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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'

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.


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.


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


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 - 15:09 | 2815843 negative rates
negative rates's picture

I'd walk a mile for a camel.

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.


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


Thu, 09/20/2012 - 16:22 | 2816109 grid-b-gone
grid-b-gone's picture

When they want to knock down PMs, they'll raise margin requirements.

As long as you hold phys, it doesn't matter. Buying opp.

Thu, 09/20/2012 - 15:22 | 2815897 101 years and c...
101 years and counting's picture

the coming market crash will put 2008/09 to shame.


Thu, 09/20/2012 - 15:49 | 2815982 jay28elle
jay28elle's picture

crash?  there ain't no stinking crash in Ben's plan.  

Shall we examine:

1. melt up, melt up, melt up,

2. melt down a tad,

3. melt up, melt up, melt up,

4. go to step 1


Thu, 09/20/2012 - 16:33 | 2816164 ZeroAvatar
ZeroAvatar's picture


Thu, 09/20/2012 - 20:19 | 2816604 lotsoffun
lotsoffun's picture

yup.  and even bennie knows it.  but when?  timing is everything.  sooner than later - but before or after big bad bama II.

i'm loving big bad bama doing wwIII.  he's SOOOO upto it.  i'm sure he's going to have jay-z and beyonce doing great shows for the troops.  and michelle dishing out holiday dinners in fuqwhatisitstan to the poor suckers signed up to get out of prison.

time to pay the that noble prize now big boy.


Thu, 09/20/2012 - 15:22 | 2815898 Robslob
Robslob's picture

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

I am Ben Bernank and I approve of this message!


Thu, 09/20/2012 - 15:24 | 2815902 e-man
e-man's picture

"...compressing the mortgage yield to the S&P 500 dividend yield worked in March 2009."

Easy, all we have to do is return to March 2009 S&P levels.  Problem solved...

Thu, 09/20/2012 - 15:25 | 2815904 fonzannoon
fonzannoon's picture

look at this fkin market...

Thu, 09/20/2012 - 15:25 | 2815905 centerline
centerline's picture

Rough day watching the ink dry on the newly printed bills.  Need something fun to bring out the moonbats for a lively discussion.

Come on... there must be something juicy out there.

Thu, 09/20/2012 - 15:25 | 2815907 slaughterer
slaughterer's picture

oMFG POTTER has targeted GREEN on green for the ES today!!!!  OMFG  QE3 is working, ain't it?  FOr us .01%   OMFG   TO go GREEN on a shitty macro day like today is the signal.  BUY STAWKZZ!  ALL PIGMEN ON HAMPTON ARE HAPPY WITH THEIR HOOKERS THIS WEEKEND!!   And RobotTRader is COMING big PEarlJam in his CK UNDIES right now.  (See wall Street Bears site since Tyler banned him from here).  Oh, and I, as PUGMAN SUPREMUS, got drunk net to KASS (shithead) today, and am rich for keeping my WTI position on despite "Cougar" setbacks today, keep it kumming. oh I love ZH, the ultimate KONTRARIAN.  Oh, I LUV IT, ban me, pEEZE.  

Thu, 09/20/2012 - 15:27 | 2815914 centerline
centerline's picture

RT got the ban hammer? That sucks.

Thu, 09/20/2012 - 15:29 | 2815921 Deep79
Deep79's picture

Dont you have anything better to do.

Your pathetic



Thu, 09/20/2012 - 15:33 | 2815936 crusty curmudgeon
crusty curmudgeon's picture


I believe that liberty is the only genuinely valuable thing that men have invented, at least in the field of government, in a thousand years. I believe that it is better to be free than to be not free, even when the former is dangerous and the latter safe. I believe that the finest qualities of man can flourish only in free air —that progress made under the shadow of the policeman’s club is false progress, and of no permanent value. I believe that any man who takes the liberty of another into his keeping is bound to become a tyrant, and that any man who yields up his liberty, in however slight the measure, is bound to become a slave.  H.L. Mencken

Thu, 09/20/2012 - 16:37 | 2816181 ZeroAvatar
ZeroAvatar's picture

Pop-a-top, my friend!


Berskanky hasn't heard any of us cats out here screamin' 'bout inflation! 

Thu, 09/20/2012 - 15:30 | 2815924 q99x2
q99x2's picture

Thank God. The DHS aren't going to shoot us today.

Thu, 09/20/2012 - 15:31 | 2815928 centerline
centerline's picture

There's still some time left.

Thu, 09/20/2012 - 15:31 | 2815929 slaughterer
slaughterer's picture

I WANT a GREEN close from my FED.  FED gave it to ME>  What does that mean?  AD 2 + 2 ZHers.  (Hint: those who hold TZ/FAZ/SDS as maintstay of portfolio are FUKKKEED vis-a-vis PIGMEN SUPREMUS on WS.   OMG.  Did I tip you guys off?  SHORTS ARE B AKED.   But wait, isn't MITTEN supposed to win?  FUK that.  Get drunk in FL and Make $$$$).  

Thu, 09/20/2012 - 15:46 | 2815971 pods
pods's picture

If you are drunk in FL why the hell are you posting here?

Why not drop a line in the surf, wrestle a gator, goose Cinderella, or piss on Karl's lawn?


Thu, 09/20/2012 - 15:50 | 2815983 slaughterer
slaughterer's picture

OK will do that for you,






Thu, 09/20/2012 - 15:57 | 2816014 walküre
walküre's picture

You're losing it. Understandably. We're no longer in Kansas and this ride is simply not going to stop anytime soon. Get some fresh air and plant a garden. Helped me to look at the really big picture and forget how we're being screwed day in and day out. In the really big scheme of things, it matters NOT. Compared to the age of this universe or the planet, we're just a speck of forgetable dirt. You think dinosaurs would care thousands of years later how fucked they were when that asteroid hit?

Thu, 09/20/2012 - 15:36 | 2815944 disabledvet
disabledvet's picture

I'm sorry. The entire Mortgage Market "is a bunch of kitty-cats?" he's herding LIONS. "for a mere 50 billion and the promise to do more." try focusing on the ECONOMY next time. Because those are INTEREST RATES and they are LOW to ZERO.

Thu, 09/20/2012 - 15:42 | 2815955 centerline
centerline's picture

And likely not going to change one bit except lower.  Zero to negative... which in real terms means negative and really negative.

Thu, 09/20/2012 - 17:18 | 2816288 HungrySeagull
HungrySeagull's picture

Never mind Lions, the Zebras are changing stripes again. They tend to drown lions.


How to name zebras?


Aim a barcode scanner at the herd.



Thu, 09/20/2012 - 20:55 | 2816651 Lost Wages
Lost Wages's picture

If this is about herding cats, then someone needs to put Jackson Galaxy in charge of the Federal Reserve. (See the TV show "My Cat from Hell" on Animal Planet.)

Thu, 09/20/2012 - 15:42 | 2815956 dobermangang
dobermangang's picture

Looks like Mort is jumping off the Obama wagon.

Mort Zuckerman: Welcome to the Modern-Day Depression. We need to recover from the Obama economic recovery.

The cartoon is pretty good.  Ouch!

Thu, 09/20/2012 - 15:46 | 2815970 slaughterer
slaughterer's picture

Smoke a cigar: market GREEN for the next 2-3 months.  FuK shorts.  Do not short untul ES 1530-1560 otherwize U R STUPID!    Even KASS agrees at this point (covred).  A for Bidermann, he is a GS squidula. 

Thu, 09/20/2012 - 15:48 | 2815974 The worst trader
The worst trader's picture

PPT time..........Have to go green

Thu, 09/20/2012 - 15:52 | 2815993 slaughterer
slaughterer's picture

GO GREEN it will UNLESS VWAP bekkons like a LIsa Falcone CUNTuLA.  

Thu, 09/20/2012 - 15:55 | 2816007 uno
uno's picture

nothing more than opex tomorrow, all week is that scam, next week is window dressing and then Turbo will try to ramp into the election, all time highs for the obama-ation

Thu, 09/20/2012 - 15:56 | 2816008 the not so migh...
the not so mighty maximiza's picture

Ben needs infinity to prove his thesis, give it time.  We believe in you Ben.

Thu, 09/20/2012 - 15:59 | 2816021 firstdivision
firstdivision's picture

1700, here we come!

Thu, 09/20/2012 - 16:04 | 2816035 walküre
walküre's picture

I'd rather watch paint dry. At this speed, we'll get to 1700 in 2017 ... maybe.

Ben is out of bullets. Infinity and beyond is pretty much his whole wad.

Thu, 09/20/2012 - 16:55 | 2816244 obejoyful
obejoyful's picture

Ben has got you right were he wants you.  Your the idiot buying aapl at 700 and amzn at 230.

SP will be 800 within 6 months, and suckers like you will be holding the bag.  You think he can control the market, he cannot, look at 2008.

Thu, 09/20/2012 - 17:06 | 2816266 walküre
walküre's picture

Call me crazy, but I'd swear 2008 was just as programmed as what we're seeing today.

Thu, 09/20/2012 - 16:01 | 2816024 walküre
walküre's picture

Weak finish. No conviction. Not even among PPT and TPTB.

Thu, 09/20/2012 - 16:03 | 2816034 wagthetails
wagthetails's picture

or maybe this is what he wanted.  he's just tricking the market into buying the bonds for him and reducing rates.  than maybe the $40B/month in purhcases slips to somethign less?  Brilliant!  man, if he ever pulled that there would be a massive dumping of bonds and, then, finally, the mass market would realize the Fed is full of S. 

QE 2.0 will be when the Fed starts buying those cars stuffed in the channel.  or homes in the shadow inventory.  wait a minute, then the gov will own everything?!  i think we found the end game.

it's a slipperly slope's got to be hard with all those balls in the air.  when they'll fall, nobody knows.

Thu, 09/20/2012 - 16:11 | 2816038 Getting Old Sucks
Getting Old Sucks's picture

I hope Ben has all the wet signature notes when he goes to foreclose on defaulting home owners.  The banks and MBS trusts must be laughing their asses off.  The Gov will eventually have to nullify state property laws on their way to total national dictatorship.


Oh, and another thing.  Is Ben & co. gonna put up all the legal foreclosure fees?  Or is Uncle Sam gonna do it gratis?

Thu, 09/20/2012 - 16:23 | 2816113 Snakeeyes
Snakeeyes's picture

Bernanke took the starch out of MBS too, Convexities have collapsed and spreads have narrowed.

Thu, 09/20/2012 - 16:46 | 2816218 Downtoolong
Downtoolong's picture

'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.

 And now they have no idea what else to do, nor does anyone else, for the next four years, eleven months, and 359 days.

Thu, 09/20/2012 - 17:56 | 2816282 unununium
unununium's picture

This was not front running.  This was the Fed itself.

NY Fed report shows over 3x normal NYFed MBS reinvestment volume.


* Come to think of it, both "normal" and "reinvestment" should be in quotation marks.


Thu, 09/20/2012 - 17:59 | 2816378 helping_friendl...
helping_friendly_book's picture

S & P limps up to -0.79 close. Unbelieveable! What a farce!

Poor Grampa!

Thu, 09/20/2012 - 19:28 | 2816528 razorthin
razorthin's picture

Because we least expect it, somebody will soon make a digital killing hft-ing markets down back to fair value.

Thu, 09/20/2012 - 19:36 | 2816541 newengland
newengland's picture

The privately owned Federal Reserve Board doesn't give a damn about what the U.S. or anyone else wants. It serves its own private interests.


Stop whining. Defend yourself or be a victim, a whiner. 

Thu, 09/20/2012 - 19:37 | 2816543 zerotohero
zerotohero's picture

This will continue until a major war breaks out.

Thu, 09/20/2012 - 20:17 | 2816590 devo
devo's picture

I know I'll feel the wrath of Zh for asking, but what do you guys think of buying BAC? Reason being Bernanke is buying every bad asset they own, so the stock could outperform...

Thu, 09/20/2012 - 20:21 | 2816607 akak
akak's picture

You might be one to something there, and you could stand to make a handsome profit thereby.

You might also, if you were an attorney, go chasing after ambulances for your clients.

Where does one draw the line on what are "acceptable" profits?

Thu, 09/20/2012 - 20:38 | 2816613 devo
devo's picture

Where does one draw the line on what are "acceptable" profits?

Do you mean morally?

The way I figure, the Bernanke is stealing from me (and you, via hidden tax/inflation) to buy these assets from BAC et al. THAT is immoral. They also have punished savers. This is an opportunity for savers, who have some money on the sideline, to get into that asset and get back some of what they are owed. That's my thinking.

I do worry about BAC's derivatives/CDS. Doubt Bernake is buying those, so there's tremendous risk, but the upside is pretty big if the FED takes all those bad mortgages off the books, and that is their goal. Bernanke wants the banks to start lending again. He wants to reinflate the housing bubble via ARMs--this is very clear. Banks can't do that with these zombie assets on the books. The 40 billion per month is likely going to BAC, C, and JPM in that order.

Just trying to find any assets I like at these prices. Everything is overpriced except financials and silver, and both can outperform in a QE3~ environment. Energy stocks seem fairly priced, but definitely not cheap, and miners still look okay. Any ideas? Normally I would short here, but I know the market is not allowed to go down, so I'm looking for value and there isn't any.



Thu, 09/20/2012 - 20:53 | 2816640 Manipuflation
Manipuflation's picture

"Everything is overpriced except financials and silver".

There, does that help at all?

Thu, 09/20/2012 - 21:01 | 2816654 chump666
chump666's picture

Doesn't mean it will make major profits, that is the thing with this new QEinfinty. The market priced it in months ago, so buying now into this capped market could be risky.  There is a hidden tail risk, I am thinking a rogue trade again (amongst other things, maybe a war soon).  Feels like that.  When the market volumes collapsed as much as they have and volatility on both FX and equities are at all time lows = danger.

I'd wait.

We get a major crash, a good low to buy from, wait till that occurs. Bernanke's put/s are - 3-5% on the Dow/S&P.

Thu, 09/20/2012 - 21:13 | 2816663 devo
devo's picture

market priced it in months ago

There is a hidden tail risk

Agree so much. When you have a large sum of cash, it's nerve-wracking to wait for dips. I'm trying to be patient, but stocks never drop, and my dollars are worth less every day. It's a bad position to be in. I have too much gold/silver so I need some diversity and there's nowhere to go. I guess I will buy more food!

Thu, 09/20/2012 - 21:19 | 2816670 chump666
chump666's picture

Energy stocks on war tensions. Financials will be hammered on any middle east/south china sea flare up.  Asia appears to be pricing that in.  My only 'conspiracy' theory on the MBS infinity Fed trade, is the Fed could be front running a major conflict (mostly likely Iran), which will rev up as banks start looking like 'junk' again (2008).  Which in theory, will be a possible buy on a major low. When?  Hard to say.

But If you can look at what the larger players are hedging with, most are still long and bullish.  At any point they will fall back into short/defensive positions.  I was long into July and sold out prior to the Fed (I know kill me).  But even then I thought the market was overbought.

Thu, 09/20/2012 - 22:15 | 2816762 Manipuflation
Manipuflation's picture

"When you have a large sum of cash, it's nerve-wracking to wait for dips."

"I have too much gold/silver"

What???  Paper or silver?  Why didn't you buy more in August then?  Do you have mulitple citizenships in other countries?  Perhaps that should be how you diversify. 

BTW, my built in Bullshit-O-Meter has now reached 11.


Thu, 09/20/2012 - 22:27 | 2816781 devo
devo's picture

I have a lot of PMs, so I wanted a different asset (i.e. don't want all eggs in one basket), so I have been waiting for a stock dip. It never happened. It's frustraiting waiting for it while holding dollars. Why would I bullshit about that?

Thu, 09/20/2012 - 20:46 | 2816634 buzzsaw99
buzzsaw99's picture

unintended consequences


Thu, 09/20/2012 - 20:55 | 2816649 chump666
chump666's picture

Also, China/Asia are still buying up a lot of USDs (offsetting their stagflation/inflation).  Which should cap any USD denominated asset selling to then go into stocks.  All and all, the overpriced front running trade is embarrassing - it just can't push higher.  It's an over bought behemoth, leveraged to hell and dying to go short. 

If this crashes, which it will at some point near term, it will make the Fed look like the f*cking brain-dead idiots that they are.


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