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ETA To NEW QE: Don't Hold Your Breath Just Yet

Tyler Durden's picture


Whether one believes that Bernanke's mandate mission in life is to 'save the banking system', 'reflate asset prices', 'devalue the USD' - all of which seem to err on the side of inflation (and ultimately hyper-inflation once the trust is gone); it seems more critical to focus on the other side of the coin - deflation. Bernanke's true raison d'etre is simple: avoid debt deflation and implicitly everything he has said and studied points to the avoidance of any deflation. For this reason, BofA notes that today's chart of the day is the Break-even inflation rate in the US. This has been the most consistent - non-numeraire-based - leading indicator of Fed QE efforts. We note that the initial QE2 decision took a little longer to enact but was signaled considerably earlier (Jackson Hole) as the break-evens dropped below its NEW QE threshold. But with the levels currently 25-30bps off their threshold levels, we suggest those holding their breaths for the next Fed-induced liquigasm in stocks, should practice Pranayama.


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Tue, 05/22/2012 - 09:07 | 2450453 Harlequin001
Harlequin001's picture

It is inevitable...

The mathematics defines it.

Luckily my  gold won't spoil or rot or default whilst I'm waiting...

Gravity is a bitch.

Tue, 05/22/2012 - 11:23 | 2450666 scatterbrains
scatterbrains's picture

I like to visualize the printing situation like a giant leaking fish bowl with the masses of fiat using guppies cluelessly swimming about unaware of the falling water line. World central bankers are trying to pour just enough water in to keep the fishies alive. Gold is behaving like a bobber floating on the water's surface and providing a measure of how fast or slow the central bankers are pouring water in (printing). If they get lucky and get it just right, gold and silver will be flat to slightly down.(I don't think they will) Too little and down we go in a deflationary collapse.  If they misjudge and add too much, the water and guppies will spill over the edge and out onto the floor and die. Gold is your life preserver in case the CB's fuck it all up.  They are guilty of mass murder if they fail and the system collapses for having denied how important gold is to your survival.

Tue, 05/22/2012 - 11:10 | 2451047 Silver Bully
Silver Bully's picture

According to that chart, we ought to be expecting QE3 sometime around October. That's over 5 months out. Gravity still apparently takes a bit more time.

Tue, 05/22/2012 - 12:58 | 2451485 Harlequin001
Harlequin001's picture

I can wait...

Tue, 05/22/2012 - 09:07 | 2450464 Stoploss
Stoploss's picture

WTF, we drop 100 S&P points, and it's print or die already??

1215 still too high...

Tue, 05/22/2012 - 09:13 | 2450495 Lucius Corneliu...
Lucius Cornelius Sulla's picture

800 is too high

Tue, 05/22/2012 - 09:20 | 2450532 LawsofPhysics
LawsofPhysics's picture

300 is too fucking high.  Paper is going to zero.  If you can't touch it, you don't own it.

Tue, 05/22/2012 - 09:50 | 2450702 malikai
malikai's picture

I'm placing a firm floor on the ES at $0.01. At that price, I will buy it all.

Tue, 05/22/2012 - 09:54 | 2450716 Lord Blankcheck
Lord Blankcheck's picture

I'd rather own  private equity then public debt.Governments always default,once people start fleaing public debt is when the Dow goes to 36k.

Tue, 05/22/2012 - 10:01 | 2450744 LawsofPhysics
LawsofPhysics's picture

All paper going to zero, including private equitiy "stocks".  How do you think the revenues for these companies will look when the dollar is worthless?  You would do better to buy land for lease to future sharecroppers (something a number of corporations and banks are already doing).

Tue, 05/22/2012 - 09:13 | 2450497 SheepDog-One
SheepDog-One's picture

-100 S&P points! OMG we need fresh free monees up in here!!

These people are deludng themselves with their chomping at the bit for QE every hour, and its not going to least not until WAY lower, if at all.

Tue, 05/22/2012 - 09:28 | 2450588 nantucket
nantucket's picture

any statement that ends with "up in here" is taken more seriously than those without it.  i use it in company meetings all the time now and i get IMMEDIATE results

Tue, 05/22/2012 - 09:30 | 2450605 THX 1178
THX 1178's picture

+1 I LOL'D

Tue, 05/22/2012 - 09:40 | 2450658 kito
kito's picture

not until after elections, for the 1000th time i say.....and again, dont hold your breath for 2000 gold until qe3 is implemented..................funny how many people on here cant accept that.............

Tue, 05/22/2012 - 09:50 | 2450701 Floordawg
Floordawg's picture

It's like Homer Simpson and his microwave hotdog... "30 seconds!? But I want it now!?"

Tue, 05/22/2012 - 10:07 | 2450781 CrashisOptimistic
CrashisOptimistic's picture

It truly makes no sense to have folks continually betting on gold.

Gold is insignificant to society and life, and the point of that is that it CAN'T become significant.  If it did, threatening "the system", then governments globally in globaly coordination will simply tax transactions.

You can own it, but if you traffic in it, you'll be taxed on the transaction, perhaps 60%.  

It's pointless.  Governments have the power to do this.  You could never do private transactions because you would never know if your counterparty is law enforcement.

Tue, 05/22/2012 - 10:36 | 2450905 eaglefalcon
eaglefalcon's picture

Well, try to levy a 60% tax on gold transaction in countries where gold ownership is widespread and a primary mean of saving! (India and China for example). The people wouldn't be concerned about their gold, but the law enforcement would be mightily concerned about their own rear end. What happens if you do that in the US? Gold will simply flow out of the country to wherever it's not taxed.

Tue, 05/22/2012 - 11:23 | 2451082 theTribster
theTribster's picture

Your right they could do that but they wouldn't unless they want a revolt. Gold has an emotional connection to the world, anything done along those lines would create some serious pushback. They added a tax to Indian Gold a couple months ago and the market basically shut down completely! They eventually relented and removed the tax of course.

I don't think the gubmint will be successfull fucking with PMs like Roosevelt did, that was a one-time opportunity because the people will not be folled again! Also, some states have already made moves to allow Gold and Silver as a form of tradable currency - this sort of restricts what the Feds can do.

Leave my Gold alone, just keep printing paper money Bernanke.

Tue, 05/22/2012 - 12:54 | 2451478 Harlequin001
Harlequin001's picture

Yes you can, you can do it through a trust. There is absolutely nothing stopping me clearing your trades on your behalf anywhere including overseas.

No country can stop that.

To be blunt, your entire scenario is just not workable. There is no way any government can prevent it. If they stop you investing in gold, where are you going to invest? Corn? Wheat?

Inflation would shoot skyward like you wouldn't believe.

Tue, 05/22/2012 - 13:31 | 2451606 Overfed
Overfed's picture

That might end up being a whole pile of straws on the camel's back.

Tue, 05/22/2012 - 14:31 | 2451870 tekhneek
tekhneek's picture

You also can't buy marijuana ... because it's illegal... but people seem to... have found a way around that...


Tue, 05/22/2012 - 09:15 | 2450507 Raynja
Raynja's picture

The market is still high, but they either have to print soon or wait til after the elections.

Tue, 05/22/2012 - 09:18 | 2450524 SheepDog-One
SheepDog-One's picture

Yea and look at them rush in to emergency re-pump markets every time, the muppets are going to be waiting a real long time before theyre showered with mythical free money for their losing stock portfolios, if ever.

Tue, 05/22/2012 - 09:07 | 2450465 itisthetimethis...
itisthetimethisistheplace's picture

Inevitable yes, delayed...probably.



Tue, 05/22/2012 - 09:08 | 2450468 monopoly
monopoly's picture

Yes, but no rush. We all know the end game. Just going to take time to get there. And when the funding crisis hits, that is when it will get interesting. Until then, same old shit. 

Tue, 05/22/2012 - 09:12 | 2450491 Floordawg
Floordawg's picture

and fire sale prices... BEFORE the fire.

Tue, 05/22/2012 - 09:08 | 2450470 Deep79
Deep79's picture

I have been saying since Jan, we aint getting QE til SP is near 1000



Tue, 05/22/2012 - 13:05 | 2451510 paulbain
paulbain's picture

Deep79 wrote:


I have been saying since Jan, we aint getting QE til SP is near 1000


I respectfully disagree. I think that the SP 500 index need only decline to 1250. If it falls below that point, then QE3 is practically guaranteed, except that QE3 probably will not be called "quantitative easing 3," but something else.

-- Paul D. Bain




Tue, 05/22/2012 - 09:11 | 2450473 q99x2
q99x2's picture

His mission is to give the banksters everyone's money and set the stage for a culling of the population. He is a ChairSatan.

Besides don't need the Bernank on this one we have the retail inverstor doubling down bargain hunting with a Martingale vengence after the collapse of FB

Tue, 05/22/2012 - 09:10 | 2450479 spastic_colon
spastic_colon's picture

more whining banks asking for QE....QE is now a politcal timebomb, bernanke gets reappointed no matter who is in office, which is why the repubs have said nothing about him or the fed if you havent noticed

Tue, 05/22/2012 - 09:14 | 2450505 Floordawg
Floordawg's picture

Romney has stated, if he's elected Bernanke's out.

Tue, 05/22/2012 - 09:16 | 2450515 Harlequin001
Harlequin001's picture

and do you think that will make any difference?

Tue, 05/22/2012 - 09:24 | 2450559 Floordawg
Floordawg's picture

None whatsoever. Other than everyone having someone else to bitch about.

Tue, 05/22/2012 - 09:34 | 2450629 BeetleBailey
BeetleBailey's picture

unless he anoints Ron Paul............armed with a flamethrower..............

Tue, 05/22/2012 - 09:35 | 2450634 Harlequin001
Harlequin001's picture

the odds against that are bigger than the national debt...

Tue, 05/22/2012 - 09:20 | 2450533 Vince Clortho
Vince Clortho's picture

He probably wants out at this point.  Being the visible hatchet man for the CB takes its toll.  Time for someone else to turn their face into a dartboard.

Tue, 05/22/2012 - 09:26 | 2450579 LongSoupLine
LongSoupLine's picture

Yep, and besides, Goldman needs a new CEO

Tue, 05/22/2012 - 09:34 | 2450631 kito
kito's picture

perhaps you should look at romneys top contributors...............


Goldman Sachs $573,080 Bank of America $398,850 JPMorgan Chase & Co $393,825 Morgan Stanley $373,850 Credit Suisse Group $317,410 Citigroup Inc $301,550
Tue, 05/22/2012 - 09:42 | 2450668 SheepDog-One
SheepDog-One's picture

Damn where did all those insolvent banking fronts get all those monees to throw around to politicians? Hmmmm.

Tue, 05/22/2012 - 10:00 | 2450740 Floordawg
Floordawg's picture

Please don't confuse my comment as any vote of confidence (in either candidate)... Just saying what was said.

Tue, 05/22/2012 - 09:11 | 2450480 Floordawg
Floordawg's picture

How low can gold, silver and oil go? Place your bets people!

Tue, 05/22/2012 - 09:26 | 2450574 HurricaneSeason
HurricaneSeason's picture

The top will be:

1-ounce of gold = 4000 shares of facebook (If facebook was still on the stock exchange at the price they probably would have set it at.)

Tue, 05/22/2012 - 09:13 | 2450493 Doubleguns
Doubleguns's picture

Up, down, up, down, up, down. Something about Debbie and Dallas.

Tue, 05/22/2012 - 09:14 | 2450501 AC_Doctor
AC_Doctor's picture

Fucker needs some fresh rope with a pretty sliding loop at the end action...

Tue, 05/22/2012 - 09:15 | 2450510 Vince Clortho
Vince Clortho's picture

Bernanke is going to be remembered as the man who brought HyperInflation to the world.

Is there a "Man of the Year" award for that?

Tue, 05/22/2012 - 18:57 | 2453152 PrinceDraxx
PrinceDraxx's picture

Cover of Time Magazine and a Nobel Prize, of course.

Tue, 05/22/2012 - 09:16 | 2450513 monopoly
monopoly's picture

My bet is the bottom is in for both gold and silver. Can retrace some, scare out the weak holders, but I think we continue to move higher with the usual fits and starts. And that is how I am playing it.

Tue, 05/22/2012 - 09:17 | 2450519 HD
HD's picture

Just a quick detour - anyone know where that wiki photo was taken? That is one hell of a beautiful location (if you ignore the half naked man).

Tue, 05/22/2012 - 09:19 | 2450527 monopoly
monopoly's picture

Cannot wait for the lawsuits on FB to start. Oh, that is going to be a fun time. What a crock of shit that stock is. I never logged on to face book.0 interst and I like my privacy.

My daughter does though, a lot. I asked her how much has she bought from the ads on FB. She advised, "Dad, you kidding, none of us buy anything, we just "chat and share pictures". 

Tue, 05/22/2012 - 09:23 | 2450551 LawsofPhysics
LawsofPhysics's picture

Precisely, zero revenues, but hey, homeland security will know exactly where she is and who she associates with.  Why does this not make us all feel warm and fuzzy?

Tue, 05/22/2012 - 09:22 | 2450544 SheepDog-One
SheepDog-One's picture

No worries! We've got the Biderman stating FB probly worth about $1 trillion! Introducing Biderman's Market Picks: Facebook Could be $1 Trillion Stock - YouTube

Tue, 05/22/2012 - 09:23 | 2450548 ArrestBobRubin
ArrestBobRubin's picture

Who needs Tantric stuff, all you gotta do is fantasize about a Janet f*ck sandwich: Napolitano and Reno. That'll cool you down pdq...

But back to our story: unplanned events not on the calendar of Mr. BS & Co could easily pull the rug out from under the preferred QE timeline


Tue, 05/22/2012 - 09:27 | 2450587 HD
HD's picture

"...fantasize about a Janet f*ck sandwich: Napolitano and Reno"

Not cool man. Not cool. You made me think it, and now I can't unthink it. Time for me to push the Q-tip all the way in.

Tue, 05/22/2012 - 09:28 | 2450597 VonManstein
VonManstein's picture

ZH is obviously the best source out there bar none.. but they should really make their mind up.. only yesterday they were suggesting its coming soon and today suggesting otherwise..

Although its essential to get contradictory info to form you own opinion ZH doesnt seem to have an opinion anymore.. and just claims whatever the most recent article supports as its opinion.

QE is coming we know.. but is it June, August, bla bla bla?? we dont really know. we can assume based on evidence.

ZH changes its mind quicker than the fucking retard market.

Tyler you the man though really appreciate your hard working crew

Tue, 05/22/2012 - 09:36 | 2450642 Cursive
Cursive's picture

@Von Manstein

It's Tylers, as in plural and I prefer heterodoxy over consensus. ZH is incorrectly described by some as "bear porn," when in fact, it's a unique source for economic and market perspectives.

Tue, 05/22/2012 - 09:43 | 2450670 VonManstein
VonManstein's picture

note i reffered to tyler and his "crew!" .. i am aware that there is more than man (or woman) running this operation.

And look i said it was good to have contradictory info so we can formulate our own opinions.. so im not really sure what your getting at.

my point is the the tylers are all to quick to claim they predicted something or as things happened as they said they would... but never acknowledge they have said lots of contradictory things will happen.. and never have i heard them suggest they got something wrong.

but hey as i said. ZH is where i get my news and base my investments partly on the things i read.

and whats wrong with bear porn? as rick rule said.. "volatility is our friend"

its pretty bearish round here to be honest but thats just reflecting the world being ina crisis. its bearish for a reason. and i agree..

long phyz

Tue, 05/22/2012 - 09:29 | 2450598 asteroids
asteroids's picture

Dear FED: There is NOTHING wrong with deflation. You fear it too much.

Tue, 05/22/2012 - 09:31 | 2450617 Cursive
Cursive's picture

We are where every rational (i.e. non-Keynesian, non-Monatarist) thought we would be: painted into clusterfuck corner. The never was an easy way out and any dumbass who advocated dropping money out of helicopters should be in an asylum by now. We can't ignore the mountains of debt. It is still there, waiting to be paid or defaulted. Either way, it ultimately leads to deflation. It's inescapable.

Tue, 05/22/2012 - 19:12 | 2453202 PrinceDraxx
PrinceDraxx's picture

D.C. is where the Bernanke stays. D.C. is an insane asylum. They merely let the inmates come and go as they wish. But hopefully quite soon it will get locked down and the crazies will never be allowed to mingle with the public again.

Tue, 05/22/2012 - 09:32 | 2450619 FieldingMellish
FieldingMellish's picture

No QE until the numbers we make up says so...

Tue, 05/22/2012 - 09:41 | 2450661 bshirley1968
bshirley1968's picture

By allowing the markets to fall further:

1.  Destroys money by causing it to disapear into thin air.

2.  Money liquidated will hurt private investors as banks will just get another handout later from uncle Ben.  But no QE has put money in mom and pops pocket.

3. Destruction of billions in market allows fed to print more, give to banks, and avoid inflation in the cpi. (theory)

4. Psychologically, it makes uncle Ben look like a hero for riding in and saving what is left of mom and pop's 401k.

Because of these points, no QE for a while yet.  Hell, Europe is up for two days now, the world must be okay, right?  The place to be today is in Italian equities.  No worries that they are at a 10 year low or that they are the 8th largest economy in the world, or that there is a run on the banks developing.  Buy some Europe/Italian stocks.  They're GGGGRRRREEEAAATTT!

Tue, 05/22/2012 - 09:42 | 2450665 Cycle
Cycle's picture

Until the Fed significantly adds to the monetary base, rather than sterilizing their liquidity additions, I do not think we will experience hyperinflation.  Meanwhile, since we are experiencing a global solvency crisis, and not a liquidity crisis, even the low long term interest rates managed by the Fed will not be helpful in stimulating economic activity because the ability to pay even a low rate of interest is severely compromised due to the large overhanging debt. Of course, if the Fed chooses to literally "print" by expanding the monetary base, US Treasury bond holders will liquidate, probably making the Fed the buyer of last resort, while the dollar will be severely compromised. in other words, the Fed now has the choice of overseeing monetary destruction by deflation by doing nothing and letting debt defaults take care of the process, or by hyperinflation, by literally printing currency. Perhaps Mr. Bernanke plans on adding a codicil to his thesis after he decides which course to take while overseeing the results.  Results which in either case will be highly unpleasant.

Tue, 05/22/2012 - 09:48 | 2450693 realtick
realtick's picture

The system is going to deflate, and IN THE LONG TERM there isn't a goddamned thing the Fed can do about it.

Tue, 05/22/2012 - 09:53 | 2450711 bshirley1968
bshirley1968's picture

That is what people don't get about QE.  There is plenty of money out there in the banking system right now.  The problem is there are no more assets to secure more debt (money printing) and the world economy can't service the current debt level.  So more printing which is just more debt is not the answer and is not needed.

Deflation is coming for now.  Just not in the area of day to day necessities. 

Tue, 05/22/2012 - 10:01 | 2450745 q99x2
q99x2's picture

That's what I've been thinking. But then when the market goes up I have my doubts. Peter Schiff was on Coast to Coast last night and after listening I felt better.

Tue, 05/22/2012 - 10:37 | 2450894 Shizzmoney
Shizzmoney's picture

I say this all happens after the elections; the Federal Reserve would like for this NOT to be a main debate issue.

I mean, summer chaos and more bank downgrades are possible.....but the Fed really wants QE to be as quiet as possible....they are already concerned about their image, look at the transparncy fail job of a PR campaign they just had.

Either way, QE will happen....the corporations...and the banks that bankroll their operations, and who handle their stock portfolios, will demand it from the Bernank.

Tue, 05/22/2012 - 10:39 | 2450925 dizzyfingers
dizzyfingers's picture

"May 22, 2012 Is America Bankrupt? If the U.S. government were a private company being audited by standard practices, it would be considered much further in the red than official national debt figures show. It would, in fact, be shut down and its key executive prosecuted for fraud. - in The Fiscal Times"

Tue, 05/22/2012 - 10:56 | 2450983 Bill Shockley
Bill Shockley's picture

Long term inflation or deflation or QE or not will become just another construct to explain the colapse all of us will be forced to live with.


Preparing for the collapse is the important thing to remember, not our gold balls or money wad.

Didn't plant a garden senior, with heirloom seeds?


Please try to think it through.


Watch the Robin babies in the nest.


You are high on on zeros and hedges.


Better get to the next screen.


Tue, 05/22/2012 - 12:18 | 2451249 Bastiat009
Bastiat009's picture

No new QE, that's great news. That means the Fed doesn't need to manipulate the economy further. Best news in a long time.

Also, is this why gold is crashing again? Stocks are doing much better, especially in Europe where the situation is great again.

Tue, 05/22/2012 - 12:35 | 2451386 jmc8888
jmc8888's picture

At some point Genocide Ben has to realize the warning shots of the currency wars have already started.  We're not the reserve currency anymore, though the dollar is temporarily still involved in much of the world's trade.   The usefulness of the dollar around the world has ended in the last three or so months...mostly the last three months. 

QE3 costs us the reserve currency in total, the inflation from that, as well as China is about to cause those Wal*Mart import prices to skyrocket. 

Ben's going to do that for that little? Well I guess that's why he's called Genocide Ben or Benocide.

Glass-Steagall (especially the worthless derivatives before they make us and the world WORTHLESS...either the world is worthless or the derivatives are made worthless.)

Tue, 05/22/2012 - 12:37 | 2451402 Clashfan
Clashfan's picture

In MLA formatting, commas go inside quotations, but never mind that: Other problems abound.

Most notable is the improper semi-colon. Don't use one of those unless you already have an independent clause, and then only use one if you're sure it belongs there.

If you have a dash, you probably want a double dash, and you probably want it on both sides. You should either have

USD," all of which


USD"--all of which


gone), it seems


gone)--it seems

and take the dash at the end and change it to a colon or comma

coin: deflation


coin, deflation.


stocks should (no comma)

simple: Avoid (need cap b/c what follows the colon is an ind cl)

consistent, non-


consistently non-

and--   deflation, and implicitly (ind, and ind)

Some editing would really help the site's credibility. Just sayin'.

Tue, 05/22/2012 - 13:13 | 2451547 paulbain
paulbain's picture


I agree with your opinion, but you are probably going to be "moderated down" nevertheless. The participants on this web site, ZH, do not like either "grammar or punctuation Nazis." Just saying.

-- Paul D. Bain




Wed, 05/23/2012 - 02:23 | 2454085 Clashfan
Clashfan's picture

That's cool, Paul. I don't want to be disruptive on the threads, just to be heard by the writers. Trying to be supportive. :)

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