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Forget Operation Twist: Rosenberg Says Bernanke Will Shock Everyone With What Is About To Come
As we have been pointing out since the beginning of the week, the one defining feature of the past 5 days has been a relentless short covering rally. And while the mechanics were obvious, one thing was missing: the reason. Well, courtesy of David Rosenberg's latest, we may now know what it is. Bottom line: for all who think that Bernanke is about to serve just Operation Twist next week... you ain't seen nothing yet. "The consensus view that the Fed is going to stop at 'Operation Twist' may be in for a surprise. It may end up doing much, much more." Rosie continues: "Look, we are talking about the same man who, on October 2, 2003, delivered a speech titled Monetary Policy and the Stock Market: Some Empirical Results. I kid you not. This is someone who clearly sees the stock market as a transmission mechanism from Fed policy to the rest of the economy. In other words, if Bernanke wants to juice the stock market, then he must do something to surprise the market. 'Operation Twist' is already baked in, which means he has to do that and a lot more to generate the positive surprise he clearly desires (this is exactly what he did on August 9th with the mid-2013 on- hold commitment). It seems that Bernanke, if he wants the market to rally, is going to have to come out with a surprise next Wednesday." In other words, stocks are now pricing in not just OT 2, and a reduction in the IOER, but also an LSAP of a few hundred billion. There is, however, naturally a flipside, to Bernanke's priced in announcement: "If he doesn't, then expect a big selloff." In everything, mind you, stocks, bonds, and certainly precious metals. And, of course, vice versa.
Full note from Today's Breakfast with Dave:
The consensus view that the Fed is going to stop at 'Operation Twist' may be in for a surprise. It may end up doing much, much more. And this may be one of the reasons why the stock market is starting to rally (a classic 50%+ retracement, which always occur after the first 20% down-leg in a cyclical bear market would imply a test of 1,250 on the S&P 500 at the very least). Hedge funds do not want to be short ahead of next week's FOMC meeting, and who can blame them?
Here are 10 reasons why:
- Just go back to August 9th. The Fed was supposed to make a more emphatic comment in the press statement about "extended period" as it pertained to the length of time the Fed would stay ultra-accommodative on the rates front. Bernanke went much further than anyone thought with his pledge to keep the funds rate at the floor at least to mid-2013.
- Ben Bernanke has shown repeatedly that he is willing to take risks and be very aggressive.
- Everyone knows that the Dow finished the August 9th session with a huge 430 point gain after the FOMC press statement was fully digested. Not only that, but when Bernanke held his two-day meeting in mid-December of 2008 and unveiled QE1, the Dow soared 360 points. And last November, the day after that two-day meeting when Bernanke made it clear in his Washington Post op-ed article how key it was to ignite the stock market, the Dow jumped 220 points. It may all be just for a near-term trade, but in an industry where every basis point counts, who wants to be short knowing all that?
- At that August meeting, we know both from the statement and minutes that additional rounds of unconventional easing were discussed. And Mr. Bernanke made it very clear at Jackson Hole that they would be on the table again at the coming meeting
- The Fed would like to be out of the picture during the election campaign (especially if Richard Perry ends up winning the GOP nomination).
- The Fed has cut its GDP forecasts at each of the past three meetings.
- The stock market is actually little changed from where it was at the last meeting and we know based on that Washington Post op-ed, that it is equity valuation (specifically the Russell 2000) that Ben wants to see rally. Sanctioning lower bond yields is just a means to that end.
- There is no fiscal stimulus to bolster the economy, with the odds very high that the Obama jobs plan — some in his own party object to the package as per yesterday's New York Times — will be dead-on-arrival on the House floor. The Fed is the only game in town.
- Financial conditions have tightened nearly 100 basis points since the spring and deserve a policy response.
- Bernanke announced at Jackson Hole that this coming meeting was going to be a two-day affair, not one day. The last time he did this was back in December 2008 and that was when he invoked QE1. There has to be a reason why it is two days, and it must be because he wants to build the case for three dissenters. The Board is being sequestered for a reason!
Look, we are talking about the same man who, on October 2, 2003, delivered a speech titled Monetary Policy and the Stock Market: Some Empirical Results. I kid you not. This is someone who clearly sees the stock market as a transmission mechanism from Fed policy to the rest of the economy. Here is a key excerpt from that sermon:
Normally, the FOMC, the monetary policymaking arm of the Federal Reserve, announces its interest rate decisions at around 2:15 p.m. following each of its eight regularly scheduled meetings each year. An air of expectation reigns in financial markets in the few minutes before to the announcement. If you happen to have access to a monitor that tracks key market indexes, at 2:15 p.m. on an announcement day you can watch those indexes quiver as if trying to digest the information in the rate decision and the FOMC's accompanying statement of explanation. Then the black line representing each market index moves quickly up or down, and the markets have priced the FOMC action into the aggregate values of U.S. equities, bonds, and other assets.
Even the casual observer can have no doubt, then, that FOMC decisions move asset prices, including equity prices. Estimating the size and duration of these effects, however, is not so straightforward. Because traders in equity markets, as in most other financial markets, are generally highly informed and sophisticated. any policy decision that is largely anticipated will already be factored into stock prices and will elicit little reaction when announced. To measure the effects of monetary policy changes on the stock market, then, we need to have a measure of the portion of a given change in monetary policy that the market had not already anticipated before the FOMC's formal announcement [emphasis added].
In other words, if Bernanke wants to juice the stock market, then he must do something to surprise the market. 'Operation Twist' is already baked in, which means he has to do that and a lot more to generate the positive surprise he clearly desires (this is exactly what he did on August 9th with the mid-2013 on- hold commitment). It seems that Bernanke, if he wants the market to rally, is going to have to come out with a surprise next Wednesday. If he doesn't, then expect a big selloff.
What he is likely to do is another story, but here are some options:
- Expand the balance sheet further and simply buy more bonds (at the longer end of the curve).
- Eliminate the interest paid to commercial banks on excess reserves (to try to spur lending).
- Announce an explicit ceiling on the 10-year note yield (say 1.5%), which the Fed has done in the distant past. Based on Bernanke's prior rhetoric, this would seem to be a preferred strategy (though the Fed relinquishes control of the balance sheet).
- Buy foreign securities (bail out Europe and weaken the U.S. dollar — talk about killing two birds with one policy stone).
- Announce an explicit higher inflation target or perhaps a lower unemployment rate target (i.e. reinforce the DUAL mandate).
- As Mr. Bernanke stated for the record in November 2002, the Fed does have broad powers to lend to the private sector indirectly via banks, through the discount window. It could offer fixed-term loans to banks at low or zero interest, with a wide range of private assets (including, among others, corporate bonds, commercial paper, bank loans, and mortgages) deemed eligible as collateral. For example, the Fed might make 90-day or 180-day zero-interest loans to banks, taking corporate commercial paper of the same maturity as collateral. Such a program could significantly reduce liquidity and term premiums on the assets used as collateral. Reductions in these premiums would lower the cost of capital both to banks and the nonbank private sector.
Note that this is all for a trade. As we saw back on August 9th, we had a huge rally but the market is no higher today than it was then. All we have seen since is a huge amount of volatility.
Source: Gluskin Sheff
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Shit, I've already been having a party! Eating out whenever I want and eating crap that I know is bad for me but will likely be hard if not impossbile to find/afford after the collapse.
baby-BLYTHE,
Now it is time to turn on the spigots and hand out Federal Reserve Notes to every man, woman and child that draws oxygen in the USSA.
For the life of me,I do not understand why this has not been done WAY before now, IF indeed they are trying to get the Consumers, consuming again.
While it migt be a short term spike, it damn sure would be more effective than what they have done w/it to date.
Depletion of inventories, and re-orders would at least for a time Kick the Can for the people instead of Wall Street.
If your tanking, whay not send out a Trillion to the 100 million + tax paying families left.(divided up that would be a tidy sum, and we KNOW the spending spree would ensue like a Midnight Sale at Walmart.
And bank stocks take a big hit as consumer debt drops across the board, as they can no longer collect on 20%+ credit card bills monthly. I'd take that immaginary gift, but it'll never happen. It flies in the face of the debt enslavement doctrines currently revered in the halls of power.
Look - the only weapon they have is the printing machine -- love you SheepDog but QE3 is baked in since the beginning - the Bernank is a one trick pony and Geether is giving everyone in the EU the low down how it's going to go, so they can front run their @ss's off!
Right! Its already baked in how many times over? Exactly what Ive been saying!
you are so right, dog
thanks for the advice yesterday.
All sabre rattling sparks...again I DARE Bernank to print another few trillion, go ahead man I'll be here laughing!
People so conditioned- 'Well see theyll print more, then stocks'll go up, see'...for how long a week until oil spikes to $150 and the economy pukes and shits the bed? We're at our limit here folks!
It will be interesting when groceries go up another 10-20% and food package sizes shrink another 10.
Don't worry. I heard the hunger will only be "transitory."
'Well see they'll print more, then stocks'll go up, see'...for how long a week until oil spikes to $150 and the economy pukes and shits the bed? We're at our limit here folks!
*************
Not necessarily-if the whole planet agreed to print a certain % based on GDP or per capita-then all currencies should stay more or less relative and maybe that's what Geithner is up to-try convincing the euros to print in harmony-
This is Keynesian economics-those with the strongest currency lose-
SD1 - remember there are many more trillions being destroyed in deflation and default than BB is printing...biggest issue is that he's giving all the "money" to the most powerful to gain ever greater power at the expense of the rest. People cry for help and BB and big O say ok and help those least in need the most.
I think its way too unpopular to do some SPECTACULAR printfest here in election season, people of the world already revolting all over the place, Obama big suck approval numbers...I just dont think some huge stunner out of the FED next week is in the cards.
it's more unpopular for the wheels to fall off, jobs market dislocate, banks close - most of society is dependent on the state for their money, their food, their medicine, their safety...
"dependent on the state for their safety"?! You may want to reconsider that aspect of societies' dependence.
I agree with you. I don't see it.
Then again, I foresaw the gold drop off the recent highs -- but didn't expect it to bounce back strongly today.
methinkZ so, too, SD1
there's nothing wrong w/ any of the "markets" and the Treasury may be able to finance the next year w/out the FED funding the debt
the 2-day meeting is b/c there is a new game plan for europa and it is monetization of poo-poo-doo-doo for the banksters who can then "buy" the assets of broke eurostates
i don't see the FED doing too much LSAT; there is plenty of fiat in circulation; just show a little gold bullion and git er done
nothing is "solved" but the can is down the road and when it shows up again, it will get kicked again
then again, rosie is often quite correct and has his ear much closer to the ground than slewie & others, here, but i think that as long as the US can get financing w/out printing the money, why tf print it?
it won't "fix the economy" no matter what the oligarchs & ubers who get the new money "first" blow up our asses
here's the weekly wrap as of 4PM eastern (i think): Gold Seeker Weekly Wrap-Up: Gold and Silver Fall a Little Over 2% on the Week
...if you just look at the top chart, how many "problems" do you see for the FED? ZERO?
then look a the review of all the week's econ reports; still zero?
the FED, the ECB, japan, china, germany, and lastrange lagarde at the IMF need to do the printing so nobody gets fuked but the broke sovereigns, who may or may not get what they need in financing, but the banks will be backstopped, either way, only the FED needs to follow dodd-frank and act thru solvent agents, which it has if one doesn't look too closely and/or mark to reality
i think stocks have had their come-back; there have been some haircuts, but no space monkeys, yet
considering the dangers and the confusion, our fuking banksters came outa the hole (jackson) speaking softly and now they have showed their hand. for now. i'm not unimpressed, for all the clown shows and "expert predictions"
the markets & the money aren't real; but the bombs and bullets sure are!
trust me. i'm wearing my new orange hat w/ the red crescent...from libya...
Hi SheepDog-One.
I'm not betting on Ben's message next week.
NeverThe-Less, I believe the Fed prints. Prints and prints and prints. They always print. QE3 is a sure thing soon. QE4 is a wildcard. We'll never make it to QE5.
QE3 is not "baked into" the stockmarket yet, IMO.
Fiat currency is alway about confidence in the currency. Regardless of BB's name callers, Helo Ben will support stock and bond markets by printing money and funneling it to the PD trading desks.
Obama's job approval ratings, misery index, and consumer confidence numbers are good indicators BB is losing the battle for precious precious confidence. Just a matter of time. He knows it. One hand on the Print Key, the other clutching his rip chord.
In a vacuum of public confidence, FRNs return to intrinsic value.
SheepDog, you are probably right, but pardon the language, don't take it personally, but they may just "throw Obama to wolves"?
+++ tuco!
L0L!!!
isn't there a 2 yr or so lag between printing and inflation? Besides, BB can just change the CPI to not include inflating commodities.
http://bigpicture.typepad.com/.shared/image.html?/photos/uncategorized/2...
Anyone recall what date Dave flipped from short to long stocks ?
at the recent high in April
but I'm not sure it was short to long as much as a May to September romance with a bull
so he was basically a bear from the crash lows up until April where upon he flipped long and the market tanked. Now he is saying get long again ? Wave C on deck ?
wait a minute Rosie, you say OT is baked in
but then you say if he doesn't do more than OT then we should expect a big sell off -
sorry does not compute
Being that OT is already priced in, doing only OT won't be a sufficient catalyst to propel stocks higher.
I don't think Rosenberg is implying that the Fed only doing OT will lead to the S&P dropping to 1000 within a week. But it definitely won't be enough to launch stocks any higher than they already are.
that's sort of kind of what I think he said:
Someday I'd like to hear an explanation on how OT helps the market. I can see how QE helped but other than a slow change in the curve to make banks start being marginally more profitable how does it help? The mortgages are still there. Greece is still there. The deficit is still there and I haven't seen how it prints new money that can find its way into equities.
Existing T-bond big owners (Banks) will see their bond increase in value and this will translate to profit that can then be reinvested in equities and more importantly commodities.
Thanks, the Fed helps them convert crap bonds into crap stocks. I can see how that will fix everything. Still, it seems pretty weak compared to that dropping $100 bills from the helicopter trick.
yes, those "paper bond profits" can be taken (bonds sold) or capitalized (used to trade/gamble with) as long as they are ++ on "paper"
but more important to the Treasury, methinkz, is that the Treasury can borrow another 1-2 Tril $$$ at very low cost, and the FED's "balance sheet" right now allows it some "space" to suck up new debt by rolling over what will mature or selling the short stuff and buying the 10-30 yr stuff~~~a "twist" that as the long stuff goes up in value from the "buying" the short stuff does, too, and RATES STAY MANAGEABLE even if the damned goobermint has never seen a fuking checkbook it could balance...
...and probably never will...
Exactly DeadFred. It is all about the banks. If they really wanted to get this economy rolling they would lay green fiat into the hands of the masses. That may happen eventually though once that $1,500,000,000,000,000.00 in derivatives starts unwinding!
big brother gets bigger
and the holding company gets bigger
and the green stamps just keep getting smaller
Janis Joplin - Piece Of My Heart - YouTube
Rosie in effect saying 'Bernank is screwed here, so he has to put on a huge show and really surprise everyone'! With what, the same old 1 trick everyone is rolling their eyes at already? The ONLY surprise from Bernank is if he said the money printing is over....further money printing has already been priced in God only knows how many times.
Also Rosie, dont forget this money printing is WILDLY unpopular, with 12 months till election....you REALLY think Bernank goes hogwild now and goes all in printing which the public identifies and gifts to bankers?
Yea well we'll see in just a few days.
First FOMC it was like this, Jackson Hole everyone also predicting huge gifts from on high from Bernank, same as next week.
He could shave his beard. That would be a big surprise
He's going to need a willing donkey and sombrero to pull of anything spectacular, although, now that I've said it, it's not longer a surprise...
You got something against sombreros?! I would not have made it across that desert with Blondie in tow without my sombrero. You saw what the sun did to Blondie, didn't you?
"But no one will set foot in this hell!" Tuco to Blondie before entering the desert
Yes, but, a tanking economy is even more unpopular. Refusing to print and letting the market and job market tank reveals their hand, i.e. there is no recovery without easing. The party line is that the recovery is organic, with a little QE fertilizer sprinkled in. As much as QE is unpopular with those that have some inkling of what's going on, the need to maintain the believability of the party line amongst those that have no clue and think QE is not printing and that the recovery is ongoing is even greater. Thus they will print, and soon. That's what I'm betting anyways.
Bernanke's not running for election.
I'd say the average Joe Public has no idea what QE is, nor have they probably even heard of it. What the fed does know is gas at 4-5-6 dollars a gallon at election time will ruin any chances for their party to continue. I really think they are stuck between a rock and a hard place, by their own doing, and will have to try something new. If they stop monetary easing we may see gas at $1.XX, imports would be cheap, but exports would get crushed, and unemployment would skyrocket. If they continue, gas skyrockets, prices on everything skyrocket, hyperinflation and mass unemployment ensues, while our exporters get a nice boost (if they are able to afford material).
I think if they want to keep on keeping on with this same BS, they will have to attend to the forex market. IMO, no way they can do QE3 without artificially strengthening the dollar, but at what point in time do our games push other countries to their tolerance limit?
To sum this rant up, I think the fed knows they, and us, are fucked. Expect the unexpected and hedge like a mofo.
People are financially illiterate. My dad is starting to get it, but asked me last week "So what does fiat mean again?". Nobody cares about prinitng money or any of this shit.
Nobody = 99 %
None of it computes, besides 'OT2' being priced in, a couple trillion QE has ALSO already been priced in since Feb DOW 9,800-12,800. Nothing computes here, basically Rosie is saying Ben needs to pull 20 pink unicorns WITH sparkle glitter on them right out of his ass next week.
OK I'll be watching!
Oww! That hurts to even think about. I certainly don't want to watch.
Make it 21 and I'll buy in!
Sheepdog, every time you talk about the unicorns that way I squirm in my chair. Unicorns have horns don't they?!!
If the head inmate does little or nothing do you think the miners will sell off for maybe a day or three? So what. I am keeping all my core positions, as I have done, will take off my trading positions next week and if they dump will bless The Bernank and add more. If they ramp, all I have lost is my weekly trades. Either way, not buying NFLX or RIMM for a bounce. :)
And I don't do stocks generically outside of miners. Just have 0 interest with all this volatility. And of course, 0 margin.
It is nice to hear from a trader who understands he doesn't have to participate in every move. Why risk your neck with this much volatility? We all know where gold and silver (and stocks) will eventually go.
This is one dead market. Geesh.
Beardy Bennie can "shock" the world by ending the Fed immediately. All the rest is noise.
Exactly! Hell the ONLY possible 'surprise' out of the FED is if they said 'We're ceasing all monetizing operations as of now and shutting down the FED'....all else is already priced in 50 times!
can he shock you? how boring!
Tired of Rosie, his ideas may be on track and plausible, but his timing is always offd. Which is as good as being wrong.
Isn't it great that one man is so smart and has the power to do whatever he wants?
Bullshit........oil is tying the Bernank's hands.
Bens got no room to pull trillions out of the hat, youre right! He does it, and overnite oil is $150...OK then what?
He's going to do whatever he thinks will buy him the most time. I'll piss myself if he just talks about all the tools he has and announces the next meeting will be three days. Any bets on that guys?
Thats what I think too, hold up his tool box and rattle it so we can hear he has tools, conclude by saying theres another FOMC in a while.
I call shenanigans. Again, you're assuming that BB DOESN'T want to break the market. The $2T from QE1 and 2 only pushed oil up marginally to about $85 bbl. Dropping another $2T wouldn't push it to $150 bbl overnight.
Besides, it the price at the pump that consumers see, not $/bbl and right now fuel prices have been around the $4 high we saw in 2007/8 even though oil prices aren't at the highs of $140 bbl. And $140 bbl didn't really affect consumption too much.
I think that once oil hits a certain high, maybe $200 bbl, then we'll start seeing supply and demand waiver back and forth for some time.
You cannot use 2007-08 gas price at the pump to deduce that it would take a $200 bbl to see an increase at the pump.
What you see at the pump today is the new baseline. The oil oligopoly will say that refining costs have increase a lot since 5 years!
Yup, this is that "hard place." Oil/energy imports constitute about 50% of US trade deficits. Contrary to what this "consumer economy" has been programmed to believe, that you can actually SAVE by spending, we ain't going to correct the balance sheet this way. Oil has us trapped...
I think you're right, good comment.
All the action is in Europe and the creation of an ECB (BIS/IMF) ZIRP/TALF gang-bang. (Is there a hyphen in gang-bang?) It's all going to be financed and injected by the (bankrupt) Fed and then when the good ol' US of A doesn't have the power to run its printing machines anymore, all hail our new galactic overlords. My question is how much man-juice does China add to the bowl? The Fed's (and its shareholders') goals are to migrate the discounted debts at full price to the new IMF's XDR facility - now $500 billion last week. $5 trillion is the new magic number.
There is already so much electronic money sloshing around the world that everything fake-economy is floating from one asset class to another differentiated by time zones only. It might as well be magic swords or L$. At some point however, you have to buy a cheeseburger for your kids.
Right on Bankon! All they are doing is passing keyboard entries back and forth. What a sick world we live in!
"Where's the real money?!" Sean Connery to Catherine Zeta Jones in "Entrapment".
QE2 was to prevent us from going into a deflationary trap. CPI isn't indicating deflation. So no LSAP. Operation Twist & reduction in IOER, yes, because it will give household/buinesses more time to deleverage, at lower rates.
Wait a sec. The market's been pricing in unanticipated actions by the fed, and surprise will be the key to the fed's success?
correction: anticipated actions. Otherwise, yup.
EHHHH just throw some more money at it...
With every aggressive (and concurrently idiotic) move he and the rest of those genocidal maniacs make, only adds to the case against these psychopaths to be tried and have justice brought to them. He's in a so-called paradox: the more he needs to do to the fix the economy, he actually kills the real economy and makes their inevitable demise that much more likely.
So do it, and reap what you sow.
i don't really know, but even if I sound, again, like a broken record, without a political mandate, which he does not have at this point, he can't give nothing to no one, even if markets force him to do something, he can't! Money printing aka LSAP requires a congresional approval, which takes time to get!
All I think he will do/say on Wednesday will be more of the same, gee I wish he would announce something BIG, my PMs would scream higher in a heartbeat! but I guess we won't see anything yet!
More hopium perhaps!
Next weeks Bernank speech will result in another 'word jumble' puzzle while everyone wonders what he really meant, reading the word count tea leaves.
Hey people its OVER no matter what Ben says!
If people are to be disapointed and the market tank then it explains why it is imperative for the TPTB to squeeze as much shorts as possible
I hope he goes balls out. I'm looking for gold at $5000+ and silver at $100+ !!!
Trillions in liquidity aren't enough. TBTF banks need a $2.5 quadrillion POMO starting now!
Not really, can't they start unwinding the TOTO, MOMO crap now with rolling maturites. Seems like there is enough liquidity in the blackhole to allow the three card monty with the primary dealers, the Fed, and the treasury to fire up. heck, the ECB may even get in on the game. Why not make it a four card monty so long as everyone is going for the full monty.
This is a good point with regards to precious metals. If he doesn't print, the dollar will ramp and gold could sell off. If he prints, gold can still sell off, a la gold's selloff prior to the SNB intervention. One scenario is likely to be bearish, the other should be bullish BUT is also likely to be accompanied by price manipulation. Either scenario next week carries a threat to gold longs. It might be a good week for gold longs to sit out.
Please, someone, punch a hole in this reasoning, because I don't want to scare myself out of a good trade.
You just picked up on the same message I did. You effectively can't trade this info. You could win, but also lose you're shirt. I was thinking PMs would be the place to be, but if the quest for yield goes to equities PMs are stuffed.
This market manipulation sh*t is for the birds.
Your mistake is trying to use logic. If he prints logic would dictate PMs going through the roof but those in power don't want that to happen so they will intervene and send the price lower.
The real price for anything is no longer set by the central planned market. Forget about trading and just buy PM to hold. Problem is it is too late to really make money and there is more downside risk than upside in the current price of gold unless we get hyperinflation. Those that bought under $1000 are safe but if we do get hyperinflation you won't be trading your gold for dollars so the price in dollars really ins't a meaningful measure.
I have some UGL shares that I am going to hedge with (2) GLD puts at $168. That is a 5% retractment and would limit your losses. I like to lose money buying the cheap weekly options.
This is some very convincing and conclusive non-information. The key word here is "may". How are we supposed to trade this? I guess PMs since in equities you only have a 50/50 chance of getting it right: you'll either win big or lose big. Gotta love Roulette.
Or go for the zero hedge .. buy gold sell equities
So buy Netflix????!!!???
Rosie was wrong last time he can certainly be wrong this time. I respect Rosie but I dislike people in his position publishing articles trying to "guess" what the professor will do.
Rosie doesnt even address the issues of oil, the dollar, prices, inflation, handcuffing the FED big time. This is NOT 2009 when oil was at $40 and the dollar at 92 and prices 50% lower! Whats Ben going to do, $2 trillion QE and oil shoots right up to $150 and the dollar dives under 60? OK, then what?
At best next week we will get another 'keyword jumble' speech.
Heres Ben out on a tightrope over the grand canyon and Rosie says what he needs to do is a few backflips to make the crowd Oooo and Ahhhhh...whatever.
I agree with you but I tend to always underestimate their insanity. All bets are off.
Ahh, but that's the secret, he's not saying ANYTHING. There is no deicision. Check out the word "may", this means either direction is possible with equal weight. He's saying the Fed move could be huge, but with no certainty.
Technically he can't be wrong because he qualified it.
Bernank: "Tim where should we start level wise?"
Geithner: "I think a zillion sounds about right"
Between AJA, the US's portion of the IMF's "support" of Europe, OT, QE3, whenever the fuck "swaps", and of course our debt ceiling problem AGAIN closing in on us
The suprise will be that they will continue to monitor the situation with the so many "tools" at thier disposal. speech delivered by the head tool himself,,,
NO surprise to the upside IMO
Think of everything we've accomplished, man. Out these windows, we will view the collapse of financial history. One step closer to economic equilibrium.
It could offer fixed-term loans to banks at low or zero interest, with a wide range of private assets (including, among others...mortgages... )deemed eligible as collateral.
Ding! Ding! Ding! What do we have for her Johnny?!!! Instead of screwing around with the primary dealers and all the dyspeptic blockages created by the great Wall Street Money Maw, take all the bad mortgages directly off the balance sheets of the banks and replace them nice crisp, spendable, lendable CASH. Hold them at the Fed until the inflation rate reaches 5% (it should happen within a two or three years if the banks get busy lending), and then sell them back at a gigantic (my guess is at least $300 billion) loss that nobody really laments because the economy is finally beginning to recover. The Bernank may even be able to time it so he liquidates between the moments that inflation really begins to go and when interest rates take off (it might be about a 10 minute window). Who knows.
I agree on an upcoming big splash, I just don't think it's going to happen at the September meeting. This sucker needs to hit crisis mode before he can get the sociopolitical power to do a massive balance sheet increase (I would suggest we're probably going to $4 trillion in short order here). Looking at late October/early November, pulls the rabbit out of the hat just in time for the holidays, S&P hits $1400 and the MSM annoits him "Man O' The Year" once again. Rhetorically, the September "do nothing" meeting and subsequent 20-30% stock market drop (along with continuing bad economic data that will be massaged into illusiary correlation with said stock market) will serve as "proof" that "doing nothing" "doesn't work".
As far as trading this, ditch the shorter term options and trade December 17/30. FAS calls are going to be enormously cheap by about mid-October, you could probably double your money on this trade by end of year.
This guy doesn't know shit. He just finished penning a bearish piece now he is going with the bernanke hurl. jesus tits, the stock market will go up if bernanke does QE3, is that supposed to be some profound thinking on his part? holy fuck rosie, get a grip!
All Rosie is really saying is 'Its fuked, so Ben has to REALLY pull something huge out of his hat'...but what can he do? Deliver us $150 oil and a sub-70 dollar?
This article is a big nothing burger after going thru it twice, it doesnt deal with any reality that Bens hands are tied, the conclusion is he needs to pull a glitter unicorn out of his ass. OK whatever.
Top Secret
From: Head of FBI
For: POTUS, Chief of Staff. Not for Treasury Secretary
Subject: Full and final Bernanke Report
Copied and pasted from Daily Kos
As you are aware, Bureau Operative TK421 was passing Federal Reserve Chairman Ben Bernanke’s office on 19th August 2011. He heard a commotion and entered. A partially clothed and screaming Mr Bernanke was being restrained by aides from exiting the room via the fire escape. TK421 sedated Mr Bernanke and removed him from the building, disguised as a filing cabinet. He then interrogated the aides.
Mr Bernanke was preparing for his 26 August keynote speech. Aides said he was agitated. The debt ceiling plan had upset the markets. Investors thought the spending reductions were too big (given slow US growth), too small (given massive Federal deficit), and too incredible (given Congress). The US Credit Rating was downgraded. Reflation was impossible even if Congress wanted it. The markets would say it was too small, with growth so slow. And they would say it was too big, worsening the deficit.
Then there was Europe. He couldn’t do their job for them. “Anyway what is their job?” he asked. “Bailing Greece and the rest out? Band aid. Rewarding failure. Storing up trouble. Greece is badly run. Is it? As badly run as Lehmans? AIG? RBS? No, let the Euro go to hell. Then what? More banks failing. But there’d be just one reserve currency. The dollar! But what could America do with a rising dollar? Give it to China?
“And what can I do? More QE? Markets’ll say I panicked. The banks. I’ve tried, I tell you. Friedman on the Depression. In reverse. Zero interests rates. Free money. My idea! But no one lends, they keep it, clean themselves up, wipe their ass, pay bonuses. But if I lean on them, regulate, they’ll kill me.
“We won. Remember! We won. So the market can win. Heads they win. Tails they win. You lose. Smart. But no. Not now. No! And the winner is, ladies and gentlemen: Beijing!” He got up and started throwing books off his shelves, Freidman and Keynes, Galbraith, his own works on the Crash. “Useless!” he screamed. “So what do I say? What do I do? Nothing? Another do nothing Central Banker watching the world go to shit, like that beady-eyed, inflation-obsessed, arrogant-with-so-little-to-show-for-it, self-congratulatory, Bank-of-England fuck King? No. Must do something. What? Wait. Maybe…” He seemed to have an idea and stood up. “Must go out,” he announced. Where, his aides asked.
“I’m going to find it.” Find what? “Find it. Find it. It. IT! THE REAL ECONOMY! Must be there. A cobbler in Southern Spain, someone running a taverna on Naxos, a carpenter in the Italian hills, making puppets, no, no, not that one, he lies! oh, I don’t know, do we make things any more, things that aren’t so much crap? Got to find out. Find it! I have ta’en too little care of this. Off, off, you lendings, come unbuckle here.” Mr Bernanke removed his jacket and tie. When aides saw he had no intention of stopping there, they reasoned with him, suggesting it would look odd – and might adversely affect the markets – for the Fed Chairman to run naked through Washington. So Mr Bernanke decided to disguise himself, saying he’d sneak up on the markets and make them come and find the real economy too. He then attempted to staple a black handkerchief to his bald head. At this point his aides rushed him. TK421 entered the room shortly thereafter.
We kept Mr Bernanke in isolation for a few days. Measures were taken to restore his morale. We played him DVDs of the Fall of the Berlin Wall and recordings of Mr Fukuyama’s The End of History.
Mr Bernanke as you know recovered sufficiently to achieve the waking catatonia needed to give the steady state speech he made on 26th August. Which the markets hated. At time of writing, the Eurozone crisis is intensifying and the US economy remains stalled. While Secretary Geithner continues to be publicly, though impotently, activist on the former question, we are confident Mr Bernanke’s rediscovered passivity will serve to neutralise him on this and other questions.
To that end, Mr Bernanke will continue to receive the programme of therapies prescribed. We have co-opted Mr Bernanke’s predecessor Mr Greenspan onto the programme. He has promised to remind Mr Bernanke “that a Central Banker’s role is not to manage the markets, not to be right, but to be their High Priest, giving them an offering from time to time, a toy, and observing that if they play with it capriciously, this merely proves their invincibility”.
ENDS
Note: TK421’s presence in no way corroborates the widely held Washington view that the Bureau keeps senior people under surveillance. TK421 says he and other operatives regularly use the Federal Reserve as a john en route to the Bureau’s Washington office.
Ben Bernanke...Rogue Trader with his finger on the buy button using your US dollars.
Just bought 1 million shares of AMZN, that pig is going to the moon.
<--- SELL OFF AND CRASH
<--- QE3+++to the Nth+++ FUCKTARD RALLY
¡VOTE BIYATCHEZ!
IF Bernank pulled a magical unicorn out of his ass, yea we might get 'stocks up'...we'd also have $5 gas and a dollar 10% lower, for a nice pissed off public in election season. OK then what? Bernank's hands are tied here.
OK, so this comes down to an observation that everyone can agree with. Bernanke doesn't want to pull the magic unicorn out or he would have already done so in the previous meeting. He wants to delay. What is going to force him to do so now? What has changed?
There is zero chance he will do so. Worse case scenario, he can blow some more smoke, offer a few hints about what they are going to do, and hope the sell off isn't too extreme. There's nothing magical about this meeting, he can change his mind and make an announcement anytime, so why would he pull out the unicorn at the meeting???
This is all about kicking the can, not about fixing things or making announcements that change anything.
Maybe something unrelated to the Fed will happen between now and then? Maybe they'll kill Osama for a third time Sunday night?! It's been 4 1/2 months since he died again.
They could roll out Osama's evil twin brother- Abdullah Hussein Mohammed Bin laden. Right now he is fighting alongside the evil Ghadaffi in Libya, murdering the brave and valiant freedom fighter rebels, raping young Libyan maiden virgins and planning more terrorist attacks in america. Once this fact is made known to the American people, we will certainly send our boys to the Libyan mainland to lend a helpng hand.
I hear Larry Silverstein just bought the Sears Tower in Chicago. We should all send him some cash to help pay for the necessary terrorist attack insurance-as his premiums have skyrockedted since 911, and the Arab terrorists are persecuting that poor man and his family - -all because he's Jewish. Disgusting.
I have been saying this for awhile: It has to be more than Operation Twist. Otherwise, forget about it. You know he--being Ben--has boxed himself into this corner: if he doesn't surprise the market, expect a subsequent tanking. Yet, Ben just loves his fifteen minutes of fame. So we know he'll do something to surprise the market.
However, I'm still totally baffled that the "market" was surprised by his ZIRP forever policy: who the hell paying attention ever thought he was going to raise rates, ever.
..."2:15 p.m. on an announcement day you can watch those indexes quiver as if trying to digest the information in the rate decision..."
Drunk with power.
BTW, was QE2 a success?
Yes, for the banksters II
Neel Kashkari Defends TARP as “Wildly Successful”
Yes, for the banksters!
Commodities have been spanked the last few days
Gold sell off ended today
Which means something big is about to happen. Maybe the Bernanke has a huge shocker in store for the bears. Probably outright purchases of credit instruments which everyone and their brother have been shorting the last few weeks.
- Note the outperformance of the retail sector. Again.
- Note the huge launch off the lows of many industrial and cyclical stocks.
- Note the world record breakout in AMZN today.
- Note the inability of PIIG banks like HBC to selloff intraday when the market dumps
- Note the straight line vertical moves in EBAY, almost at 52-week highs. Again.
Lots of frontrunning going on.
Just sayin......
Same old pump before the dump.
Bulls beware
All I note robot trader is you're THE BEST contrarian indicator known to mankind. I've faded you so much I should probably send you a cheque for next years rent on your 600 sq ft stuido city studio apartment that you cling to.
Watch the George costanza reverse repo Seinfeld episode.
Just saying.....
Hi Robot. I've missed watching everyone owning you lately. I can see you are still up to your usual trolling to guage human interaction you lack in real life.
-Signed, Your Mom
Dude you crack me up, thumbs up, and go get 'em.
God, I love pigtails. Please don't tell me you have a cheerleader uniform on!?:)
Yes, something big is going happen. The markets are going to take a big steamy diarrhea dump, and miracle of miracles, gold and silver are going to be dragged down at the same time to show who really runs the markets. They should skyrocket, so they will be attacked, probably even before the announcement.
You don't need to ramp stocks this much, for this many days, to frontrun good news. You run it up on the rumor and sell it on the news when that news is horrible.
Making a case for a commodity sell off because bernank has some more inflationary plans makes absolutely no sense.
That said, only techs are on a significant rip. Don't know what that means, if anything beside money-parking, but it's been a good trade.
lots of front running going on...
tptb setting up short is the name of the game. amzn and ebay up 15% in three sessions are you fucking kidding me?? the ridiculous price action is what's called a "topping process" maybe you've heard of it lol???
amzn blow-off top on huge volume, and ebay quadruple-top. ftw bitch.
"The market can remain irrational longer than you can remain solvent." --unkkkkk.......
Not saying that this is the case, and it certainly was not my orders alone, but eBay and Amazon.com are the only two places I've spent money (aside from the gas station and the local grocery store) in a couple of months.
There is a reason for that, of course. In the case of eBay, my local coin shop has basically run out of US 90% silver and ASE. He still has rounds, but I'm just not that interested in silver that is not easily identifiable, so I've been buying coins off eBay. Yes, I know that I could get them from AMPEX or Gainsville coins or wherever, but I've always found better deals on eBay with a little work. Every single auction that is selling PMs within 5-10% of spot has at least 6-10 bids when I look. Lots of transactions happening there.
When it comes to Amazon, it's just a basic fact of life that you can't buy some things locally when you live in a mainly rural area. I've got most of my food stockpiled, tools, and all the other things I feel like I need that can be obtained locally, so now it's down to ordering the harder-to-find stuff, and that means on-line. Amazon just happens to have almost everything, so I can just load up and pay in one shot. Just got a boatload of antibiotics in the mail today, and I can't think of any other way that that could happen.
Could be that the stock jumps on those two are legit, if others are doing similar things. Though I know it's part of the script here to chastise "them" (being those people who are not part of this group) for not being "awake," but I have actually not met anyone who thinks everything is ok and getting better in a long time. All the guys I work with, to the best of my knowledge, are stockpiling ammo- some are stocking gasoline. Not much PM investment or food storage, but stacking up box after box of ammo is not a sign of optimism on their parts. Who knows what else they're doing- ammo is just the thing they talk about, kind of like silver is the thing I talk about- but I leave the rest out of most conversations about prepping.
I'm confused, did ben acquire a new toy beside his old printer, has he become a 2-trick pony?
I have a feeling that FED just about to repeat what it was already said last meeting, nothing else, - no QE, no Twist.
Just blah--blah, And Market might tank or might ever rise,
who knows. No deflation and enough liquidity already..
Dunno, we'll see, but I'm betting on NO Further ACTION
for now from Bernank, - ZERO.
Everyone will be searching the 'word jumble count' tea leaves on Wednesday after the speech trying to figure out where the gold nuggets from Bernank's speech are....when they realize no diamond encrusted Tiffany trunk full of free money was delivered, the MoMoChaser stock Gods will be very upset.
Fed Chairman "tradition":)
Don't forget that there is a big vote at the UN next week over Palestinian Statehood.
Go long food and ammo.
"WAR, HA! Good god, y'all! What is it good for?"
Well Edwin, it's good for short term economic stimulus, rallying support behind failed regimes, population reduction, and further reducing personal liberty.....
Absolutely nothing, say it again!!
And here he is Mr. Edwin Starr at his best circa 1969. A black Al-Qaeda no doubt!
http://www.youtube.com/watch?v=01-2pNCZiNk
From the article: 2. Ben Bernanke has shown repeatedly that he is willing to take risks and be very aggressive. Bwaaaaaaaaaaaaaaaaaaah!
I remeber his lips quivering very aggressively on national TV but that's about it.
Bens aggresiveness and risk taking according to some behind the scenes means he will soon be gone with charges against him following. Ben, you really want to double down now? Think HARD!
Your lips would quiver too if you had a hand up your ass making your mouth move. I'm just sayin'.
Swap lines are already open so there's your QE of sorts. Problem is with hugely over valued euro and swissie. Euro banks are imploding making lehman look like a walk in the park so it Geithner front and center not the Bernank. This is all about RESTRUCTURING...IDEALLY. It could be about "destructiring" Europe as well.
Hey, first time long time as they say.....I'd like peoples' opinion on this potential storyline. It seems like with 1.5 quadrillion in derivatives on the world market, TPTB can crash any market, any country, the whole world at any time they want. So knowing that and that they are in charge, there has to be a reason for all this Greece talk, US credit rating downgrade, etc. To me the super congress - or whatever anyone wants to call the unconstitutional budget fast track authority - has as its guaranteed cuts 500-600B in Medicare/SSI and 500-600B in Defense. There is no way defense is taking a hit and we know that there is nothing in the SSI coffers, hasnt been since they started "borrowing" against it in the 80s. So couldnt a Greek default and a stock market plunge associated with it be the perfect storyline to convince the American people (or at least their sellouts in the District of Criminals) to do exactly as the super congress says? Granted no one really knows what TPTB are up to but just reading and seeing what is public, that seems like where they are headed. Any thoughts?
Tommy, I agree that TPTB can do great damage to the world of fiat. But, breaking away from that failed sytem is going to be necessarily painful for those who have placed their faith in it. There's just no way this ends with everyone's promises and expectations (401K) intact. That was baked in the cake from the day these vermin dropped the twin towers. There are still people buying the government line that it was a bunch of hastily trained hijackers that perpetrated this highly coordinated crime.
To those of us who have had to carry the weight of this failed zomie state on our backs, this is where our revolution rises to the next level.
Keep your powder dry! -Shine
Yea, I need to leave my job to get my 401k into gold. I am about 50/50 gold cash. I have some doomsday calls on SRS and TZA just in case they go to 2008 levels. Gold, Silver and Hollow Point Steel.
I'm in the same boat. I took out the largest loan I could against that 401k and plowed it into physical. I sleep well at night.
What did they give you ltv wise? I'd like to do the same but figured they probably wouldn't give me shit.
They will probably deflate the ponzi before the majority of baby boomers remove too much from their 401k
As Sheepdog aptly tells us all the time. This is all planned. The objective is to create a one world fascist police state and then eugenics. The idiots tell us this in their white papers but nobody reads them.
They want a Unites States of Europe and eventually consolidate the hemispheres. Think like a evil demon and you will know where we are headed unless we beat them, which is still possible. We need the thugs at the alphabet soup of U. S. agencies to pick a side. If they choose poorly they could end up at the end of a rope!
Rosie is like Nouriel - they were great as bears during the boom. Now, liked whipped puppies, their brains have gone soft, or they have been "bought". The Fed has been given the evil wink by the GOP - devalue the dollar any further and when (not if, sadly) we get into power next November you won't just be an ex-Chairsatan, you'll be in court. Timmay wants the Eurofolk to leverage their Eurotarp because the US needs that cover before they dare print again. QE3 trillions won't happen.
We'll get more 'extension of present policy' and thats it, as a market with a few $trillion priced in sputters and topples.
AAPL broke 400$, sh*t my 400 call options expired worthless month ago :)))
Strange Market though, very few selective stocks are at All time highs, but most are near 2008 bottoms..
Nobody read yesterday's china article? It's them buying up bib and tech.
Not even operation twist is going to happen,since buying longer duration securities only increases the Fed's duration risk at no gain to the economy and possibly higher inflation.The independence of the Fed is a risk if the balance sheet is increased by any sighificant amount.Maybe Mr. Rosenburg in Canada did not listen to the Republican debates,but it for the first time in US political history , the Fed has been the focus of such skepticism by presidential candiadates.Any implicit target on interest rates would guarantee the dumping of all of China's holdings in that maturity,increase the Fed's balance sheet by a huge amount and , hurt the banks radically and put pension funds and insurance companies at extreme risk.
reinformance of the dual mandate is absurd .The fed has no positive influence on improving unemployment given the ulra low interest rates that we have currently.The fed might be able to increase inflation above its goal ,but that will only destroy Mr Obama's chances in 2012 and gurantee that the next Republican president will rein the FED and get rid of Mr Bernacke
Buying short term term foreign securities is and probably will happen.Buying longer term foreign securities would probably result in congressional hearings about why he is bailout out Europe
Eliminating intesest on reserves will probably happen,but it will only serve to reduce bank earnings .Thsi action will not increase loans at all
Taking in underwater mortgages from banks just will not happen as it will be a backdoor TARP program and will seen as usurping Congressional powers.
The Fed is completely out of bullets ,given the political attitudes among Republican presidential candidates.Get set for a massive decline in the stock market and bonds ; the Fed will be there just sitting on their hands.
"The independence of the Fed is at risk" NOT!
Why the fukk would any goon trader be buying into the close today - a Friday - in a clear intermediate term downtrend, after 5 consecutive up days, and at massive resistance?
Good question, maybe so many rely on the Bernank? I sold some but will probably get out Monday, if this continues, as if Bernank surprise with something big, this sh*t could run + 400 points in 1 day.. Mean while I've just shorted DIA and SPY (Spreads), but will stay alert..
Closed my uncovered longs today. I am waiting for a for at least a good reset on the 60 minute chart at a higher low. Momentum very positive. We clear the 50 day MA on good volume and stay above it at least a week, then there's more to it than short covering.
In answer to your question, John Kenneth Galbraith in his book, The Great Crash of 1929, provides an observation that traders turn to "incantations" during the popping of the bubble which quell their fears and keep them from seeing reality.
The same concept applies to passengers on the Titanic telling themselves it was "unsinkable." This unshakable faith in the Fed will eventually be shaken, and the greedy people who hoped to wrest the last 10% rise out of the markets will learn it was the most costly 10%.
You know, the Bernank is going to be a little tounge-tied. What with trying to direct money into longer term treasuries and being unable to prevent the onset of negative nominal interest rates, the banks have no protection from the privatised central bank and will just have to rely on the strength of their own balance sheets.
Its enough to try and get your pronounciation correct by filling your mouth with pebbles, but what if your forked tounge is tied up in knots at the same time? (quivering beards excepted)
QE2 boosted asset prices but it also dramatically boosted the cost of food and energy, more than offsetting any benefit to the average American.
Bernanke does another LSAP, and Arab Spring will visit the USA.
Not only that but the Feds wings will be clipped by an act of congress. They will have NO choice. As the primary mandate of the fed is price stability and maximum employment. NOT backstopping speculators.
Hell yea. Bens prints again, and election season in the US will be $5 gas riots. I just dont see this, I think Rosie is wrong and next week people will be trying to figure out the keyword jumble where Bernank really didnt say jack shit.
Dog I think Bernank is crazy enough to do it. ZIRP and an addition 500 trillion for Europe.
not for europe but for euro bankers and the world oligarchs...the people of first world will suffer bad.
I really don't see an Arab Spring type movement happening in America...ever. Americans will just bend over, take it and say "thank you sir may I have another". The people of this country are like a dog that's been beat too much. They're more prone to hiding in a corner than biting.