This page has been archived and commenting is disabled.

Is The Fed's Balance Sheet Unwind About To Crash The Market, Again?

Tyler Durden's picture




 

Almost six months ago we discussed the dramatic shifts that were about to occur (and indeed did occur) the last time the New York Fed tried to unwind the toxic AIG sludge that is more prosaically known as Maiden Lane II. At the time, the failure of a previous auction as dealers were unwilling to take up even modest sizes of the morose mortgage portfolio was the green light for a realization that even a small unwind of the Fed's bloated balance sheet would not be tolerated by a deleveraging and unwilling-to-bear-risk-at-anything-like-a-supposed-market-rate trading community. Today, we saw the first glimmerings of the same concerns as chatter of Goldman's (and others) interest in some of the lurid loans sent credit reeling. As the WSJ reports, this meant the Fed had to quietly seek confirming bids (BWICs) from other market participants to judge whether Goldman's bid offered value.

The discreteness of the inquiries sent ABX and CMBX (the credit derivative indices used to hedge many of these mortgage-backed securities) tumbling with ABX having its first down day since before Christmas and its largest drop in almost two months. The knock-on effect of the potential off-market (or perhaps more reality-based) pricing that Goldman is bidding this time can have (just as it did last time when the Fed halted the auction process as the market could not stand the supply) dramatic impacts as dealers seek efficient (and critically liquid) hedges for their worrisome inventories of junk.

The underperformance (and heavy volume) in HYG (the high-yield bond ETF we spend so much time discussing) since the new-year suggests one such hedging program (well timed and hidden by record start-of-year fund inflows from a clueless public which one would have thought would raise prices of the increasingly important bond ETF) as the market's ramp of late is very reminiscent of the pre-auction-fail-and-crash we saw in late June, early July last year as credit markets awoke to the reality of their own balance sheet holes once again.

 

The ABX index (the credit derivative index that would be closest to hedging the positions that other dealers will face a re-mark-to-market on should the NY Fed sell at a below market-price to Goldman) shown in black on the chart and HYG (the high-yield bond ETF which has become incredibly liquid and trades at almost double the volume of just a year ago currently) shown in orange are at very similar levels to the last NY Fed auction that was halted for lack of demand (or unwillingness to extend balance sheets). The green ovals show the market's performance of each is also notably similar with a significant ramp into the auction in the hope of encouraging risk-on appetite (Goldman aren't dummies).

Interestingly this time, we have seen very little (if any) high-yield issuance as demand appears to have dried up almost entirely (or been crowded out by impressive distressed yields in European sovereigns for those willing to extend and pretend). Investment grade issuance has picked up into this ramp though concessions remain high (lenders want their pound of flesh to flip or garner liquidity premia).

The point is - while stock markets are rallying, financials are rallying, and homebuilders are rallying (as we are told again and again that the bottom is in housing), helped perhaps by the huge surge in M2 recently, just as they were in June of last year (XHB - the homebuilder ETF rallied almost 9% leading up to the failed auction, XLF - the financials ETF rallied over 6%, and the S&P rallied almost 7% in that month alone), credit markets are far less enthusiastic (and downright dismal today in the most liquid and closest hedges) and the last time the New York Fed tried and failed to unwind even a small amount of the Maiden Lane II book, when the markets weren't facing anything like as big a fundamental (EU recession, China slowing, US recoupling) and technical (huge supply overhang from European issuance and lagging financial and non-financial calendars - especially high yield) headwinds, we saw a very significant sell-off in the two months following (the red arrow above and below).

It appears that we have some new metrics to monitor on a daily basis instead of the now-secured EUR-USD basis swap and BTP yields and this time, its a little more tricky to manage all the way up and down the credit quality spectrum of liquidity as dealers rush for any and every liquid hedge from PrimeX, ABX, CMBX, HY, HYG, IG, and LQD they can get their hands on...

Perhaps as we somewhat sarcastically noted in June, the post QE2 timing of the June failed auction and its impact could have been the ammunition to set up a QE3 infusion...and now with almost 10% rise in the USD since August (and obvious impact on US company earnings already) perhaps its time to hit the reset button, print, and devalue a little to juice Q1 earnings which are seeing downgrades galore.

Charts: Bloomberg

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Fri, 01/13/2012 - 03:08 | 2060838 bob_dabolina
bob_dabolina's picture

Long TBT(or whatever derivative of your choosing) and  Long Gold

Smoke a blunt, pop a xanax and chill. 

Investing is common sense.

 

Fri, 01/13/2012 - 03:54 | 2060864 TruthInSunshine
TruthInSunshine's picture

This will be front page on ZH soon.

Here's a article on FOMC discussions, circa 2006, and wow, these imbeciles take imbecilism to a new level:


 

Inside the Fed in 2006 - A Coming Crisis, and Banter - NYTimes.com

 

By Published: January 12, 2012

 

WASHINGTON — As the housing bubble entered its waning hours in 2006, top Federal Reserve officials marveled at the desperate antics of home builders seeking to lure buyers.

The officials laughed about the cars that builders were offering as signing bonuses, and about efforts to make empty homes look occupied. They joked about one builder who said that inventory was “rising through the roof.”

But the officials, meeting every six weeks to discuss the health of the nation’s economy, gave little credence to the possibility that the faltering housing market would weigh on the broader economy, according to transcripts that the Fed released Thursday. Instead they continued to tell one another throughout 2006 that the greatest danger was inflation — the possibility that the economy would grow too fast.

“We think the fundamentals of the expansion going forward still look good,” Timothy F. Geithner, then president of the Federal Reserve Bank of New York, told his colleagues when they gathered in Washington in December 2006.

Some officials, including Susan Bies, a Fed governor, suggested that a housing downturn actually could bolster the economy by redirecting money to other kinds of investments...

...

***“It’s embarrassing for the Fed,” said Justin Wolfers, an economics professor at the University of Pennsylvania. “You see an awareness that the housing market is starting to crumble, and you see a lack of awareness of the connection between the housing market and financial markets.”

“It’s also embarrassing for economics,” he continued. “My strong guess is that if we had a transcript of any other economist, there would be at least as much fodder.”...***

 

Fri, 01/13/2012 - 04:25 | 2060878 Alpha Monkey
Alpha Monkey's picture

Some officials, including Susan Bies, a Fed governor, suggested that a housing downturn actually could bolster the economy by redirecting money to other kinds of investments...

Hmmm....

Fri, 01/13/2012 - 05:58 | 2060911 Michael
Michael's picture

Did President Obama really use the "B" word?

I thought only Dr Paul used the "B" word.

Referring to raising the national debt ceiling, something to the effect of, "and to keep the country from going BANKRUPT"?

Tell me the President didn't use the "B" word?

Fri, 01/13/2012 - 11:45 | 2061573 Smiddywesson
Smiddywesson's picture

"and to keep delay the country from going BANKRUPT"?

Fixed it. 

We are utterly bankrupt, but our ability to print is infinite, so we can continue to deny the obvious, exactly what they did when they said a 50% haircut on Greek bonds was not a default.

Fri, 01/13/2012 - 11:06 | 2061365 Smiddywesson
Smiddywesson's picture

Yes, and as I noted on TheMetalsReport.com, the situation is far more explosive and complex now than it was back in 2006.

This article, and the one Truth in Sunshine posted, are the dynamic duo top articles for the year.  They show TPTB don't know as much as they think they know, and that they are now trapped in a cage of their own making. 

I used to think these guys said stupid things because they wanted to mislead us.  We now have confirmation they say stupid things because they are indeed stupid. 

Fri, 01/13/2012 - 11:16 | 2061402 Jim in MN
Jim in MN's picture

Psychopathic.  Not the same.  But similar outcomes.

Fri, 01/13/2012 - 11:13 | 2061391 andyupnorth
andyupnorth's picture

+1,000,000

Fri, 01/13/2012 - 07:41 | 2060945 constantine
constantine's picture

TBT ?  Yeah let's use the most complex derivative ETF in existence to hedge a derivatives implosion...  Have you actually read the prospectus on that bad boy ?  I think it says on page 29, "the underwriters are heretofore allowed to steal all investor money".  Good luck with that.

Fri, 01/13/2012 - 07:48 | 2060949 s2man
s2man's picture

Besides a failed auction, we know what happened to gold last time the chart looked like that.  Yep, long gold.

Fri, 01/13/2012 - 03:07 | 2060840 The Monkey
The Monkey's picture

They need an excuse to print. Bottom line, the Fed is protecting the banks. QE is the only guaranteed method to lwervreal rates and narrow spreads.

Reverse Robinhood - TAKE FROM JOE SIXPACK, GIVE TO THE BANKS.

TAKE FROM JOE SIXPACK, GIVE TO THE BANKS.
TAKE FROM JOE SIXPACK, GIVE TO THE BANKS.
TAKE FROM JOE SIXPACK, GIVE TO THE BANKS.
TAKE FROM JOE SIXPACK, GIVE TO THE BANKS.
TAKE FROM JOE SIXPACK, GIVE TO THE BANKS.
TAKE FROM JOE SIXPACK, GIVE TO THE BANKS.
TAKE FROM JOE SIXPACK, GIVE TO THE BANKS.
TAKE FROM JOE SIXPACK, GIVE TO THE BANKS.
TAKE FROM JOE SIXPACK, GIVE TO THE BANKS.
TAKE FROM JOE SIXPACK, GIVE TO THE BANKS.
TAKE FROM JOE SIXPACK, GIVE TO THE BANKS.
TAKE FROM JOE SIXPACK, GIVE TO THE BANKS.
TAKE FROM JOE SIXPACK, GIVE TO THE BANKS.
TAKE FROM JOE SIXPACK, GIVE TO THE BANKS.
TAKE FROM JOE SIXPACK, GIVE TO THE BANKS.
TAKE FROM JOE SIXPACK, GIVE TO THE BANKS.
TAKE FROM JOE SIXPACK, GIVE TO THE BANKS.
TAKE FROM JOE SIXPACK, GIVE TO THE BANKS.
TAKE FROM JOE SIXPACK, GIVE TO THE BANKS.
TAKE FROM JOE SIXPACK, GIVE TO THE BANKS.
TAKE FROM JOE SIXPACK, GIVE TO THE BANKS.
TAKE FROM JOE SIXPACK, GIVE TO THE BANKS.
TAKE FROM JOE SIXPACK, GIVE TO THE BANKS.
TAKE FROM JOE SIXPACK, GIVE TO THE BANKS.
TAKE FROM JOE SIXPACK, GIVE TO THE BANKS.
TAKE FROM JOE SIXPACK, GIVE TO THE BANKS.
TAKE FROM JOE SIXPACK, GIVE TO THE BANKS.
TAKE FROM JOE SIXPACK, GIVE TO THE BANKS.
TAKE FROM JOE SIXPACK, GIVE TO THE BANKS.
TAKE FROM JOE SIXPACK, GIVE TO THE BANKS.
TAKE FROM JOE SIXPACK, GIVE TO THE BANKS.
TAKE FROM JOE SIXPACK, GIVE TO THE BANKS.
TAKE FROM JOE SIXPACK, GIVE TO THE BANKS.
TAKE FROM JOE SIXPACK, GIVE TO THE BANKS.
TAKE FROM JOE SIXPACK, GIVE TO THE BANKS.
TAKE FROM JOE SIXPACK, GIVE TO THE BANKS.
TAKE FROM JOE SIXPACK, GIVE TO THE BANKS.
TAKE FROM JOE SIXPACK, GIVE TO THE BANKS.
TAKE FROM JOE SIXPACK, GIVE TO THE BANKS.
TAKE FROM JOE SIXPACK, GIVE TO THE BANKS.

Fri, 01/13/2012 - 03:14 | 2060842 lolmao500
lolmao500's picture

Who cares. Let the banks implode already.

In other news, that retard Stephen Colbert is running for president.

Fri, 01/13/2012 - 03:46 | 2060860 LaLiLuLeLo
LaLiLuLeLo's picture

This shit would be funny if it wasn't real.

Fri, 01/13/2012 - 05:45 | 2060901 Colonial Intent
Colonial Intent's picture

Colbert's nearly as funny as that daily show.

Fri, 01/13/2012 - 03:14 | 2060843 chump666
chump666's picture

outstanding ZH

Fri, 01/13/2012 - 03:21 | 2060847 Johnk
Johnk's picture

Jeez ZH, how short are you?

Fri, 01/13/2012 - 03:22 | 2060849 non_anon
non_anon's picture

The Right String, Baby, But the Wrong Yo-Yo

http://www.youtube.com/watch?v=mHMj0oZY7MA

Fri, 01/13/2012 - 03:36 | 2060853 ACP
ACP's picture

When this all collapses, I'll just take advantage of the torch and pitchfork bubble.

Long hickory and iron.

Fri, 01/13/2012 - 03:43 | 2060857 eurusdog
eurusdog's picture

It will never be allowed to collapse to the levels it needs to! Ad infinitum.

Fri, 01/13/2012 - 03:49 | 2060862 LaLiLuLeLo
LaLiLuLeLo's picture

Their lives depend on it.

Fri, 01/13/2012 - 07:00 | 2060927 twotraps
twotraps's picture

Hmmm, the largest player on the Planet prints its own money and strongly suggests convenient and economically beneficial rule changes that suit their positions........Oh yeah, you need a couple of fucking  economists to tell you what the future will bring!!!!!!

Fri, 01/13/2012 - 03:50 | 2060859 BlackholeDivestment
BlackholeDivestment's picture

http://www.youtube.com/watch?v=VEPEPYXcVZk

OURstinkingOBorOShhhiiit ...mad cow.

 Denny Crane.

 http://www.youtube.com/watch?v=r3n4qPpL8T0 

Fri, 01/13/2012 - 04:07 | 2060868 Coldfire
Coldfire's picture

One of things I like best about ZH is the insight it affords into the credit universe. Thanks, Tylers.

Fri, 01/13/2012 - 04:09 | 2060869 Tuffmug
Tuffmug's picture

Looks like Ben's ABX and other toxic bailout sludge going to be Marked to Fantasy and held on the balance sheet forever. Else he's going to have to fess up that he bought shit at caviar prices and his supposed billions of bailout profits to Treasury are really billions of losses.

Fri, 01/13/2012 - 04:47 | 2060883 PhattyBuoy
PhattyBuoy's picture

The Fed's balance sheet is so toxic and putrid it makes fuku seem like a freshly douched vag.

Fri, 01/13/2012 - 11:51 | 2061601 Smiddywesson
Smiddywesson's picture

No, there is another possibility.  They devalue the dollar, peg to the SDR, and peg the SDR to gold.  Then they ramp gold prices to the moon and print like crazy.  The result is you take a haircut and they get a balanced balance sheet.

Devaluation is coming, all at once, all over the world...soon.

Fri, 01/13/2012 - 04:18 | 2060872 besnook
besnook's picture

so this is what happens when there is real market transparency? everyone realizes the composition of the krap everyone is holding that is marked to fantasy and freaks out.

Fri, 01/13/2012 - 06:27 | 2060913 snowbaall
snowbaall's picture

The world sucks ass.

Bernanke will find a way to protect his rich buddies and save the stock market.

Thank God women still have tits.

And we're pretty much powerless to do anything about it.

The whole process is frustrating.

The money-changers are in charge of the temple.

Fri, 01/13/2012 - 04:26 | 2060877 BlackholeDivestment
BlackholeDivestment's picture

 

 

 

...heard a horror story about short sheeting at Camp Sella JumpAAA-Bungalow Atzero. The parent's tried taking the owners to Court for broken feet but, the Court tossed the case, do to the Waver.

Fri, 01/13/2012 - 05:10 | 2060890 props2009
props2009's picture

http://fnn24.com/?p=37178

 

CHF Peg to be removed? 

Fri, 01/13/2012 - 06:33 | 2060917 chinaguy
chinaguy's picture

Talk that SNB is set to raise the peg again to 1.3000 from one corner, with the other rumour that it’s going to be withdrawn!.

Either way there are bids to the tune of 500+ million euro’s on the EBS at 1.2090 ahead of barriers reported at 1.2075 and 1.2050 .

Fri, 01/13/2012 - 05:18 | 2060892 Scalaris
Scalaris's picture

Just bundle Maiden Lane into anything and pledge it as a collateral to the ECB. I hear they'll take anything.

Fri, 01/13/2012 - 13:32 | 2062179 upWising
upWising's picture

Thanks for the tip!  I have a BIG credit card payment due to Chase on Monday and I almost threw out the diaper pail full of Pampers from the baby's nursery.   

That means I can go out to the Mall and get more Chase Points to get a Free Trip to Europe!

  POOP TO POINTS!  It's the New "Mark to Market!"

Fri, 01/13/2012 - 05:37 | 2060900 Colonial Intent
Colonial Intent's picture

A quick word to Zero Hedge readers from the people in charge.

 

You don't have the education, upbringing, connections, manners, appearance, and good taste to ever become one of us.

In fact, you'd probably need a book the size of the yellow pages to list all the unfair advantages we have over you.

That's why we're so relieved to know that you still continue to believe all those silly fairy tales about "justice" and "equal opportunity" in America.

Of course, in a hierarchical social system like ours, there's never been much room at the top to begin with. Besides, it's already occupied by us — and we like it up here so much that we intend to keep it that way. But at least there's usually someone lower in the social hierarchy you can feel superior to and kick in the teeth once in a while. Even a lowly dishwasher can easily find some poor slob further down in the pecking order to sneer and spit at. So be thankful for migrant workers, prostitutes, and homeless street people.

Always remember that if everyone like you were economically secure and socially privileged like us, there would be no one left to fill all those boring, dangerous, low-paid jobs in our economy. And no one to fight our wars for us, or blindly follow orders in our totalitarian corporate institutions. And certainly no one to meekly go to their grave without having lived a full and creative life. So please, keep up the good work!

You also probably don't have the same greedy, compulsive drive to possess wealth, power, and prestige that we have. And even though you may sincerely want to change the way you live, you're also afraid of the very change you desire, thus keeping you and others like you in a nervous state of limbo. So you go through life mechanically playing your assigned social role, terrified what others would think should you ever dare to "break out of the mold."

Naturally, we try to play you off against each other whenever it suits our purposes: high-waged workers against low-waged, unionized against non-unionized, Black against White, male against female, American workers against Japanese against Mexican against.... We continually push your wages down by invoking "foreign competition," "the law of supply and demand," "national security," or "the bloated federal deficit." We throw you on the unemployed scrap heap if you step out of line or jeopardize our profits. And to give you an occasional break from the monotony of our daily economic blackmail, we allow you to participate in our stage-managed electoral shell games, better known to you ordinary folks as "elections." Happily, you haven't a clue as to what's really happening — instead, you blame "Aliens," "Tree-hugging Environmentalists," "Niggers," "Jews," Welfare Queens," and countless others for your troubled situation.

We're also very pleased that many of you still embrace the "work ethic," even though most jobs in our economy degrade the environment, undermine your physical and emotional health, and basically suck your one and only life right out of you. We obviously don't know much about work, but we're sure glad you do!

Of course, life could be different. Society could be intelligently organized to meet the real needs of the general population. You and others like you could collectively fight to free yourselves from our domination.

But you don't know that. In fact, you can't even imagine that another way of life is possible.

And that's probably the greatest, most significant achievement of our system — robbing you of your imagination, your creativity, your ability to think and act for yourself.


Fri, 01/13/2012 - 07:21 | 2060936 Dasa Slooofoot
Dasa Slooofoot's picture

Nice chain email copy and paste, you "cunt burp".  

 

Make sure to edit out nigger with [n-word] when you post it in the comment section at Huffpo.  Don't want any heads to explode over there. 

Fri, 01/13/2012 - 09:24 | 2061080 Colonial Intent
Colonial Intent's picture

We call em fanny farts over here......

It s a copy and paste  from scroogle, i read this post and felt it was relevant to the comments posted.

Nigger word is fine in the right context, and no its not referring to obama per se, so keep your knickers on.

Fri, 01/13/2012 - 07:36 | 2060943 Golden monkey
Golden monkey's picture

(Dear) people in charge

Many people think they are superior, being part of an "elite".

The problem with you is not your ice cold (mad) pussy.

Face it : the whole world knows you're just a bunch of senile impotent dumb men.

Evidence 1 : Koichiro Gemba is everywhere in the news this morning. "We don't care both your sanctions and Iran".

BTW, Thank you for robbing me. That was not too painfull, hopefully???

Fri, 01/13/2012 - 05:51 | 2060908 LookingWithAmazement
LookingWithAmazement's picture

Crash, collapse, crisis, meltdown! Nothing happens.

Fri, 01/13/2012 - 05:58 | 2060910 roy10
roy10's picture

The Fed needs to start unwinding its balance sheet ASAP. The QE3 talk is complete nonsense. The fed will be shrinking, not expanding in 2012.

Fri, 01/13/2012 - 11:56 | 2061629 Smiddywesson
Smiddywesson's picture

It's too late for austerity.  It was too late for that path a year ago.  If you think there is any political will to stop spending, you are not paying attention.  The Fed's balance sheet IS the ECB.  You are making a logic based assumption based on what you would do.  If you were in charge, would you have done anything the Fed has done recently?

They don't think like you and have boxed themselves in a corner.  They have to devalue the dollar AND print.

Fri, 01/13/2012 - 06:13 | 2060912 LookingWithAmazement
LookingWithAmazement's picture

Great news from Europe: Euro Strengthens as Italian Bonds Advance, ECB Says Credit Crunch Averted

http://www.bloomberg.com/news/2012-01-13/euro-set-to-end-five-week-decline-after-ecb-says-credit-shortage-averted.html

Told you so: "they" always keep the show going on. US economy goes better. Auctions will succeed today. #WhatCrisis?

Fri, 01/13/2012 - 06:29 | 2060914 HD
HD's picture

I thought the Fed never, ever, ever had to unwind anything ever...

Go big (balace sheet) or go home, right?

Fri, 01/13/2012 - 19:45 | 2063610 Zero Govt
Zero Govt's picture

the ECB's is now bigger

there must be some 'tit for tat' trans-Atlantic competition between Bernankenstein and Count Dracula on who can pile up the most toxic shit on their balance sheets

Fri, 01/13/2012 - 06:35 | 2060919 chinaguy
chinaguy's picture
Italian auction results

Sold  Eur  0.779 bln of 4.25% July 2014 BTP, yield 4.29%  , cover 2.276

Sold Eur  0.971 bln of  4.5% Aug 2018 BTP, yield  5.75% , cover 1.606

Sold Eur  3 bln of 6% Nov  2014 BTP yield 4.83% (vs 5.62%)   , cover 1.218 (vs. 1.364)

Fri, 01/13/2012 - 06:52 | 2060923 Scalaris
Scalaris's picture

 

O/T  - FT Alphaville - Goldman on metal pawning

 

Negative rates imply that banks are pawning gold in exchange for dollars. A move which happens to depress gold prices. In other words, much of gold’s under-performance in 2011 may have been down to gold pawning forces and the fact that gold was much less valued in the market than dollars. But it wasn’t just gold markets which became exposed to “commodity repo” forces. Goldman notes much of the same was happening in copper and base metal markets too — though in these markets dollar funding needs translated into plain old de-stocking. So, lacking financing from banks, merchants had no other choice but to de-stock for liquidity purposes, a fact which discharged a lot of supply into the market, driving prices lower.

 

Per Goldman Sachs:

In gold, the relationship between real interest rates and gold prices has opened up to the widest levels in the current cycle. This wedge between gold prices and real interest rates as measured by 10-year TIPS was driven by a substantial surge in the demand for US dollars during December. This demand for US dollars drove the gold lease rates to unprecedented negative levels as US dollars became increasingly more valuable than gold. This new demand for dollars was mostly from European banks using the gold market to source US dollar liquidity when their funding from the US money markets dried up, which created a significant amount of gold selling. In turn, the re-convergence of gold and real interest rates is dependent upon how long this dollar-funding liquidity squeeze lasts, forcing European banks to source US dollars from the gold market. We believe that many European banks will likely exit or sell many of their US dollar based businesses in 2012, which will likely substantially reduce this US dollar demand from the gold market, taking the pressure off gold lease rates, and pushing gold prices back up in line with real interest rates. Further, following ECB’s aggressive action on funding through the Long-Term Refinancing Operation (LTRO), the near-term pressure on European bank funding has eased significantly. Accordingly, we are maintaining our 12-month target of $1,940/toz.

Fri, 01/13/2012 - 07:06 | 2060930 RobotTrader
RobotTrader's picture

A 100 point selloff in ES will trigger an epic breakout in bonds and USDX.

 

http://finviz.com/fut_chart.ashx?t=ZN&cot=002602&p=d1

http://finviz.com/fut_chart.ashx?t=DX&cot=002602&p=d1

"Resource" stocks are likely to suffer the worst from such correction, as usual.

Consumer Discretionary will be unfazed, as usual.

Fri, 01/13/2012 - 07:11 | 2060932 AE911Truth
AE911Truth's picture

The pummeling will continue until physical silver holders capitulate and sell their silver to JPMorgan.

Fri, 01/13/2012 - 07:17 | 2060934 props2009
props2009's picture

http://fnn24.com/?p=37232

 

Italian auction disaster again.

Fri, 01/13/2012 - 07:42 | 2060946 s2man
s2man's picture

But, LookingWithAmazement says it was Great News From Europe.  Yeah, they got <5% interest, but demand was very low.

Fri, 01/13/2012 - 07:51 | 2060953 Irish66
Irish66's picture

bid to cover is way too low

Fri, 01/13/2012 - 08:10 | 2060959 slaughterer
slaughterer's picture

Italian auction: bid-to-cover was fair.  Yields declined.  Not really a disaster.  The question is: what happens when the LT ECB money runs out? 

Fri, 01/13/2012 - 08:27 | 2060973 kurzdump
kurzdump's picture

ECB will step in to force banks or buy them directly. After all it's just the law not allowing them to do so - who cares?

Fri, 01/13/2012 - 08:29 | 2060976 Ghordius
Ghordius's picture

answers: 1) depends what Oncle Ben has done by then; 2) new LRTO; 3) extensive use of soccer-skills to kick the can further down - in doubt, nr. 1) applies

no such thing as something new under the sun - no such thing as a free lunch

Fri, 01/13/2012 - 07:28 | 2060941 BigDuke6
BigDuke6's picture

Does ZH ever sleep? 

No.

Fri, 01/13/2012 - 08:02 | 2060954 spankfish
spankfish's picture

They put Viagra in their coffee... so someone or something is always up.

Fri, 01/13/2012 - 08:05 | 2060956 HD
HD's picture

Does the Fed sleep? Do TPTB?

No.

Fri, 01/13/2012 - 08:42 | 2060996 Money 4 Nothing
Money 4 Nothing's picture

Do the Markets ever sleep? When it finally get's shot with a tranquilizer dart it will go to bed. Dow and Dollar are defying gravity IMHO.

LTRO can only act as market crack for so long, gotta come down sometime.

Fri, 01/13/2012 - 08:06 | 2060957 kurzdump
kurzdump's picture

OT: Can anyone explain why copper and baltic dry are diverging? Both are said to be early indicators for the world economy/trade. Who's right then? Dr Copper or Mr. Baltic? Does one only represent what investors wish and the other is reflecting reality or is it just a "broken market"? 

http://www.investmenttools.com/futures/bdi_baltic_dry_index.htm#copper

Fri, 01/13/2012 - 08:30 | 2060979 youngman
youngman's picture

Big talk from the Liesman on another QE....he must have got a memo this AM to start selling it to the sheeple...keep an eye on those treasuriy redemptions.....if it goes slowly ..that is what the Fed wants...they know they will be the final owner of ALL treasuries in the future...they just want it slow and steady...if it becomes a panic..a week timeline event...that is when the panic spreads to the rest of the world .....I think the black swan event will happen and it will be a big overnight dump that the Fed will have to cover...

Fri, 01/13/2012 - 10:50 | 2061309 Greenhead
Greenhead's picture

This article makes no sense.  Why would the Fed care about unwinding its balance sheet when it acquired this stuff with magic money?  Besides, selling this stuff decreases the money supply and will take liquidity out of the economy.  It is the opposite of QE and surely will tank the market.

 

Fri, 01/13/2012 - 13:03 | 2062036 slewie the pi-rat
slewie the pi-rat's picture

took me several reads to start to understand this, but well worth the effort, now, so thxz, tyler!

Fri, 01/13/2012 - 19:33 | 2063594 Zero Govt
Zero Govt's picture

Tim Geithner is fucking hilarious isn't he?

Joined at the crony hip with ben bernanke who also didn't see the crisis coming.. and these 2 morons are in the 2 most senior finance posts in American Govt

Why does America need enemies (or terrorists) when they've got 'friends' like these at the helm

 

Fri, 01/13/2012 - 21:09 | 2063784 kurt
kurt's picture

Please tell me what "Austerity" looks like. I wan't to puke.

Do NOT follow this link or you will be banned from the site!