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"Crunch Time" - Goldman's Confidence That QE Will Be Announced On June 20 "Has Grown"

Tyler Durden's picture


We all know that things are bad and getting worse. Goldman's Jan Hatzius take this opportunity to summarize all the various ways in which the global economy is floundering and once again floats the Goldman solution to everything: More QE, this time with a Bill Gross twist, pun and all, where the Fed again pulls a 2009 and goes for MBS: "Our confidence that the FOMC will ease policy once more at the June 19-20 meeting has also grown... Our baseline remains that Fed officials will purchase a mixture of mortgages and long-term Treasuries, financed via balance sheet expansion and possibly coupled with an extension of the forward guidance into 2015. This would be considerably more powerful than an extension of Operation Twist or other ways of changing the composition of the balance sheet, which are possible alternatives but are limited by the relatively modest amount ($200bn) of short-term paper that is still available for sale on the Fed's balance sheet." Well, if anything, global or Fed-based easing will most likely not come before the Greek June 17 elections - after all Greek confidence has to be crushed heading into the Euro referendum, and the only way to do this is by facilitating collapsing markets. So those hoping for a groundbreaking ECB announcement on June 6 will be disappointed. But June 20? That is fair game. We look forward to seeing PIMCO MBS holdings rise to a new all time high when the monthly TRF update is posted in a few days. Also look for something like this in the EURUSD if and when Bernanke "surprises" few at 2:15 pm on June 20.

From Goldman Sachs: Crunch Time

1. Friday’s jobs report for May capped three months of disappointing economic data, with a nonfarm payroll gain of just 69,000 and sizable downward revisions to prior months. This takes the 3-month average jobs gain down to 96,000, the weakest since August 2011, from a peak of 252,000 in February. The household survey showed a decent rebound in May, but on a 3-month average basis—probably a better measure given the noise in this series—employment has grown just 74,000 per month. More broadly, our CAI—a statistical summary of the underlying trend in the 25 most important US weekly and monthly activity indicators—has slowed to 1.7% in the last two months from 3% in early 2012.

2. What lies behind the slowdown? Part of it is clearly due to the reversal of temporary positives, as we had argued back in March. The unusually warm winter boosted the level of seasonally adjusted payrolls by perhaps 100,000 through February, and that boost has gradually reversed since then. There is also some possibility of residual seasonal adjustment distortions from the speed of the late 2008/early 2009 downturn. But temporary factors are not sufficient to explain all of the weakness. The broader point is that final domestic sales growth remains too sluggish, at just 1.5% (annualized) over the past two quarters, to support a healthy recovery.

3. Alongside the slowdown in the real economy, financial conditions have tightened. Our revamped GSFCI has climbed by nearly 50bp since March, as credit spreads have widened, equity prices have fallen, and the US dollar has appreciated. Some of this tightening is clearly a reflection of the weaker US economic numbers, so we should not “double-count” it as a negative impulse to growth. And some has been offset by the accompanying fall in oil prices, which has kept the “oil-adjusted” GSFCI from tightening nearly as much. But there is also a more exogenous factor, namely the intensification of the European crisis as concern about the Greek election and the Spanish banking system has risen. By our estimates, Europe accounts for up to half of the tightening in the GSFCI since April. We estimate that this could shave an additional 0.2-0.4 percentage points from US GDP growth over the next year. This is the main reason why we have pared our GDP estimates slightly and now expect growth to average slightly below 2% over the next year, with Q1 2013 the weakest quarter at just 1.5% due to the likely fiscal tightening then.

4. The hit from Europe could shrink or grow, but the risks are skewed to a worse outcome than our current baseline. Related to this, Huw Pill and team have sketched out three potential scenarios for the Greek exit discussion—(1) more of the same, (2) a proactive Greek exit, and (3) a decision by the ECB to squeeze Greece out gradually. Scenario (1) corresponds roughly to our baseline forecast, which our European team revised to a slightly bigger sequential contraction in the remainder of 2012 and a more shallow recovery in 2013 last Friday. Scenarios (2) and (3) would imply bigger declines in euro area GDP, and probably further tightening in US financial conditions.

5. Our conviction that the stickier inflation period of the past 1½ years is coming to an end has grown. This is not just because of the drop in commodity prices—including the $25/barrel plunge in crude oil prices—and the appreciation of the US dollar but also because labor cost pressures remain absent. Average hourly earnings are still decelerating, and a sharp downward revision to Q4 wage and salary income in last Thursday’s GDP report implies that unit labor costs will be revised down substantially. We expect inflation to be back below the Fed’s target by 2013.

6. Our confidence that the FOMC will ease policy once more at the June 19-20 meeting has also grown. At a time when Fed officials are far short of their dual mandate of maximum employment and 2% inflation, financial conditions should be accommodative and GDP growth should be well above trend in order to re-employ displaced workers and avoid a gradual transformation of cyclical into structural unemployment. Instead, financial conditions are only roughly at average levels according to our GSFCI, and GDP growth is below its long-term trend. Moreover, both financial conditions and growth have been moving in the wrong direction, to a degree that we think warrants action.

7. Assuming they do ease, what are Fed officials likely to do? It is a tricky call because there are many different options on the table. At the most basic level, they could increase the size of their balance sheet, change the composition of their balance sheet, and/or change their forward guidance in a way that pushes rate hike expectations even further into the future. If the easing comes via changes in the size or composition of the balance sheet, they could buy long-term Treasuries, mortgages, or both. If they decide to extend their balance sheet, they could add excess bank reserves or “sterilize” the reserve impact via reverse repos and/or term deposits. They would also need to decide whether to announce a balance sheet extension problem in one go or adopt a meeting-by-meeting strategy. And if they change the guidance, they could simply push out the date for the first rate hike in the statement or make the first hike conditional on an economic criterion such as a nominal GDP target or the Evans proposal (commit not to hike rates until the unemployment rate has fallen, or until inflation has risen, above a specific level).

8. Our baseline remains that Fed officials will purchase a mixture of mortgages and long-term Treasuries, financed via balance sheet expansion and possibly coupled with an extension of the forward guidance into 2015. This would be considerably more powerful than an extension of Operation Twist or other ways of changing the composition of the balance sheet, which are possible alternatives but are limited by the relatively modest amount ($200bn) of short-term paper that is still available for sale on the Fed's balance sheet. We still think that Fed officials might decide to “sterilize” balance sheet expansion via reverse repurchases or term deposits. We may get a better sense on all of these issues from Chairman Bernanke's testimony to the Joint Economic Committee of Congress on Thursday or other Fed speeches this week.

9. What about the objection that rates are already so low that additional asset purchases will either fail to push rates down further or that further rate declines will be ineffective in boosting economic activity? This concern looms a little less large if purchases are focused on the mortgage market, where the zero bound is still further away. It is also important to remember that the low current level of rates incorporates some expectation of further easing, so rates would presumably rise if the Fed decided to do nothing. All that being said, we do have sympathy with the idea that the liquidity trap is moving out the yield curve, and the Fed’s ability to provide support via “conventional unconventional” options—which we define as date-based forward guidance and changes in the size and composition of the balance sheet—is declining. Therefore, the “unconventional unconventional” options— the Evans proposal, a higher inflation target, or a nominal GDP or price level target—deserve another look. Amongst these, we continue to believe that a nominal GDP level target is the most promising. It would provide reassurance that Fed officials will keep monetary policy loose until nominal spending and income have recovered. Once that recovery has occurred, it would provide a natural “exit strategy” from a loose to a tighter monetary policy. However, we do not expect Fed officials to adopt a nominal GDP target or other unconventional unconventional policies anytime soon


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Mon, 06/04/2012 - 08:09 | 2491157 GetZeeGold
GetZeeGold's picture



QuE the rumors!

Mon, 06/04/2012 - 08:17 | 2491174 ITrustMyGut
ITrustMyGut's picture

let them eat fiat, bitchez!

Mon, 06/04/2012 - 08:51 | 2491255 MonsterBox
MonsterBox's picture

An early QE in June runs the risk that it's Market pumping influence could run out of steam just before the elections.  No, a huge July QE has far better odds keeping the muppet voters asleep in November.  Question is, can the EU banks hold it together until July?


Mon, 06/04/2012 - 09:46 | 2491456 Platinum_Investor
Platinum_Investor's picture

I've read in the past that Stimulus in the economy takes 6 months to take effect.  QE is a bit different then direct stimulus but I'm sure their is a delay for its effectiveness.  June sounds like the perfect timing. 

Mon, 06/04/2012 - 08:09 | 2491158 gwar5
gwar5's picture

The Squid has spoken

Mon, 06/04/2012 - 08:18 | 2491172 Popo
Popo's picture

Yes, the Squid has spoken.   And the accuracy of the Squid's publicly released analysis is uniformly 0% with no margin of error.   ie:  There will be no QE and they are short up to their eyeballs hoping for stupid muppets to take the other side of their trade.

Mon, 06/04/2012 - 08:42 | 2491238 JackT
JackT's picture the opposite of publically released info?

Mon, 06/04/2012 - 09:04 | 2491296 DeadFred
DeadFred's picture

Goldman likely has access to up-to-the-minute info on the Fed, but what do they gain by telling you? If you can spin a scenario that they gain by telling the truth then you may want to bet on it. Don't bet on the premise that they are providing their inside take for altuistic reasons. My guess is they know June is a wash and want to offload positions to sheep that still think there's reason for hope. They can buy those positions back in July or in the fall at a discount.

Tue, 06/05/2012 - 07:03 | 2495139 Offthebeach
Offthebeach's picture

In Amerika The Squid owns Fed!


Mon, 06/04/2012 - 09:47 | 2491472 Platinum_Investor
Platinum_Investor's picture

Sadly this is true.  Goldman does the opposite of what they say publically.  It's Fact.  That's why I was upset to read this column this morning.  QE chances have just dropped by 25% in my eyes from 50% down to 25% chance of it happening. 

Mon, 06/04/2012 - 10:16 | 2491685 brooklynlou
brooklynlou's picture

Yep. My take as well.

PS. AMEX across the street from GS here in NY just pulled off a very quiet layoff and a vicious round of budget cutting. The layoffs were just enough under the NYS mandated limit to avoid having to announce it as a layoff and file paperwork with the state. GS may publically announce that the sun will come out tomorrow, but AMEX that can actually see the pace of global transactions lessening knows what the deal is ...

Mon, 06/04/2012 - 11:10 | 2491995 Bananamerican
Bananamerican's picture

"they are short up to their eyeballs hoping for stupid muppets to take the other side of their trade."

Watch Gross...

either he swims to the top of the fishtank for another hit or he doesn't...

Mon, 06/04/2012 - 08:39 | 2491231 LongSoupLine
LongSoupLine's picture

And on that note, CNBS is in full QE retard mode (do they have any other mode?). They are parading Nobel winners and Ivy league shitheads to the max. They even had Larry "ubertard" Summers on with his "borrow until you die" rhetoric.

We are soooo fucked.

Mon, 06/04/2012 - 08:13 | 2491163 Muppet Pimp
Muppet Pimp's picture

Pavlov is getting the bell out

Mon, 06/04/2012 - 08:13 | 2491164 theMAXILOPEZpsycho
theMAXILOPEZpsycho's picture

When will all the Bernanke critics finally face up to facts and admit it: the guys a magician. Goldbugs and silver bugs are just stubborn losers; they'll never have the humility to admit they should've been buying treasuries, like I have for the last 5 years. My logic was simple; I asked my self: who's the smartest when it comes to economics? Why, Bernanke of course. So I did exactly what he was doing and have been richly rewarded. There's simply no reason for QE - why? - THE WHOLE WORLD CANT GET ENOUGH OF US DEBT! Thats all thanks to bernanke and thank god the good old us of a has someone who can ACT at the helm, or we'd be going down in a deflationary terror crash like you're seeing in europe.

Is anyone man enough to admit they got it wrong and he got it right? I doubt it

Mon, 06/04/2012 - 08:15 | 2491169 Hedgetard55
Hedgetard55's picture



     Your troll fu is nowhere near as strong as MDB.

Mon, 06/04/2012 - 08:51 | 2491259 bonderøven-farm ass
bonderøven-farm ass's picture

+1 for effort Max.....

Mon, 06/04/2012 - 08:17 | 2491171 GetZeeGold
GetZeeGold's picture



Blistered by the heat of the gold's rocket engines.....little Johnny stood his ground clutching his smoldering shares of FB.

Mon, 06/04/2012 - 08:28 | 2491200 BeetleBailey
BeetleBailey's picture

LOL. You've been buying Treasuries for the last five years?

Well, one thing about that is good; you'll not run out of butt wipe anytime soon.

Go suck Bernanke's wee-wee - if you can find it.

Mon, 06/04/2012 - 08:48 | 2491250 LongSoupLine
LongSoupLine's picture

Holy crap MAXILOPEZ, even robo is a better troll than you

Grade: F-

Mon, 06/04/2012 - 09:15 | 2491319 TWSceptic
TWSceptic's picture

"Goldbugs and silver bugs are just stubborn losers"


Yeah, losers for over 10 years now, when will these losers finally give up and start joining the winning team?


Bad troll.

Mon, 06/04/2012 - 08:13 | 2491165 SheepDog-One
SheepDog-One's picture

So if GS says it more likely then its definitely not happening.

Mon, 06/04/2012 - 08:15 | 2491168 Rock the Casbah
Rock the Casbah's picture

Looks like GS needs to sell!

Mon, 06/04/2012 - 08:24 | 2491170 JustObserving
JustObserving's picture

Debt in Western nations is just too large to be paid back (for example, debt and unfunded liabilities of $1,186,000 per taxpayer in US).  Banks, who control the Fed, will never allow debt repudiation.  So the solution will be to print money until inflation eats away the debt.

QE as far as the eye can see.  It is very bullish for gold and silver - so they must be attacked and kept in check.  That will only work for a while though.

Meanwhile we have a market completely controlled by Fed policy.  A crony, corrupt, controlled market will collapse.

Mon, 06/04/2012 - 08:30 | 2491210 Alex Kintner
Alex Kintner's picture

I'm short wallets and long wheelbarrows. QE Jubilee -- all debt is forgiven.

Mon, 06/04/2012 - 08:35 | 2491221 optimator
optimator's picture

And I'm long applecarts.

Mon, 06/04/2012 - 08:17 | 2491173 bullionbaron
bullionbaron's picture

Positioned in physical Gold and Silver, ready for launch.

Mon, 06/04/2012 - 08:17 | 2491175 SheepDog-One
SheepDog-One's picture

GS thinks June 6 is a bit too hot....but June 20 is juuuuust right! LOL GIMME DA FREE MONEEZ!!

Mon, 06/04/2012 - 08:18 | 2491176 RaymondKHessel
RaymondKHessel's picture

But but but Larry Summers has a plan !
MORE D E B T ! !

Mon, 06/04/2012 - 08:18 | 2491177 Boilermaker
Boilermaker's picture

This shit literally never stops, does it?

Mon, 06/04/2012 - 08:25 | 2491186 GetZeeGold
GetZeeGold's picture





Mon, 06/04/2012 - 08:27 | 2491197 Boilermaker
Boilermaker's picture

Thanks for the affirmation.

Mon, 06/04/2012 - 08:19 | 2491179 mendolover
mendolover's picture

ALERT! Joseph Gobbels, I mean Larry Summers coming up on Squawk Box.  I'll have to listen from the other room because Becky Quick and Summers on one TV screen is more than I can take on a Monday morning.

Mon, 06/04/2012 - 10:19 | 2491715 brooklynlou
brooklynlou's picture

Just take it as the universe giving you permission to start drinking early

Mon, 06/04/2012 - 08:19 | 2491180 bnbdnb
bnbdnb's picture

GS is BS.

Mon, 06/04/2012 - 08:21 | 2491181 sudzee
sudzee's picture

The productive efforts of the world can no longer support the trillions in debt created out of nothing even at ZIRP.

Mon, 06/04/2012 - 08:23 | 2491183 Sean7k
Sean7k's picture

Why aren't low interest rates encouraging expansion? No capital to expand with. 

Real reason for more QE, especially mortgages? Get the crap off the banker sheets and onto the taxpayer's back.

Just making the bankers more and more solvent for when ALL capital is withdrawn, the market crashes and debtors go belly up- all the better for the bankers to feast upon. Now that their derivative exposure is covered as too big to fail, the removal of the foreclosed albatross will put them in their best position ever.


Mon, 06/04/2012 - 09:17 | 2491331 ElvisDog
ElvisDog's picture

Except the brilliant plan of putting all the debt on the taxpayer has one little flaw - the taxpayer doesn't have enough money to pay it off. So, the debt held by those greedy banks is going to be defaulted on at some point in the future anyway.

Mon, 06/04/2012 - 08:23 | 2491184 Alex Kintner
Alex Kintner's picture

Did someone say Goldman and Confidence in the same sentence?

Hell, Goldman owns the country, so yeah QE is assured.

Mon, 06/04/2012 - 08:23 | 2491185 DarkestPhoenix
DarkestPhoenix's picture

But........if Goldman is saying they WILL print on 6-20, then aren't we supposed to assume they know the opposite is true?

Mon, 06/04/2012 - 08:41 | 2491237 a growing concern
a growing concern's picture

UNLESS they know that we know that they're lying and will take the opposite side of the trade.  [dramatic music]

Mon, 06/04/2012 - 08:25 | 2491187 hazek
hazek's picture

"..that Fed officials will purchase a mixture of mortgages and long-term Treasuries, financed via balance sheet expansion.."

Nice propaganda, abstracting what they actually mean: electronically create more money out of thin air, robbing the savers through the inevitable rising prices



Fking psychopaths.

Mon, 06/04/2012 - 08:26 | 2491188 Sandmann
Sandmann's picture

Why don't they find The Philosopher's Stone and start turning Base Metals into Gold ?

It would be more practical than simply providing Investment Banks with more Debt to trade and leverage

Mon, 06/04/2012 - 08:25 | 2491189 vegas
vegas's picture

Well great - now Gartmann, who pronounced 100% QE3 on the money honey channel this AM, joins Vampire Squid. by the time the Fed meets the whole QE3 mantra will be baked into the cake.

Mon, 06/04/2012 - 08:32 | 2491195 GetZeeGold
GetZeeGold's picture



Oh good.....Gartmann showed up.


Should do a 180 reversal in.......3,2,1. Wait for it.



Mon, 06/04/2012 - 08:51 | 2491258 Quinvarius
Quinvarius's picture

And just an hour ago Gartman was all about global panic.  The guy is a moron.  Tape up, things look great.  Tape down, things are grim.  No deeper undersatnding.  He is as annoying as robotrader. 

Mon, 06/04/2012 - 08:26 | 2491191 Sweet Chicken
Sweet Chicken's picture

This means one thing.....GOLD BITCHEZ!!!!


Received 6 oz physical on Friday ready for the patch job on my boat.

Mon, 06/04/2012 - 08:42 | 2491239 a growing concern
a growing concern's picture

Not ANOTHER tragic fishing mishap with your gold on board?!?!?!?!

Mon, 06/04/2012 - 09:37 | 2491382 Sweet Chicken
Sweet Chicken's picture

For some reason every time I weld with it I have problems????


Well if at first you don't succeed..........

Mon, 06/04/2012 - 08:26 | 2491194 flying dutchmen
flying dutchmen's picture

The FED should fuck off and let the market settle where it may..

Mon, 06/04/2012 - 08:26 | 2491196 ghostzapper
ghostzapper's picture

Call me stupid but I fail to see how Shalom could surprise even one single person with an expansion of the balance sheet.  Who on earth would be surprised with another bailout and more money printing?  I am not being sarcastic here fellas.  How the hell would this surprise anyone at this point?  The Spider is loaded to the gills with QE expectations as we speak so where would the surprise come from?


I realize the USD has surged and is implying that we will not get QE in the near future and gold, silver, and oil have trended down (oil more so than the others).  So perhaps a "surprise" QE in June catches the USD off guard.  But seriously, who would be surprised by more money printing?


Shalom has even said himself positively shocking the markets is part of the very loose argument for intervention.  Plus, the damn ten year is being pounded down so the Euro debacle is helping Shalom here.  what the hell would QE do for interest rates?


Sorry for the rant but I simply do not see how balance sheet expansion would surprise anyone here.  Now, Jackson Hole 2010 was different there was a bit of a surprise upper cut thrown to the bears in that scenario. 

Mon, 06/04/2012 - 08:34 | 2491218 SheepDog-One
SheepDog-One's picture

Right, trillions have already been baked in with about 50 QE3 calls already....if it did ever come, it would really be the most unsurprising event ever, and likely be a negative since it would just be immediately devoured in a 1 hour fake paper feeding frenzy.

Mon, 06/04/2012 - 08:38 | 2491229 ghostzapper
ghostzapper's picture

Spider around 1,000ish would tell me a decent chunk of the jonesin for free heroin has been flushed out.  Not all of it but a decent chunk of it.  Right now the SPider i high as a kite with visions of Shalom handing out free money dancing in its head.  Jesus Christ the ten year is below 1.50% and other debt markets are telling you something very, very different from what the Spider's current price level is expecting.

Mon, 06/04/2012 - 10:37 | 2491812 eclectic syncretist
eclectic syncretist's picture


Wouldn't buying MBS means the Fed transfers bad bank debts onto the taxpayers shoulders?  It wouldn't help anything really, just stave off bank collapses for a while, unless I'm not seeing something here.

I agree the Fed is nearing impotency at the moment, by which I mean it is approaching the point where QE would be needed just to keep asset prices from falling.  The bubble deflation rate appears poised to inundate all efforts to stop it.

Mon, 06/04/2012 - 12:30 | 2492315 ghostzapper
ghostzapper's picture

Agreed.  An MBS QE is just another handout to try and kick the can further down the road.


My main point is what on earth would make Shalom think QE would help in any meaningful way at this point???  Now I know he granted himself the power of giving the Fed a third mandate of propping up risk assets but come on he has to at least kinda sort of act like he is trying to maintain the Fed's dignity and credibility (I know pretty funny huh). 


Furthermore, what if we are reaching the point where more free heroin, coke, and hookers does NOT lift risk assets beyond an initial pop from the algos?  What do the cheerleaders have left at that point?  I say risk assets eventually call the bluff of "free money" or QE or whatever you want to call it. 

Mon, 06/04/2012 - 08:27 | 2491198 SeverinSlade
SeverinSlade's picture

While I'm inclined to agree with GS this time, people should remember that GS has been calling QE3 ever since QE2 ended.  It wouldn't surprise me one bit of Bernanke and the Fed don't announce QE3 on the 20th and allow all hell to break loose before making some emergency announcement of QE3.

Mon, 06/04/2012 - 11:42 | 2492140 kekekekekekeke
kekekekekekeke's picture

they need people clamoring for it

we're not quite there yet

Mon, 06/04/2012 - 08:28 | 2491199 ghostzapper
ghostzapper's picture

And, it should be noted that although Gold rocked on Friday it did not break out above its descending channel that has dictated its direction for a couple of months now.  Same with Silver.

Mon, 06/04/2012 - 08:28 | 2491203 Conman
Conman's picture

WHy QE? markets going to ramp up today anyway. Spain up near 3% futures already moved 100 points and going.

Mon, 06/04/2012 - 08:34 | 2491215 Currency is Debt
Currency is Debt's picture

We certainly have a bond bubble.

Global economic earthquake of 08 (starting in 06) has been shaking since and the bond market collapse is the global tsunami. The more it hurts the larger the bond bubble will get. Maybe when the 10yr reaches -0.05 yield in a couple of years it will be the end. Pure insanity.

When you have psychopaths running the world....

The so-called jobless recovery.What is a jobless recovery? It is a misinformation term for The big boys are getting their money out and exchanging it for other assets - then we drop the world on you (main street motherfuckers).

The vampires are not American, or European - they owe you no allegiance. They go where there is plentiful blood, could be Asia and Africa in the future. Call it the Central Bank plague sweeping accross the earth. They will pump you and dump you.

Tue, 06/05/2012 - 07:15 | 2495152 Offthebeach
Offthebeach's picture

Like cattle in a feedlot waiting the free ride to the slaughtering.

Mon, 06/04/2012 - 08:34 | 2491216 Dorky
Dorky's picture

So is this going to be true or what?

No more QE3?

Mon, 06/04/2012 - 08:36 | 2491224 Kina
Kina's picture

So then, GS ramps up expectations of QE3 up until the 20th June, then the Fed does nothing except delay, markets plummet.


GS makes a mint on have shorted everything in the meantime.


Mon, 06/04/2012 - 08:37 | 2491227 Hondo
Hondo's picture

Nothing but corruption..there is no one on main street clamering for the FED to to anything.  All the clamering is coming from bankrupt Wall Street...wanting another money transfer from main street to wall street.  The Fed should do nothing and let the cost structure decline to what the economy can produce and quit destroying wealth...

Mon, 06/04/2012 - 08:38 | 2491230 rufusbird
rufusbird's picture

The most useful information was in Tyler's introductory comment..."Well, if anything, global or Fed-based easing will most likely not come before the Greek June 17 elections."

Mon, 06/04/2012 - 08:39 | 2491233 Currency is Debt
Currency is Debt's picture

My question to all the smart Hedgers amongst you: As a normal working person, the $million question for me is:

Is this another wave in the money printing inflationary economic society in the US and Europe or actually the end characterized by dramatic change? We have followed a course since atleast 1913 where there is asset price inflation, cost of living inflation bubble and then contraction, bubble and then contraction... leading to atleast higher nominal highs..... is this a wave or the end?

Mon, 06/04/2012 - 08:44 | 2491244 a growing concern
a growing concern's picture

 "is this a wave or the end?"

I think that depends on how big your boat is.

Mon, 06/04/2012 - 08:53 | 2491260 MongolGold
MongolGold's picture

Thank goodness people are now listening to the genius of guys like Krugman. These idiots just don't understand his genius.

Mon, 06/04/2012 - 08:55 | 2491267 Bubbles and Busts
Bubbles and Busts's picture

Unless the markets really tank from here, which seem unlikely given expectations of global easing and China stimulus, politics will likely prevent the Fed from undertaking another round of QE. There will be No More QE in June?!?!

Mon, 06/04/2012 - 08:57 | 2491270 Racer
Racer's picture

'It didn't work last time, so we must try it again because it wasn't big enough so 100% confident to work this time'



we have let the market drop enough to show that it is needed to keep the 'recovery' going

Mon, 06/04/2012 - 09:31 | 2491384 khakuda
khakuda's picture

It must be really mentally freeing for these guys, for they can never be wrong.  I should have gone to an Ivy.  Then maybe I'd have bought Lehman and Bear all the way down, too.

Mon, 06/04/2012 - 08:59 | 2491276 Currency is Debt
Currency is Debt's picture

The average person does not have too many assets - maybe an apartment or house etc. If we go back through recent history - in each recession the story was wow prices (and of real-estate) have become ridiculous and too high. Many 'suckers' certainly accepted this view and were shaken out.  Yet in hindsight commercial and residential real estate and land has continued to grow in nominal terms and have been offering some shelter from inflation and standard of living destruction. 

Generally anyway at a critical time like this - the deepest economic downturn in almost the last century - It is a key question for investors. Does the world carry on within the general established paradigm or is this truly a time of absolute change. Are they trying to feverishly shake us all out, so we dont participate in the next inflation fuelled bubble bonanza?

Mon, 06/04/2012 - 10:59 | 2491943 eclectic syncretist
eclectic syncretist's picture

I think the inflation/deflation debate may be moot and superceded by the perspective of the credit/debt bubble.

Bernanke thinks all he needs to do to create inflation is create debt, and while he's right there is an upper limit to how much debt is sustainable, and once one gets beyond that point adding debt to the system does nothing more than add debt to the system.  We appear to be at the tipping point where that could happen, meaning QE3 or QE4 or whatever you want to call it may produce very little if any inflation in non-essentials like equities and bonds.

Mon, 06/04/2012 - 09:05 | 2491291 Cycle
Cycle's picture

Bernanke continues to give banks cheap money, while the real economy is not borrowing, thereby not "creating" new money for the economy. It's like giving cocaine and heroin to the doctor and nurse taking care of a dying patient, hoping that if they feel good it will rub off.

Mon, 06/04/2012 - 09:21 | 2491343 geewhiz190
geewhiz190's picture

bonds overbought, stocks oversold. dollar overbought, currencies oversold. odds favor a short-term rebound. may be enuf to frighten shorts. can probably trade some cyclicals and materials from this level. but  in all cases probably swimming against the tide which seems to be definitly going out. gold could recover to high of 3/1

Mon, 06/04/2012 - 09:20 | 2491345 ElvisDog
ElvisDog's picture

Two points - first, GS's bold plan for Fed action would do absolutely nothing. The half-life of Fed interventions is shrinking. We might get a pop for 2-3 weeks and that would be it. Second, do you really think the Fed would want to be seen as doing what GS wants when GS wants it? The reputation of GS is at an all-time low. They are basically seen by most of the public as baby killers. I don't see June 20.

Mon, 06/04/2012 - 09:22 | 2491350 10mm
10mm's picture

Ammo prices will continue to rise.Ammo"It's the other real metal currancy".

Mon, 06/04/2012 - 09:27 | 2491368 Currency is Debt
Currency is Debt's picture

This is good and a reaction of natural law.

If only it were true though. The squids are far more united and organized than than we the people.

Mon, 06/04/2012 - 09:28 | 2491372 khakuda
khakuda's picture

After decades of pulling demand forward via credit and having unsustainably high GDP for decades, god forbid we have a few slow years as debts are repaid.  NO, we must continue to pull demand forward until we have pulled every last dollar forward.  For we are Goldman, Sachs.

Mon, 06/04/2012 - 09:30 | 2491381 Platinum_Investor
Platinum_Investor's picture

Doesn't this mean QE3 won't happen?

Goldman says the opposite of what it's actually doing to lure in the sheep to buy it's stock or sell their stock.

They have called for QE3 the last two meetings.  I wish I didn't read this. 

Mon, 06/04/2012 - 09:37 | 2491404 Gabriel420jr.
Gabriel420jr.'s picture

the reason the fed hasn't officially announced another round of "quantitative easing" already is because they haven't come up with another fancy name for counterfeiting. It's so sad when I try and have a conversation with my friends about it and on the off chance they are willing to listen they complain that my word choice, counterfeiting, is too harsh. I'ts a shame, one works in banking for wells fargo and the other is a campaign financier for a congressman, these guys are supposed to be smart and yet they still can't call a spade a spade.

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Mon, 06/04/2012 - 09:44 | 2491443 Platinum_Investor
Platinum_Investor's picture

Most people in the world are to busy trying to survive and wait for the next pay check to live.  They don't want to hear any negativity in the world.  They look at you as if you are some crazy person if you try to educate them.  They would rather think everything is rosey and the government will take care of them and they just need to focus on making more money and getting more in debt. 

Mon, 06/04/2012 - 09:38 | 2491414 Gabriel420jr.
Gabriel420jr.'s picture

p.s. why does my comment automatically add that second part?

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Mon, 06/04/2012 - 09:42 | 2491431 GetZeeGold
GetZeeGold's picture



Heh heh....because you're doing it wrong.


Mon, 06/04/2012 - 10:29 | 2491765 eclectic syncretist
eclectic syncretist's picture

Call it what it really would be: Operation twist the taxpayer arm to finance debt forgiveness for the big banks

Mon, 06/04/2012 - 12:10 | 2492238 snowlywhite
snowlywhite's picture

everyone expects qe; so... where's the risk?

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