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Did Bernanke Pre-announce QE3 And More "Hope" Last Friday As Stocks Believe? Here Is Rosenberg's Take

Tyler Durden's picture




 

With today's market session merely a continuation of what happened on Friday, here is David Rosenberg's explanation of the market move seen following the initial dip on Friday, followed by the latest surge in stocks. Rosie's summary on what has been driving stocks higher over the past 48 trading hours? Simple - " the markets were responding to something and they were. It's called hope, and Ben gave them some." If indeed stocks are correct about QE3, look for Brent, WTI, Gold, and everything else to resume the upward climb, completely ignoring anything and everything that the CME decides to do with "speculative" margins levels.

From David Rosenberg:

Friday's Action in Context

What a session, or more like 'what a week!', as the Dow Jones Industrial turns in its best performance since early July via a 4.3% spike.

It was almost like a replay of the FOMC press statement about a month ago (August 9). The markets didn't know what to do with it, selling off and then rallying, and then closing near the session highs. The Dow fell big in the session (down over 200 points, but by the end of the day, it had closed considerably higher (up by 135 points last Friday and was up over 400 points back in August).

There was a critical difference between Ben Bernanke's speech this past Friday and the one he delivered back on August 27, 2010, notwithstanding the similar equity market response (the S&P 500 with a 1.5% gain; the Nasdaq closed 2.5% higher). A year ago, Bernanke practically all but pledged another round of quantitative easing to combat deflationary pressure.

This time around, there was more discussion about fiscal policy than there was about monetary policy and there was no discussion about deflation. He largely reiterated what he said in July at the semi-annual congressional testimony about the "range of too/s" that could be deployed (i.e. extending the term of its assets and charging the banks interest on their excess reserves or even additional balance sheet expansion). But he spent most of the time putting the burden on policymakers down the beltway to act more forcefully ("most of the economic policies that support robust economic growth in the long run are outside the province of the central bank").

Still, the markets were responding to something and they were. It's called hope, and Ben gave them some.

First, the September FOMC meeting is now going to be two days, not one. This provides hope that the Fed will be spending time coming up with another investor-friendly stimulus package (to allow for a "fuller discussion").

Second, Bernanke sounded optimistic over the economic outlook (How can he not sound positive based on the position he holds?). Even so, his forecasting record in the past five years has been circumspect, at best.

Third, by putting the onus on fiscal policy, he is helping President Obama out in his quest for another round of stimulus, to be announced after Labour Day. This will likely include a range of goodies from mortgage market measures, to an extension and expansion of payroll tax relief and more money thrown at infrastructure — see Obama Pressed to Come Out Fighting Over Jobs on page 3 of the weekend FT.

So there is still hope for QE3, hope that Bernanke is right and a recession is averted and the hope that more fiscal stimulus is coming our way. (A tad ironic since in the GDP accounts we see that government spending contracted in volume terms for the third quarter in a row in Q2.)

But there are some problems. First, QE2 and last year's fiscal follies gave us one good quarter of GDP growth and that was it. Why will more short-term gimmicks be any more effective?

Second, the rally last Friday occurred with lighter volume on the NYSE. So call it a low-conviction rally, even if the August 8th lows have held thus far. The brutal down days see the market close at or near the lows and the up days see the market finish at or near the highs. The volatility is intense and still characteristic of a bear phase

Third, unlike August 27, 2010 when the QE2 hopes sparked a move out of bonds and into stocks — the 10-year Treasury yield shot up 16bps that day — there was no such shift this time around. On Friday, the 10-year note rallied 4bps to 2.19% — not providing the validation for the rally we saw in equities.

Fourth, this rally in the equity market in the past week has been noteworthy for its lack of leadership — the leader board is filled with thinly traded stocks and that is never a signpost of a healthy uptrend. And, as the Investor's Business Daily aptly points out, the areas doing the best are the gold miners, discount stores, tobacco and utilities. So this market bounce definitely has a 'defensive quality' feel to it.

Fifth, the market has yet to hit capitulation-like sentiment levels and the reality is that when you see articles like this surface on page B7 of the weekend WSJ — Those Safe Havens You've Been Flocking To Aren't So Safe — then you can rest assured that the bear market in risk assets has hardly run its course completely. There were enough bearish articles on gold in Barron's and the weekend WSJ (like Bubbly Gold might Take a Bath) that you know that there is little chance the yellow metal is in any danger of entering into a bear market any time soon.

Sixth, as anyone who has covered the asset classes over time would know, bonds lead the economy and the equity markets. A sub-1% yield on the 5-year note is ominous in terms of what Treasuries are signaling about the economic outlook..

Credit is already bracing for a recession, or some facsimile thereof, with high- yield debt turning in its bleakest performance since November 2008; and Markit's Crossover Index of European high-yield bond default swaps have gapped up to 724bps, a level not seen since the global economy was struggling to emerge from the Great Recession in July 2009 (see Rally in Equities Defies Credit Gloom on page 12 of the weekend FT).

 

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Mon, 08/29/2011 - 14:26 | 1612383 papaswamp
papaswamp's picture

Hopium Bitchez

Mon, 08/29/2011 - 16:45 | 1612875 bigdumbnugly
bigdumbnugly's picture

bernanke's speech only kicked the can about kicking the can.

Mon, 08/29/2011 - 14:28 | 1612391 PulauHantu29
PulauHantu29's picture

Lagarde Snubbed in Push to Raise Bank Capital

 

http://www.bloomberg.com/news/2011-08-29/lagarde-s-call-to-raise-europea...

Mon, 08/29/2011 - 14:28 | 1612392 erik
erik's picture

"Greece's Venizelos says recession is affecting to a degree fiscal goals"

I'm guessing that he is the master of understatement.  The next set of Greece austerity data will be uninspiring no doubt.  That should help Finland stand firm on their collateral demand.

 

Mon, 08/29/2011 - 14:30 | 1612400 kito
kito's picture

no qe3 coming. remember snake oil salesmen never give you the cure, only the hope of one.  

Mon, 08/29/2011 - 15:15 | 1612582 nope-1004
nope-1004's picture

+1

Mon, 08/29/2011 - 18:11 | 1613245 AlmostEven
AlmostEven's picture

But snake-oil salesmen always give you the snake oil (in this case, more printing). The cure (economic recovery) is the item that won't be delivered.

Mon, 08/29/2011 - 14:32 | 1612407 TradingJoe
TradingJoe's picture

Algo ramp! Then Algo Dump!

Mon, 08/29/2011 - 14:33 | 1612409 bogey4
bogey4's picture

Somebody forgot to tell gold...

Mon, 08/29/2011 - 14:33 | 1612410 baby_BLYTHE
baby_BLYTHE's picture

He is going to print again. Not too hard to bet against. Remember, he believes he can get almost the same effect just by hinting/threating it.

But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.

  
He may be a political stoge, but always a true academic at heart 

Mon, 08/29/2011 - 14:38 | 1612425 SheepDog-One
SheepDog-One's picture

Not with markets within 10% of all time highs and the dollar around low 70's, not a chance in hell.

Of sure there will be ZIRP and swaps and stock and bond manipulation and free money under the table to banks, but no QE3 announcement that will mean anything at all.

Mon, 08/29/2011 - 16:26 | 1612814 DavidC
DavidC's picture

SheepDog-One,
Agree 100%. there is NO way Bernanke will overtly QE3 unless he HAS to. If he can get a 700 point Dow turnaround and 170 point turnaround on S&P just be hinting, why on Earth would he actually DO it unless there's no alternative?

DavidC

Mon, 08/29/2011 - 14:34 | 1612412 SheepDog-One
SheepDog-One's picture

No Bernank did not announce QE3, he said theres an FOMC meeting in Sept which will be not 1, but 2 days, and by the looks of things by then DOW will = 15,000 so QE3 is DOA big time.

Mon, 08/29/2011 - 14:42 | 1612446 espirit
espirit's picture

Agree SD-1.  Market rally on dismal news and low volume, so QE unnecessary.  No brainer.

Mon, 08/29/2011 - 14:47 | 1612468 SheepDog-One
SheepDog-One's picture

Yep, wheres ANY need for QE3 at all? If the DOW can spike 250 on this mornings dismal news, then no emergency stock pumping money needed from the FED.

The Bernank is now in spin cycle, his ONLY advantageous position is right here in 'QE3 Limbo Land', kicking it down the road a month here and there and let machines melt it all up based upon nothing.

Mon, 08/29/2011 - 15:00 | 1612507 Spastica Rex
Spastica Rex's picture

Bernanke is a salesman. He sells confidence.

"If man had faith even as small as a mustard seed..." and whatnot. Bernanke is moving mountains with his mind.

Mon, 08/29/2011 - 15:03 | 1612523 Cruel Aid
Cruel Aid's picture

Even computers are going to lock in gains at some point.

Jobs program from the honcho, Balance sheet shuffling from the wizard... are computers really that dumb.

 

 

Mon, 08/29/2011 - 15:09 | 1612552 hedgeless_horseman
hedgeless_horseman's picture

Remember that QE is to support the treasury market, not the equity markets, the support of which is only a side effect.

 

Mon, 08/29/2011 - 19:22 | 1613384 sun tzu
sun tzu's picture

When the Fed dumps $1 trillion into treasuries, there is an extra $1 trillion from the private sector to dump into stocks and commodities. 

Mon, 08/29/2011 - 15:15 | 1612581 Bring the Gold
Bring the Gold's picture

Only as stupid as the quants who program them...draw your own conclusions.

Really though, smart dumb, what does it matter when they are perma fleecing the churn? Profits trump brains.

Mon, 08/29/2011 - 15:13 | 1612567 Smiddywesson
Smiddywesson's picture

I wish you were wrong SD1, but it's all about kicking the can, and if Uncle Ben can kick the can without using the last bullet in his gun, he isn't going to fire it off.

 

Mon, 08/29/2011 - 14:38 | 1612426 Sequitur
Sequitur's picture

Take away too big to fail and the Fed "backstop" of worthless U.S. dollars, and watch market value evaporate by 50%, minimum.

Entire market is a charade, and the foundation is garbage U.S. dollars, the ultimate counterparty risk, backed by nothing except $16 trillion in on-sheet liabilities, tens of trillions more in intergovernmental unfunded liabilities, and a whopping $100 trillion in total on- and off-balance sheet liabilities that can never be paid for. This is not an exaggeration.

Throw in private party derivatives, none of which is publicly disclosed, and seriously, the number is too big to fathom.

Efficient market: utter bullshit.

Totally rigged market with massive insider trading, plus private and governmental interference to prop up bankers: truth.

Mon, 08/29/2011 - 15:01 | 1612516 scatterbrains
scatterbrains's picture

blog ?  If so I need to add ya to my list.

Mon, 08/29/2011 - 15:16 | 1612586 Bring the Gold
Bring the Gold's picture

Yeah Sequitor is good stuff.

Mon, 08/29/2011 - 15:17 | 1612590 Smiddywesson
Smiddywesson's picture

Efficient market: utter bullshit.

Totally rigged market with massive insider trading, plus private and governmental interference to prop up bankers: truth.

Yes, but hasn't that always been the truth?  It's too hard to make a buck trading an efficient market, so conspiracies form in every market, at all time frames, to earn a quick buck.  That is why you will never see an efficient market.  The game is to spot the scam and trade with the winners.

Mon, 08/29/2011 - 15:28 | 1612631 11b40
11b40's picture

I agree on just about everything you said except the part about US$ backed by nothing except debt.

It may be financed by debt, but the US war machine is unlike anything ever in the hitory of mankind.  The ultimate backstop, and the rest of the world knows it, too.  Wanna' fight about it?

Mon, 08/29/2011 - 16:52 | 1612896 Ned Zeppelin
Ned Zeppelin's picture

It's all about guns and gasoline.

Mon, 08/29/2011 - 15:34 | 1612646 IBelieveInMagic
IBelieveInMagic's picture

There is also the big military that stands ever ready. That provides cover for most of the financial wizardry.

Mon, 08/29/2011 - 16:41 | 1612861 andybev01
andybev01's picture

If you don't buy this market, we'll shoot this dog.

http://davemark.com/images/lampoon.jpg

.

Mon, 08/29/2011 - 16:21 | 1612796 iDealMeat
iDealMeat's picture

Both the Boomers and the Unemployed are sucking full force from the Gubberment teat, at an increasing clip. Obama desperately needs those demographics for a win. So you can bet they will be given a 20% dose and 80% hopium until the day after 2012 elections.

I bet your TBTF = "too big to fathom" is pushing a Quad..

Mon, 08/29/2011 - 19:35 | 1613408 sun tzu
sun tzu's picture

Not the unemployed, but the welfare class. Most boomers are still working and will continue to work for another decade or more

Mon, 08/29/2011 - 18:08 | 1613240 Tsunami Effect
Tsunami Effect's picture

Sequitur great post

Don't you get the feeling that Bernanke knows there is still a massive derivatives meltdown out there at S&P <1000? 

I mean, take a look at ISDA numbers here: http://www.isda.org/statistics/pdf/ISDA-Market-Survey-historical-data.pdf 

Value of swaps/deriv from peak to trough in 08-09 was a net loss of 60 Trillion!!!

From the trough to now, the notional has regained "only" $30 trillion of that.

So, somewhere, somehow, someone has to eventually mark down that $30 trillion loss, no?

That is unless the Fed can drive the markets past '07 high by punishing savers, trading ES (PPT) AND killing the dollar.

Markets always find a way to eliminate leverage at the most inopportune time and in the most violent ways.  This is a disaster built by the Fed and just waiting for a reason to happen.

 

 

Mon, 08/29/2011 - 19:36 | 1613413 sun tzu
sun tzu's picture

Not as long as FASB allows mark to imagination

Mon, 08/29/2011 - 14:39 | 1612429 Mountainview
Mountainview's picture

Loose, loose situation for the US...neither monetary nor fiscal stimulus work.... Tipp: Work the Current account balance...

Mon, 08/29/2011 - 14:41 | 1612435 LawsofPhysics
LawsofPhysics's picture

The exponential destruction of fiat requires the exponential creation of fiat.  Equity algos are simply going along for the ride.  Relax people, we will all be equitiy and fiat gazillionaires soon.

Mon, 08/29/2011 - 14:51 | 1612480 adr
adr's picture

You are actually right. The market has just become a hedge against inflation. You put your money in and it can go up exponentially, the problem is that is due to the destruction of the currency and everything costs more than the gain you got from the paper stock.

Just think what corporate profits would look like if the dollar loses half its current value again. Stocks may triple but what used to cost $10 now cost $100.

Any way you look at it we are heading for hyperinflation unless Bernanke and Obama are stopped. Deflation would actually cause sales to go up. Labor is a very small portion of the cost of items sold today. A mall store freaks out if labor as a percentage of sales climbs above 8%. Labor as a percentage of sales at a place like KFC is less than 5%.

The problem is that deflation in price will cause earnings to go down even if the business is still massively profitable and that is terrible for the stock price.

Mon, 08/29/2011 - 15:18 | 1612595 Bring the Gold
Bring the Gold's picture

You can put any Republican tool of the bankers like Bachman, Perry etc. in the Whitehouse and you will see more of the same. We've been marching to the exact same tune since Reagan. Supply side...espcially the supply of money. I have seen nary a difference in policy for 30 years when it comes to the financial sector and the banking policy. More clever ways of hiding the rot perhaps, more ingenious fleecing methods, keeping gold down ala Summers, but nothing like a whisper of real reform to stabilize the REAL economy. Nope, just more fuel for the FIRE.

Mon, 08/29/2011 - 15:19 | 1612600 Bring the Gold
Bring the Gold's picture

Ron Paul of course would be an exception unless he is some kind of triple-think DEEP mole which I highly doubt.

Mon, 08/29/2011 - 15:35 | 1612651 IBelieveInMagic
IBelieveInMagic's picture

Hence he will not be allowed in.

Mon, 08/29/2011 - 17:26 | 1613054 Lucius Corneliu...
Lucius Cornelius Sulla's picture

Exactly.  US elections are a total farce.  Presidents are not elected, they are selected.  Romney has already been selected.  The status quo will have it no other way.  IMO, the only hope (if there is any at all) is for a third party to form to challenge the Demopulican Establishment.

Mon, 08/29/2011 - 15:22 | 1612612 nope-1004
nope-1004's picture

The problem is that deflation in price will cause earnings to go down even if the business is still massively profitable and that is terrible for the stock price.

If you assume no debt and a clean balance sheet, then yes.  But in todays world of horrific debts held by the big banks, deflation will kill them and their valuations.  People will start to walk from obligations and leave the banks holding more junk.

Deflationary forces are huge, but the big banks can't have deflation persist.  It gives too much power back to the consumer and slowly bleeds the debtor.

 

Mon, 08/29/2011 - 17:28 | 1613071 Lucius Corneliu...
Lucius Cornelius Sulla's picture

but the big banks can't have deflation persist

As if they ever had a choice in the matter.  The 40+ year debt orgy has guaranteed a garantuan deflation of epic proportions.

Mon, 08/29/2011 - 14:43 | 1612448 zeroman
zeroman's picture

ALL OF YOU ARE MISSING THE BOAT. IF THE US ECONOMY PICKS UP FROM HERE, NO ONE GIVES A SHIT ABOUT EUOROPE EXCEPT FOR THE MULTI NATIONALS. SINCE MOST OF OUR COUNTRY'S ECONOMY IS SMALL BUSINESS TO MEDIUM BUSINESS (95%), ALL THAT MATTERS IS THAT THESE BUSINESSES MAINTAIN EITHER (SLIGHTLY LESS EXPANSIVE OR SLIGHTLY MORE EXPANSIVE) AND THIS ECONOMY WILL CONTINUE TO MUDDLE ALONG. IT WILL NOT BE ANOTHER BIG RECESSION!!!

Mon, 08/29/2011 - 14:49 | 1612476 SheepDog-One
SheepDog-One's picture

You missed the boat and have the life ring around your neck cutting off oxygen to the brain. 

BTW, disengage caps lock you look like a crazy person.

I love putting in a Fight CLub reference when I can.

Mon, 08/29/2011 - 14:52 | 1612486 reading
reading's picture

Lose the caps.

 

Mon, 08/29/2011 - 14:55 | 1612494 papaswamp
papaswamp's picture

Hey Captain CAPS....might want to read the latest NFIB survey...you know of small businesses.

Mon, 08/29/2011 - 15:23 | 1612609 Smiddywesson
Smiddywesson's picture

Banks are insolvent

The USG is insolvent

State and local governments are insolvent

Housing is utterly hopeless

There are no jobs for millions of unemployed people

The biggest employer is the government

Tax revenues are in free fall

Hey, don't worry about it, small and medium businesses will pull us out of the hole, with no credit and no customers!  Just type it in caps a few thousand times and it becomes real!

Where did you hear that, CNBC?

Mon, 08/29/2011 - 16:44 | 1612873 andybev01
andybev01's picture

Shhh *use your indoor voice*

Mon, 08/29/2011 - 14:45 | 1612459 chancee
chancee's picture

It's like magic!  The overnight futures opened the market higher right above the much ballyhooed 'pennant' plastered all over the blogosphere.  Who would have thought?  Gosh, that's never happened before.

Mon, 08/29/2011 - 15:10 | 1612558 scatterbrains
scatterbrains's picture

now do a line chart closing basis and change your pennant to a flag pattern..  then compare it's flag shape to crbq, jjc, xom  etc and add TD's compression trade.

Mon, 08/29/2011 - 14:48 | 1612467 Fred Hayek
Fred Hayek's picture

Here's a typical Wall Street douche bag assuming that the ice cream truck will always stop in front of his house and hand out free popsicles (courtesy of Bloomberg news).  I'd like this particular guy to lose everything in a crash.:

It’s very clear that he’s not going to preside over a severe economic downturn if he can help it,” Mark Mobius, who oversees about $50 billion as executive chairman at Templeton Asset Management, said in an interview. “We’re not going to see a recession. He’s still got policy tools available.

Mon, 08/29/2011 - 14:51 | 1612483 SheepDog-One
SheepDog-One's picture

'Hes got policy tools available'....no, what Bernank has is a sack of hammers....thats it.

Mon, 08/29/2011 - 19:21 | 1613373 Lucius Corneliu...
Lucius Cornelius Sulla's picture

If debt monetizing is what you call a hammer I agree that it is all that he really has left.  But I think that he is cornered politically on that one.  Too much internal and external dissent to make if feasible.  So the question is, can he or will he use the hammer?  My personal take on it is that he will, but only after a massive deflationary collapse and even then only T-bills to prop up the USG.  GSE, MBS and junk bonds are going to be toast (which will contribute to the debt deflation).  As far as the ZIRP policy goes, it will do nothing in a deflationary environment.  People do not want to borrow when they are already over-leveraged and asset prices are falling ... and nobody can make them borrow!  Negative rates won't work because it will cause runs on banks as people hoard cash.  Furthermore, banks don't want to lend in this environment except to the most pristine clients and even then with significant down payments.  This is a debt trap.  Get used to it!

Mon, 08/29/2011 - 14:54 | 1612490 reading
reading's picture
Makes you wonder doesn't it? If all it took was policy tools, wouldn't they have averted the last recession/fiscal crisis?  Let's remember the S&P hit the high one month before the recession was finally admitted to.
Mon, 08/29/2011 - 16:46 | 1612877 rosiescenario
rosiescenario's picture

" “We’re not going to see a recession...."

 

Well, he is right....no one seems to see the one we are in right now, other than a few nut cases posting on ZH...

Don't think we ever exited the last one....things jsut got worse, provided you tune out the governments numbers.

Mon, 08/29/2011 - 14:48 | 1612469 mayhem_korner
mayhem_korner's picture

Why actually do anything if the market is going to continually price in the hope of doing it?  It's a nice tactic for stringing out QE3 and having it not look like the desperate, knee-jerk action that it is...er...will be.

Mon, 08/29/2011 - 15:27 | 1612625 Smiddywesson
Smiddywesson's picture

They will do something allright.  The next FOMC will be two day, the one after will be four, and they'll serve cake and ice cream too.

Problem solved

Mon, 08/29/2011 - 14:49 | 1612472 tempo
tempo's picture

IMO, the market has a free pass to move higher until Germany's high court decision on Sept 7th on the continuing funding of ECB bailouts.  With Monday as a Holiday, expect a big rally this week and a lot of risk going into a long weekend.

Mon, 08/29/2011 - 14:54 | 1612491 NotApplicable
NotApplicable's picture

Did Bernanke Pre-announce QE3 And More "Hope" Last Friday As Stocks Believe?

Yes, and no. Luckily for The Bernank, words are even more flexible than the currency he "manages."

Mon, 08/29/2011 - 14:56 | 1612497 SheepDog-One
SheepDog-One's picture

The ONLY thing out there that thinks QE3 is coming is hockey helmeted STOCKS!

Mon, 08/29/2011 - 14:57 | 1612499 verbal_kint
verbal_kint's picture

Let it all burn!

Housing will not be solved by TPTB! Band-aiding ain't gonna do it! Mortgage forgiveness sounds like a scam waiting to be looted by those in charge of it (Banksters) Don't they have enough already?

Prices need to drop by 25% +

Interest rates need to increase

REQUIRE 20%+ DOWN PAYMENT

If you can't get a loan for a home, that means you can't afford it! RENT

Mon, 08/29/2011 - 15:01 | 1612517 SheepDog-One
SheepDog-One's picture

Extrapolating out todays +230 DOW climb means it will easily surpass its all time high a few trading days before Sept FOMC meeting. Party on!

Mon, 08/29/2011 - 15:01 | 1612518 chancee
chancee's picture

People, people... don't you understand, this has nothing to do with Bernanke, Rosenberg, or QE3.  THE 'Mystery Buyer' pumped the futures overnight and OPENED THE MARKET ABOVE THE SO-CALLED BEARISH TRIANGLE/PENNANT.  That's all it takes to trigger a thousand algos that are set to buy above certain levels.  And then that triggers another few million stops that human beings have set.  That's how this market has moved higher for almost two years.

Mon, 08/29/2011 - 15:04 | 1612522 SheepDog-One
SheepDog-One's picture

Has nothing to do with Bernank? Who do you think 'the mystery buyer' is?

Mon, 08/29/2011 - 15:22 | 1612610 CrashisOptimistic
CrashisOptimistic's picture

I think you are about half right, chancee.

I also watched over 1% of upward climb in the overnight S&P futures (long before the economic reports of today released) and I also watched a tepid Euro climb.

The bounce off the 2% decline post Bernake looked like it took place in less than 1 minute.  Humans didn't do that.  That was a 2% semi gradual fall on news of no QE3, and an instantaneous recover of ALL of the 2% in about 20 seconds.  

No one made any decisions about anything fundamental at all in those 20 seconds.  What they did was say . . . if we let this -2% remain intact, we lose our jobs.  So buttons were pressed and 2% SPY lift occurred in a few seconds.

The economic whichness of what didn't matter.  They dare not show -10% for the month of August.  Simple as that.  If they do, the 401K money leaves 1 September and the next thing to leave is them from their cubicle.

This is all profoundly absurd.  Only oil can't be printed, and it will eventually decide everything.

Mon, 08/29/2011 - 15:03 | 1612524 slewie the pi-rat
slewie the pi-rat's picture

 

 

PPT = make sure that people's retirement accounts don't go "underwater" like their "can't lose investments" is real estate?

we'd hate to put a dent in the guy's "popularity" ya know!  that bull market of endless bullshit still seems intact. too

Mon, 08/29/2011 - 15:05 | 1612531 MFL8240
MFL8240's picture

Come on Rosie, all is well in America our spending is up and savings down. Europe ok today so why not a 300 point rally?

Mon, 08/29/2011 - 15:05 | 1612532 aerial view
aerial view's picture

massive selling requires many stooges to sell to: i.e. keep everyone in the market as long as possible before pulling the plug.

Mon, 08/29/2011 - 15:06 | 1612535 digalert
digalert's picture

Can you smell it?

There's QE in the air...

Mon, 08/29/2011 - 15:07 | 1612541 SheepDog-One
SheepDog-One's picture

Gold says 'no'.

Mon, 08/29/2011 - 15:54 | 1612713 IBelieveInMagic
IBelieveInMagic's picture

Gold has lost some shine for the ME folks -- they are probably getting weary of all the depleted uranium being dropped over there. They will learn to love our fiat -- look at at Qataris!

Mon, 08/29/2011 - 16:55 | 1612910 Ned Zeppelin
Ned Zeppelin's picture

And I thought it was the horrible aftermath of last night's double beef burrito combo platter, bearing witness to the veracity of that hoary adage, "silent, but deadly."

Mon, 08/29/2011 - 15:06 | 1612537 SheepDog-One
SheepDog-One's picture

Markets up 2% across the board today, euphoria flows like manna across the land for all...what need for QE?

Mon, 08/29/2011 - 15:08 | 1612542 chancee
chancee's picture

Wait, Wait, we've got it all wrong... I just saw the headline from USAToday explaining why stocks are up:

Stocks rise on relief that Irene wasn't worse in many places

 

I swear this is not a joke.  Go to USAtoday.com and see for yourself.

Mon, 08/29/2011 - 15:08 | 1612548 wang (not verified)
wang's picture

I have been a harsh critic of Rosie

but I repented, but not quite enough to pony up the thousand bucks for his daily letter

 

so thanks to TD for providing these scraps off of Gluskin's table

Mon, 08/29/2011 - 15:15 | 1612576 wang (not verified)
wang's picture

Lisa Murphy  the anchorette on Bloomberg just now

So Michael, Irene could help the ecomony, right?

Mike says no

So what does Lisa Murphy  the anchorette come back with

But won't all those repairs give a bump to the GDP?

again Mike says No  Lisa

But Michael the Whole Foods in my neighborhood was cleaned out, that would help a little wouldn't it?

 

(I think she's auditioning for CNBC)

 

 

Mon, 08/29/2011 - 17:18 | 1613016 Scalaris
Scalaris's picture

I think she read Bastiat without translation. Or high on hopium perhaps?

Mon, 08/29/2011 - 15:15 | 1612578 Gringo Viejo
Gringo Viejo's picture

QE to infinity...no choice short of status quo relenquishing power. As  a consequence.....hyperinflation....inevitable. It's a done deal.

Mon, 08/29/2011 - 15:15 | 1612580 RobotTrader
RobotTrader's picture

Buying pressure is relentless as millions of late shorts have to cover

Mon, 08/29/2011 - 16:19 | 1612791 walküre
walküre's picture

Unfortunately you are right.

Mon, 08/29/2011 - 15:21 | 1612603 Skid Marks
Skid Marks's picture

Third, by putting the onus on fiscal policy, he is helping President Obama out in his quest for another round of stimulus, to be announced after Labour Day. This will likely include a range of goodies from mortgage market measures, to an extension and expansion of payroll tax relief and more money thrown at infrastructure

 

The hurricane will do more for "stimulus" than the Fed and it's not Obama's fault. More emergency spending required to rescue the needy, create more debt, print more money.  It's campaign heaven and better than another war. Resistance is futile.

Mon, 08/29/2011 - 15:30 | 1612636 Racer
Racer's picture

This 'market' has been high on Hopium for years.

The Fed is the biggest drug dealer and responsible for the most number of deaths ever in the history of the world

Mon, 08/29/2011 - 15:44 | 1612681 somethingelse
somethingelse's picture

seems like the confidence instilled by the market being reassured by Bernanke that he's there on the sidelines with his toolbox ready to step in when needed actually raises the markets more than when and if he actually implements any form of QE3 will. 

the confidence is all he really is delivering...since actual QE impact decreases with each round. 

Mon, 08/29/2011 - 15:49 | 1612693 sbenard
sbenard's picture

Interesting insights!

In addition to the coming resurgence in stocks, crude, gold, and "everything else", I would also like to include in that "everything else" category the food commodities. Corn and soybeans are up about 25% since July 1, and corn is up 125% since June last year!We've barely begun to sse that cost input increase in CPI yet.

More Fed quantitative ANYTHING -- no matter what new-fanlged jargon and semantics games they play with it --  is likely to send the prices of commodity staples through the roof and crush even the most optimistic Pollyanna Party celebration.

Mon, 08/29/2011 - 15:58 | 1612725 walküre
walküre's picture

Hurricanes... bullish for stocks. And the season has just begun!

Who'd think that the weather channel is giving better trading advice than all of the business networks together?

Mon, 08/29/2011 - 16:55 | 1612908 besnook
besnook's picture

the problem is qe n=1 has not had the desired effect upon real estate prices. everything else has inflated on schedule, however. so what can be done to directly target real estate prices? two things. one is simply jobs. a massive infrastructure stimulus would create jobs rather instantly and will keep everyone working through the election cycle(obambam would be a hero). more jobs translates into more demand for owning a home. pretty simple. the othe problem standing in the way of real estate appreciation are underwater mortgages.  these under water mortgages are hindering mobility. people cannot move to where the jobs are or reset their finances unless they can sell their houses. one simple way to cure this problem is to allow the sellers to sell their homes without recourse while allowing the banks to zero out their loss on a short sale so their books don't record a loss(its just bytes anyway)with the fed backstopping any reserve issues with zero interest loans..

Mon, 08/29/2011 - 16:56 | 1612917 Ned Zeppelin
Ned Zeppelin's picture

You realize of course that we are completely fucked.

Mon, 08/29/2011 - 18:38 | 1613299 AlmostEven
AlmostEven's picture

My market analysis for Monday, August 29:

Jackson's Cornhole produced some sort of short-term methane/peyote contact high. Horrible housing market (sales fell more than they were EXPECTED TO FALL) joined the list of economic structures quite visibly being reduced to rubble, from the crumbling Eurozone, the BofA near-collapse (or pending collapse), muni madness, and other colossal calamities. But the market rose...

Cue the cartoon music and the clueless characters who've just run off the cliff...temporarily suspended in midair...feet turning rapidly but forward momentum taking them further off the cliff...plunge soon to follow. QE3, like springs tied to their asses, will produce the cartoon bounce off the bottom just like QE1 and QE2...with each bounce less and less pronounced.

I prefer what I'm smoking.

Mon, 08/29/2011 - 19:06 | 1613328 Loose Caboose
Loose Caboose's picture

Something wicked this way comes. 

Today had an eerie, calm before storm feel to it.  There is not enough good news to offset all the bad - no one has taken out the garbage - there it sits in the corner still stinking up the place.

Black swan wrapped in a false flag being prepared is my guess. 

Disobey.

Mon, 08/29/2011 - 19:04 | 1613350 rfbear
rfbear's picture

Is there anything that isn't bullish for stocks?

Mon, 08/29/2011 - 19:50 | 1613441 CrashisOptimistic
CrashisOptimistic's picture

That would be $140 Brent.  

Soon.

Mon, 08/29/2011 - 19:58 | 1613458 DosZap
DosZap's picture

If So,

Parabola,Parbola, parabola, parabola!!!!!!!!!!!!!!!!!!..................

Got PM's?????

Tue, 08/30/2011 - 00:19 | 1613934 Don Keot
Don Keot's picture

I still believe there is some stealth manipulation of the markets keeping the US propped up while the shit hits the fan globally.  What did the market do when Katrina hit?  A lot of things going on simultanously.

Tue, 08/30/2011 - 00:20 | 1613937 FearedDevil
FearedDevil's picture

The next stimulus is not necessarily US based but the US will benefit from it.

Mon, 09/05/2011 - 09:55 | 1634141 shacai
shacai's picture

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