 'value' is a little different now...

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Thu, 09/20/2012 - 15:07 | 2815836 Stoploss
Stoploss's picture

Until the end of time...

Thu, 09/20/2012 - 15:08 | 2815839 selectricity
selectricity's picture

DEUTSCHE BANK: Western Economies Are Screwed, And Investors Face A 'Disturbing Paradox' http://read.bi/R2SmR8

Thu, 09/20/2012 - 15:12 | 2815849 LULZBank
LULZBank's picture

Me buy you long time...

Thu, 09/20/2012 - 15:33 | 2815931 vast-dom
Thu, 09/20/2012 - 15:33 | 2815938 fourchan
fourchan's picture

say good bye to the rest of your home equity NEW YORK (RealMoney) — The largest transfer of wealth from the public to private sector is about to begin. The federal government will be bulk-selling the massive portfolio of foreclosed homes now owned by HUD, Fannie Mae and Freddie Mac to private investors — vulture funds. These homes, which are now the property of the U.S. government, the U.S. taxpayer, U.S. citizens collectively, are going to be sold to private investor conglomerates at extraordinarily large discounts to real value. You and I will not be allowed to participate. These investors will come from the private-equity and hedge-fund community, Goldman Sachs (GS) and its derivatives, as well as foreign sovereign wealth funds that can bring a billion dollars or more to each transaction. In the process, these investors will instantaneously become the largest improved real estate owners and landlords in the world. The U.S. taxpayer will get pennies on the dollar for these homes and then be allowed to rent them back at market rates. On Wednesday, the Federal Housing Finance Agency (FHFA), the Department of Housing and Urban Development (HUD) and the U.S. Treasury Department issued a Request for Information (RFI) concerning the disposition of the inventory of foreclosed homes owned by the federal government. An RFI is ostensibly a way for the federal government to get input from the private sector on how to accomplish the goals laid out in the request. But that’s really just a facade, as the RFI was structured by the investors to begin with.

Thu, 09/20/2012 - 15:43 | 2815953 LouisDega
Thu, 09/20/2012 - 15:51 | 2815990 Pladizow
Pladizow's picture

Cat Herder?

I prefer Pussy Wrangler!

Thu, 09/20/2012 - 19:48 | 2816548 francis_sawyer
francis_sawyer's picture

I wonder if Bernanke knew early on in his putrid life that his destination was to become a Hebrew cat wrangler...

Is that really the life ambition of some folks?... I'm at a loss... I really couldn't tell ya because I don't understand the mentality...

Thu, 09/20/2012 - 16:00 | 2815962 crusty curmudgeon
crusty curmudgeon's picture

This MBS crap, since announced by the chairsatan, has been making me lose sleep.  It is scary to contemplate what exactly they will do with these.

“The ideal government of all reflective men, from Aristotle onward, is one which lets the individual alone – one which barely escapes being no government at all.”  H.L. Mencken

Thu, 09/20/2012 - 15:49 | 2815980 dick cheneys ghost
dick cheneys ghost's picture

They can have em...............The majority of these homes are full of MOLD

Thu, 09/20/2012 - 16:03 | 2816032 vast-dom
vast-dom's picture

it's not about the homes, it's about creating imaginary beta off the mold.

Thu, 09/20/2012 - 16:08 | 2816047 wagthetails
wagthetails's picture

How dare you! there is no way Obama would allow all these hedge, PE or other billion dollar funds to be able to buy these homes at fire sale prices.  He has promised us that he will not allow the rich to get richer. 

Thu, 09/20/2012 - 17:09 | 2816272 Bicycle Repairman
Bicycle Repairman's picture

Rent back at market rates?  Fuck that.  Ever hear of rent control?  Normally I'm against it, but it is an opportunity to nail these bastards.  And I don't care if the plutocrats try to hide behind a handful of pension funds.  Fuck them, too.  Let's all head down to city hall and fuck these guys.

Thu, 09/20/2012 - 15:36 | 2815940 walküre
walküre's picture

no green shoots to scare the short end = no short covering "rallies"

this is not the same script as in 2009 and 2010

Wyle Coyote has fallen off the cliff and currently suspended in the air. Free fall to commence soon. Depends how long everyone is patient to watch for the inevitable to happen.

Thu, 09/20/2012 - 18:31 | 2816361 LMAOLORI
LMAOLORI's picture

 

 

LULZBank No it should be me screw you long time

Federal Reserve policies favor the rich

and according the them it's working too 

Fed’s Rosengren: Already Signs Fed Action Is Working

and I would have to agree it's working they are screwing us investor's are picking up those government owned homes for a pittance!

 

Thu, 09/20/2012 - 15:09 | 2815842 CPL
CPL's picture

Bullish...rain. sun. End of world.

Bullish.

Thu, 09/20/2012 - 15:20 | 2815892 slaughterer
slaughterer's picture

Like I sauid bevor, BUY MBS and the financials that hold the most MBS on their books (need a little reseatch there, huh?)--the shittiest of the shittiest--and you will be fuking rich in 3 months.  QE3 for DUMMIES.  C'mon ZH, get on the fuking ball.   

Thu, 09/20/2012 - 16:13 | 2816061 ZeroAvatar
ZeroAvatar's picture

Until the winds don't blow...BITCHEZ!

Thu, 09/20/2012 - 15:08 | 2815837 yogibear
yogibear's picture

Bill Dudley probably leaks out the info to his buddies at Goldman Sachs before the Fed annouces. Keeps his foot in the door in case he has to escape the fed.

Thu, 09/20/2012 - 15:18 | 2815882 pods
pods's picture

Wonder if PIMPCO will show an uptick in MBS holdings?  Of course it is just talent.

pods

Thu, 09/20/2012 - 15:58 | 2815946 Rainman
Rainman's picture

Gross was already heavily jumping the shark in early Sept...a mindreader ?...hell no.

Thu, 09/20/2012 - 15:32 | 2815933 Cognitive Dissonance
Thu, 09/20/2012 - 15:08 | 2815840 muppet_master
muppet_master's picture

the INSIDERS

were front-running QEorganizer....

the muppets and retail investors are saying:  "fool me 2X, shame on me"

let this freaking casino die under its own paper weight.

Thu, 09/20/2012 - 15:10 | 2815844 JuliaS
JuliaS's picture

You can't spell "Fucked", without the "Fed".

Thu, 09/20/2012 - 15:12 | 2815845 CvlDobd
CvlDobd's picture

I'm discussing this with a guy on a motorcycle forum. He is trying to convince me that Romney is the way and a vote for Johnson or Paul is a vote fr Obama. Perhaps, but a vote for Romney is a vote for the NDAA.

No thanks. Markets are pretty jacked BTW. Just in case you hadn't noticed.

If NSC dros anymore from here it will have completed a major top. Not that it means anything these days. I bring it up for nostalgia purposes.

Thu, 09/20/2012 - 15:27 | 2815912 crusty curmudgeon
crusty curmudgeon's picture

I'm so tired of this "waste of your vote" crap, I can't even see straight.  Are people still really that stupid?

It doesn't seem to me that people who are serious about freedom can indulge themselves too much longer in the fantasy that freedom can be advanced through politics without the risk of doing themselves substantial hurt.  Politics are the dynamic of government, government is theft and slavery, and we can achieve freedom through political action like we can achieve celibacy through rape. Victor Milan

Thu, 09/20/2012 - 15:30 | 2815923 LawsofPhysics
LawsofPhysics's picture

We find ourselves here;  "The great questions of the day will not be settled by means of speeches and majority decisions but by iron and blood." -

Otto von Bismarck 

Thu, 09/20/2012 - 16:25 | 2816122 Induced Coma
Induced Coma's picture

Agreed. 1000x. in my head i start labeling all those that comment along this line as "TROLL".  Maybe new feature for ZH? Trollvote button?  Actually would sheepvote be more accurate?

Thu, 09/20/2012 - 16:28 | 2816140 Urban Redneck
Urban Redneck's picture

Romney's for defending the sanctity of life, and meanwhile he thinks the NDAA is a good idea?  Is the entire LDS church loony, or is it just Romney, and if it is just Romney, why has he not been expelled?  it's not as if most members of the LDS are down with the NDAA... Screw the R/D paradigm being a false dichotemy, once you add a breathing politician, the R/L paradigm becomes just as false.

If a vote for either Obama or Romney is a vote FOR the NDAA, what does that say about your biker friend's priorities?  Perhaps Romney needs to have a come to Jesus moment and spend the of the campaign justifying the flip flop (and more importantly why it took so long).  It's not like the press will be any worse on him than they already are, or that his campaign might appear any more impromptu or disorganized than it already is.

 

Thu, 09/20/2012 - 20:52 | 2816645 Lost Wages
Lost Wages's picture

The whole church is loony.

Fri, 09/21/2012 - 04:56 | 2817097 Urban Redneck
Urban Redneck's picture

I don't know that, but the NDAA should be ABORTED (with extreme prejudice)

Fri, 09/21/2012 - 06:44 | 2817098 Urban Redneck
Urban Redneck's picture

Dup. (But worth repeating)

The NDAA should be ABORTED (with extreme prejudice)

 

Thu, 09/20/2012 - 17:33 | 2816336 LMAOLORI
LMAOLORI's picture

 

 

Constitutional Scholar hahaha affirmative action scholar more like it

Obama Admin: Striking Down NDAA “Unconstitutional”

 

Thu, 09/20/2012 - 15:12 | 2815848 fonzannoon
fonzannoon's picture

were comin off the lows cash on the sidelines apple facebook!!!trulia??!!!

Thu, 09/20/2012 - 15:48 | 2815977 pods
pods's picture

Trulia fucked up world we live in.

pods

Thu, 09/20/2012 - 15:12 | 2815850 dbTX
dbTX's picture

Why isn't Bernanke being impeached; give me one good reason.

Thu, 09/20/2012 - 15:13 | 2815855 CvlDobd
CvlDobd's picture

That would imply him being accountable to someone.

Thu, 09/20/2012 - 15:14 | 2815864 RSBriggs
RSBriggs's picture

Because he isn't a member of the government and not subject to impeachment?  He's the head of a private corporation, owned by other corporations.

Thu, 09/20/2012 - 15:47 | 2815972 Papasmurf
Papasmurf's picture

Normally, a board of directors would replace a CEO when that CEO ran the corporation (into the ground) with only short term profits in mind. 

Thu, 09/20/2012 - 20:14 | 2816595 TonyCoitus
TonyCoitus's picture

If he is the head of a private company, why is he appointed by the POTUS?

Thu, 09/20/2012 - 15:16 | 2815867 Meesohaawnee
Meesohaawnee's picture

uh.. cause he gave his criminal buddies just what they wanted?? your talking about the fox watchin the hen house.. for the thousanth time here folks. quit thinking what "should " be done cause were the great ole U S of A.. We are the ussa now. need to change the way you think. It will drive you crazy thinking the people that run this country are for the good of all. Foget it. its gone

Thu, 09/20/2012 - 15:43 | 2815961 LoneCapitalist
LoneCapitalist's picture

Im LoneCapitalist and I endorse this message.

Thu, 09/20/2012 - 15:20 | 2815881 Vincent Vega
Vincent Vega's picture

Professional courtesy. Cocksucker scumbags don't impeach other cocksucker scumbags.

Thu, 09/20/2012 - 15:36 | 2815943 centerline
centerline's picture

They just eat each other when there is nothing left to feed on.

Thu, 09/20/2012 - 15:27 | 2815910 JuliaS
JuliaS's picture

Government workers get impeached.

Bankers get impaled.

Thu, 09/20/2012 - 16:02 | 2816010 e-man
e-man's picture

Didn't you mean "impaled," not impeached?

 

Edit:  JuliaS beat me to the punchline.  +1 for her!

Thu, 09/20/2012 - 15:17 | 2815878 caimen garou
caimen garou's picture

mission not accomplished! abort,abort,abort,danger will robinson danger!

Thu, 09/20/2012 - 15:20 | 2815890 fonzannoon
fonzannoon's picture

MUST KNOCK GOLD DOWN AT CLOSE

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