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Forget The Twist, Here Comes Operation Torque: Presenting Morgan Stanley's Complete Moral Hazard Profit Guide
While we often pick on Morgan Stanley's Jim Caron (the same guy who year after year after year keeps predicting the yield on the 10 year will soar, and not just soar, but soar for all the wrong reasons, such as bull steepening and what not), has just diametrically changed his tune, by bringing us, drumroll please, Operation Torque. To wit: "Policy makers in both the US and Europe get back to work in September, and this month will be rife with deliberations on stimulus and market support policies. In our view, a duration extension to the Fed's SOMA portfolio is an optimal policy tool to engender easing. This can initially be done through extending the duration of reinvestments from MBS and agency holdings but may ultimately culminate in selling shorter-duration USTs in its SOMA portfolio in exchange for buying longer duration assets (‘Operation Torque’, as we at Morgan Stanley have dubbed it)." Why 2 Years? Because as per the August 9 FOMC statement, we know that there will no rate hike for the next 2 Years, and hence no duration risk. Which means that the Fed can sell an infinite amount of paper into a mid-2013 horizon without worrying about demand destruction. And by doing so it will, as we have been predicting since May, expand the duration of its portfolio, in the process pushing investors into risky assets for the third time in as many years. But there is a twist...
...Or a torque as the case may be...
As we have noted on several occasions, going aggressively after the 10 Year would likely mean an even more pronounced flattening of the 2s10s than we currently have: an outcome which more than anything will impair US banks. As yesterday's MBA mortgage refinancing data showed, even at record low mortgage rates virtually nobody wants to refi. Perhaps a forced refinancing will help courtesy of Obama, but we think not. The point being that net interest margin, or the carry trade as it is better known, will all but disappear, and perversely QE3, call it Twist or Torque, will end up generating even more pain for the critical financial sector, without which there is no chance of a broad market rally.
Furthermore, we are amused that MS is implicitly agreeing with us: Caron says - "We believe that if the Fed implements Operation Torque, it will purchase a significant amount in the 30y sector of the curve as well as at the 8-10y point." And it continues: "If the Fed does purchase on the long end, the belly could easily underperform with yields currently near all-time lows. We recommend taking advantage of this opportunity by positioning for the 7s30s to flatten, or trading 7s30s on asset swap as described below." In other words, a flattener with a 10 year hump, so needed for even some incremental 2s10s steepening... Just as we have been predicting.
However, that's not all. We are confident that when all is said and done, the Fed will realize it needs to drop the 10 Y yield modestly in order to afford some profitability for the banks, resulting in an emphasis on the Ultra longs (17-30 Year sector).
There is however a glitch: there is nowhere near enough supply in the 17-30 Year space to meet this need for 10s30s flattening even as the 10 itself floats higher. And while 10 is too short, the 30 is too long, does this mean that the Treasury will soon have to consider converting the 20 Year point on the curve from a simple Constant Maturity Series into an actual cash bond to satisfy the suddenly very picky Goldilocks environment ? Unless Geithner wants to take a chance with flooding the market with 30 year paper, for which the only buyer will be the Fed, it may soon have to.
Anyway, back to Morgan Stanley's Operation Torque. Here is how Caron presents the three core scenarios that the Fed will undertake:
The goal of Operation Torque is to remove duration supply from the market, and not simply to push yields lower. With less supply in the market, risk premiums for spread products should decrease, driving easier financial conditions.
During QE2, the Fed removed $490bn in 10y equivalents form the market. If we use that as a baseline, we may evaluate Operation Torque under several different scenarios. As the Fed would not expand its balance sheet under an Operation Torque, there is a limited supply of short-duration debt with which to extend, and the market impact is highly dependent on where it is placed. The three scenarios below help us understand targeting purchases on different parts of the curve could impact the market.
Scenario 1: Fed sells all debt with less than two years to maturity and allocates proceeds to the 8-10y sector.
Scenario 2: Fed sells all debt with less than two years to maturity. Proceeds allocated to the 8-10y sector and 30y sector, targeting a total of $400bn equivalents removed from the market.
Scenario 3: Fed sells all debt with less than two years to maturity. Proceeds allocated in same ratio as QE2 purchases.
All scenarios assume a time frame through January 2012 and include estimated auctions. We only include USTs in this particular analysis; however, we estimate that mortgage pre-pays could add up to an additional $90bn should the Fed use those funds to extend duration in the SOMA as well.
And once again, we don't like to gloat, but we did "tell you so" - the Fed will target not the 10 year but the 30 year:
By purchasing in the 30y sector in addition to the 8-10y sector (scenario 2), the Fed could achieve a $436bn purchase of 10y equivalents, having sold the same debt out of the SOMA. This is very close to the same level of duration removed from the market during QE2.
Finally, we may compare to an operation that has the same allocations as was done in QE2 (scenario 3). This style of operation has the least impact in duration terms at $186bn – less than 45% of the impact of Scenario 2 (Exhibit 5). Additional detail of each scenario can be found in the appendix to this report.
We believe that if the Fed implements Operation Torque, it will purchase a significant amount in the 30y sector of the curve as well as at the 8-10y point. In order to position for this Fed action, we recommend the following:
- Overweight 9-10y & 30y UST sectors
- UST 7s30s yield curve flattener
- 7s30s asset swap curve flattener ? UST 7y to underperform and 30y to outperform versus Libor
We look for trades that benefit from duration buying at the 9-10y and 30y points on the curve. In particular, we recommend duration longs to re-allocate into such as 2020 and 2021 original maturity 10s and 2041 bonds as these have a lot of par available to the Fed and are likely candidates for purchase.
Graphically:
Bottom line: Goldman, JP Morgan, Nomura and now Morgan Stanley all assume QE3 is a fait accompli, the only question is what shape it will take.
And for all intents and purposes, what the Fed will achieve, is to get investors to rush out of anything with a sub 10 Year duration, and into the longest point on the curve. And just like last time, the biggest beneficiaries will be not bonds, nor stocks, but commodities, where the marginal purchasing power is far greater, and the result will be yet another round of geopolitical shocks, this time, as we have said so many times before, far closer to the core: both in Europe and the US. As for the effectiveness of such a move on the economy and stocks, we urge readers to look at the following chart.
Below is the complete Morgan Stanley moral hazard playbook.
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insolvent TBTFs like Morgan Stanley are begging for more heroin from Uncle Ben.
Meth. MS uses Meth.
Ben is a virtual drug dealer now. Good selection.
Been looking at TMV for 2 years and it looks like that's all I'll be doing for another two.
TERROR DOME, BITCHEZ
All these banker whores who espouse flipping dollars here to influence dollars there not only ensure the USD train wreck ahead, but lose credibility along the way.
Dollars are being treated like Monopoly money, maybe worse, with these smoke-and-mirror ideas. All of humanity pinning hopes to this POS administration and banker cabal will end up sinking with them.
Such a sad situation the USG has become, and so sad that money influences policy..... a completely FAILURE of a policy at best. Total destruction of money is guaranteed.
My favorite part:
Somebody correct me if I'm wrong, but this is more of what got us here? QE3, indeed.
My second favorite part:
I read that thus: The guy is a real asshat as ZH has pointed out in the past, but now that he agrees with us perhaps he's not such a big asshat after all, but an asshat just the same. His asshattedness has decreased just barely enough that we can now give credibility to his opinions.
Theory of asshat relativity?
TMV = death wish. Load up on TLT, or better still, just buy the 30s and enjoy the coupons. I know, I know: ultimately the Fed's Ponzi will implode -- but it may not be in your lifetime.
One sure sign that we're getting close to a top in the Treasury market: when that bow-tied asshole who recently boasted "I'm short Treasuries as we speak" gets down on his knees on CNBC like the other Jimmy did and 'fesses up good and proper.
http://www.youtube.com/watch?v=Q1OXAi7rNMg
"Meth. MS uses Meth."
Your right. You can tell it's meth by the twitchy changes in their forcasts and their shifty, darting eyes as they lie to you. Definitely meth symptoms.
Damn, I've Torqued the wife few hundred times.
Captain Morgan, I'm familiar with beong torgued, too. Morgan Stanley has not even asked me for a date, let alone a little torquring between the sheets.
I thought Uncle Ben and uncle Sam, had first grabs. Ohhh, hit my G(government) spot.
Banksters are now calling more of a Operation Joke.
operation torque, huh anybody know what happens to the wheels on your car if you over torque the lug nuts and they snap.....
"However, that's not all. We are confident that when all is said and done, the Fed will realize it needs to drop the 10 Y yield modestly in order to afford some profitability for the banks..."
Sounds like they're planning on getting their slice. Not only are they 'begging for more heroin', they're saying how they'd like to have it delivered.
One way or another the junkies will get their fix.
Can we just collapse this thing already?
pods
off topic but I need to share the mail I just received - Comex next?
Margin Increase for Gold and Silver
Due to the recent market volatility in Gold (XAU) and Silver (XAG), Saxo is increasing the margin required for Spot Metal, Spot Metal Options and COMEX Gold Futures positions from Friday 9th September 2011 at 10:00am (CET):
- Metals (Spot, Forwards and Options)
The margins required for XAU and XAG positions will increase from 4% to 6%
- Futures Contract
Both the Initial and Maintenance margins for COMEX GOLD 100oz (GC) will increase to USD 10,950
will end up generating even more pain for the critical financial sector, without which there is no chance of a broad market rally...
The tapeworm is critical to the functioning of the digestive system.
Operation Splat
Too much torque and you strip the gears.
http://www.coaster-net.com/files/2009/1206/pictures/operation-torque-gBl...
<10 September is Mussel Day>
http://www.entendance.com/forums/viewtopic.php?f=6&t=784&p=19079#p19079
and ughh. just as ZH posts this operation, my TBT fills
Viewing this from outside America, this is all dizzyingly bizarre and tragi-comedy.
A beneficiary of the Fed's actions should also be Jeffrey Gundlach's DoubleLine Total Return Fund (DLTNX). This fund holds mostly MBS and 30s. Outside of holding gold and silver, I would suggest taking a look at this fund.
Scary unsustainable shit!
Looks bullish as NASDAQ hovers in green at 0.001% with ONLY bad news and anemic volume to levitate it!
FUCK YOU QE3
FUCK YOU QE3
_____________________________________________________
vast-dom ,
Hey! Hey!!
Wall Street only has Trillions sitting on the sidelines doing nothing..
Think of how much more helpful having yet Trillions more doing even more Nothing would be to those suffering on Main Street!!
Dont be so short sighted!
JW you are correct my myopia is not allowing me to appreciate Main St.'s upside to QE3!
Thanks JW I can now see. MORE QE3 BIYATCHEZ LET'S GET THE DOW TO 2600 already and save the populace!
Main St. don't need funduhmentals!
http://www.ustream.tv/federalreserve
Federal Reserve
189,079 Live Views 686 In Crowd The Housing Market Going Forward: Lessons Learned from the Recent Crisis is a policy forum to be held September 1, 2011. Participants of the forum will examine the contributing factors to the severe downturn of the housing and mortgage markets, reexamine the role of homeownership and rental options, and discuss policy recommendations going forward. The event will be held at the Federal Reserve Board's Martin Building in Washington, D.C., and is organized by the Board's Division of Consumer and Community Affairs.
http://www.federalreserve.gov/newsevents/housingconf2011.htm
Live Captioning of the event is available here:
http://www.streamtext.net/player?event=FRB
New item in your series of interest:
IMF Research Bulletin -- September 2011:
The Q&A in this issue features seven questions about economic recovery after "WARS" or other "open conflict"
(by Antonio C. David, Fabiano Rodrigues Bastos, and Marshall Mills).
The research summaries are "Revisiting Capital Controls"
(by Marcos Chamon)
and "Capital Flows and Financial Stability: Monetary Policy and Macroprudential Responses"
(by D. Filiz Unsal).
The issue also provides details on visiting scholars at the IMF (mainly from September through December 2011), as well as recently published IMF Working Papers and Staff Discussion Notes.
http://www.imf.org/External/Pubs/FT/irb/2011/03/index.pdf
Getting to be about time for Treasury to introduce perpetuals....
Or even better: zero bond perpetuals...
Oh my! You mean the banks might have to start making real loans to real businesses in order to make money. God forbid!
Was thinking that too, not a bad thing so long as they don't make BAD loans and bundle them into securities AGAIN. Anyone who has done any decent auto work knows what can happen when you over torque something.
As it just so happens Holder and the DOJ are in the process of doing a backdoor CRA to force bad loans;
http://www.investors.com/NewsAndAnalysis/Article/577794/201107081851/DOJ-Begins-Bank-Witch-Hunt.aspx
You're fucking kidding me ...right???!!!
Chill, this is good news. It pushes the reset up by several months.
So, the banks are biased but the title of the article (Witch Hunt?) is not? Ist there anything out there that is not slanted, and blatantly so? This is NOT a comment on the veracity of the article, rather a fervent wish that there could be some objective reporting. Fox, CNBC, MSNBC, NYT, etc., etc., ad infinitum. Please! Show me one unbiased, objective place to find facts -- and let me draw my own conclusions. That includes ZH.
Just go ahead and junk the crap outta my comment so I can then transition into the stage of questioning my own motives.
Perfect.
Yep, it was a steel bolt into an aluminum transfer case. At below torque specs.
pods
With more paper money printed out of thin air?
Maybe, I know this will be hard to believe, but maybe the Fed will act to benefit the federal Government and not the banks, after all they can see what will happen.
The Gov needs to lock in low rates so it doesn't get crushed when they rise, so the Fed drains long bonds and the treasury sells into this. The Treasury gets the low rates, or at least rates that don't rise too much.
Always good to be positive, but what has the fed's record of performance been again?
Chart: Swelling debt is really the problem world over
http://capital3x.com/?p=591
If the problem persists for more than 6 hours consult your financial planner. Financial priapism.
When everybody says 'x' will happen assume the opposite.
Isn't this just QE3 dressed in drag?
Bears are running out of time to slam this pig.
As long as the 5-year repeatedly crashes to 0.90% on the news of any type of "convulsion" in Europe or elsewhere, people are going to be horsewhipped out of bonds and into stocks where a 5% move in one day can equal 5 years worth of interest.
Look at Bank of NY, up 2.5% in just a few hours after the CEO quits.
Oh yeah? How did that work out in Japan?
No it's just anticipation of the next fomc meeting. If NFP
Comes in better than expected tomorrow you might get a little rugburn. I don't think equities will get quite the adrenaline rush but commodities sure will. However i don't have any inside info and I can't see where they're secretly pumping money. The euro is the wild card and should something break before then all bets are off. Best to play with just a little cash right now. Keep the rest for when the fog clears.
Why 2 years?
Let me think... Hmmm? Okay, I got it.
In two years, the Fed's charter expires and the reset button can be flipped. Isn't the gold carried on the books at something like $42? Once we fully release the Eurasian Huskies to pull the gold laden dog sled up to the $5,000, $7,500, $10,000, FOFOA... summit, we'll be ready to flip the $42 deflationary switch and take our $8 write up to the $50 one ounce gold buffalo coin.
Then all the MBS can be paid back in a currency that allows the new and improved IMF to book the receipts as gold (didn't you hear?... they rolled-up the TBTF). Just picture a synthetic-fiat-to-gold CDO in reverse. It should be in the fine print of next week's White House ReFi plan for your mortgage. Remember, you own America, so you own your share of the gold... unless you sign that is.
What does the national debt look like when it's written down by 99% ($50/$5000) and the Chinese get an equity stake in the new Pan-Eumerican soveriegn in a box (toll roads, expanded ports and the drink stand at Mount Rushmore included).
Dave Harrison
www.tradewithdave.com
This just makes me think the Treasury is going to refinance all its maturities at a longer duration. Feds been backstopping all of their auctions.
What an absolute borring day. Where the hell is S&P when we need a panic! My life is meaningless without global carnage!
OK. What would this do to the dollar? That is, sythetically altering it's value from a duration basis?
The dollar is the definition of synthetic. And vice-versa. The dollar is an unnatural abomination of physics, markets and common sense. GO QE3!
EDIT: the dollar is post-synthetic post-human abberation...
Read more: http://www.businessinsider.com/chinese-warship-confronts-indian-navy-vessel-in-south-china-sea-2011-9#comment-4e5fb3e369bedd707b000014#ixzz1Wif4X2Nr
"...per the August 9 FOMC statement, we know that there will no rate hike for the next 2 Years."
This assumes that Bernanke will last beyond the end of the current administration next year.
I'll hold on to my metal till I see an OZ = 1 dow point
For the sake of brevity-
Let it crash!
Like pulling off a band-aid, a quick rip is better than this creeping agony..
I don't see a full-scale QE coming. There are lots of reasons, not the elast of which are political, economic and geopolitical. A full QE with LSAP would pour jet fuel on the fire of biflation. And there would be hell to pay, unlike the last time when quiet desperation was the response.
Instead I think Ben is signaling a way more subtle approach, under the radar. ZIRP and QE lite are already in place.
And big fiscal stimulus is on the way. And as Bruce Krasting pointed out, there's a QE component to the refi portion
It's being done this way for a couple of reasons. The 3 you point out, of course, plus the inability to explain it to the average banker, financial planner, or retirement fund manager. Least of all, Rick Perry. The typical couch potato is totally lost. They can't fight what they can't understand, let alone actually SEE. The inflation resultant from this process will be easy to pin on the political party du jour! Easy, greasy.
first goldman sachs gives us reason to believe economy will be better based on their shitty nfp,
and now we know there will be no fed finagling based on on morgan stanleys call for one.
On CNBC - Goldman Sachs earnings estimate (per ISI Group) have been reduced from $2.50 to .75c .
Not a typo... $2.50 to 75 cents.
voices tell me I should wear a thong.
If Tyler and company were set on informing the American public. Not just union progressive sympathizers and gold bugs He would be telling us how to make money. Leveraged money. When the present policy makers BLINK. And raise or allow for the raising of interest rates. Just like 1979 Maybe it will take President Perry However. Jimmy Carter appointed Volker. Either way Perry or the new Fed chairman, I would like to know before the interest rate jump, How to make money on that event. Anyone can suggest Thanks in advance
If you're predicting interest rate to rise you would want to be short of US treasuries. However, if you are looking for advice on a forum you probably should not be trading.
You're about to have your ass handed to you.
Maybe its just me, but I find the SOMA acronym to be utterly appropriate to the Huxleyan/Orwellian state of affairs. Somebody must have had a good laugh when they came up with that one.
MS done stank up this joint with some hubr-ass.
Yes, stink indeed. What that taxpayer rape via "flip that bond" and ZIRP (lent back to the same taxpayers for a profit and bonuses) isn't enough for them. Tell them fuck off and go talk to there financial planner. Afterall, this is what the taxpayer is told. Let it crash already so that compensation (in whatever form that may be) can return to people who are actually worth a shit.
When all the experts and forecasts agree, something else will happen.
as long as we are in a zombie economy, the Fed & Treasury can pretty effectively sculpt the yield curve on a short term horizon. they cannot revive the zombie at this point, they can only try to prevent a fire or a sharp blow to the head.
Misread the headline and thought this article was about "Operation Tongue." I was intrigued.
Ah well.
Everyone can use a little more tongue.
What I don't understand is why nobody considers the time inconsistency problem involved. I mean, if anybody really believes this operation works in reviving the economy, why should he then believe that the FED keeps word and does really not hike rates until mid 2013. In other words, why should one believe that the outlined plan does *NOT* impact demand for the short end of the curve?
Jim Carrot, eh, Caron, bad analysis since the day one of his career. But i have to give him credit for being ablee to keep his "job" after all the rotten "analysis" he has done. Keep collecting the millions Jimbo!
Sounds plausible because it is so f'ing confusing as to what the outcome will be ... typical of Wall St.
Is anyone able to explain the relationship of Oil/USD/Equities recently? Well besides full-retard.
it all trades perfectly sanely outside of us hours... i believe the word you are looking for is "manipulation"
1st Div - There are rumors that they have found Obama's Kenyan birth certificate.
it seems that 9 times MS comes up and tyler is critical; now, they say something he likes and maybe they'll start dating. their oil desk got trashed; the fx desk caught fire; the equities desk got flooded; now, the fixed income/T is gonna freaking clean up!
tyler, this may be a set-up. they may have written this just for you (in romanian, of course), knowing europe is on vacation and america is gonna start drinking, heavily, around noon, today, and start driving around buying more booze for weekend & holiday.
i think we should get sac to take the Q & the E offa tyler's keyboard and run out for a bottle of calavados, with a few twists, of course, and see ya tuesday, tyler! heluva 3rd quarter for zH and you da man, tyler durden, you da man!
Nice reach around there at the end. No, Slewie, you da man!
Terrific.
They want everyone to pile into Junk Bonds, the only place left where there will be any yield.
This will end well. Oh yeah.
ok, i'll behave! i think the danger here is that we buy into the bullshit that the FED is in control. they have limited options here and buying the T's w/ QE and goosing the balance sheet seems pretty unwise to everyone
so, they're gonna diddle the angle of the dangle which as we learned in jr. H.S. = the square of the hair. and therin lies the bear: somebody ELSE gonna hafta finance uncle sugar. the PDs are sweating bullets, but the chairsatan has got everyone bluffed into thinking he can trade short for long and just talk his way thru the next freaking US Budget and the enormous deficit which, if the congo passes it, must be funded. nobody knows the numbers, b/c they haven't dressed the pig and put the lipstick on the stinking carcass, either. but, they gotta have pork, profits for da boys, and programs for the sheeple: the 3 P's of american goobermint! the juggernaut is steamin and ain't nobody gonna stop it now, not even the caped congo, b/c the council on for. rel. doesn't want it stopped. it.must.grow. they don't care about anything but their fascist plans, and the public debt bubble is gonna hafta grow to till we're all just a-screamin like in ghostbusters and then the marshmallow reality either blows up all over everything, or just crushes us
obviously you know what the best outcome is: we gotta take out the "dough boyz" and the stu-puff marshmallow ponzi must be microwaved, which is gonna burn when it goes, but only 2nd degree, doncha think?
the kindness of strangers gets a little overworked and interest rates begin to rise b/c if you ain't gonna pay, benzelbub, you ain't gonna play, the buyers don't care what tf you say
did anybody else check out pp 29 & 30 of this report? the euro-peon "risk calendar" where a risk event = convening any parliament in the whole she-bang! on sept 6, france convenes an "extraordinary parliament" on EFSF reform and recently-introduced budget measures. finland tees it up the same day, but w. no date set on a vote
sept 7: germany's const. court verdict on greece/eurp-peon rescue funds
sept 8: france votes on the EFSF and yup!~~recently-introduced austerity budget!
sept 9: final date 4 greek banks to participate in PSI
sept 15: ***expectations for greece to agree on finland's request for collateral (some of the entries have *, some**, and some *** but i can't read the small print!)
sept 23: germany bundestag poss vote on EFSF reform (cld be delayed til 29th)
oct 14: germany possible vote in bundestrat (sorry, mom) if bundestag vote is delayed till the 29th
and of course we have various Ecofin Council and Eurogroup meeting in there, the latter with 3 ***'s, ECB meeting w. their interest rate decisions, and auctions of absolutely worthless paper going just abt every single day from today till the ball drops in Times Square to open 2012
if this were a poker game, i would hafta say it looks like 7-card anaconda w/ a twist: 8 wild cards and three passes to the left, three passes to the right, which makes 7 betting rounds before the rollo and then six more to the showdown of the last blessed hole card. we hope
so much for behaving!
oh! edit: morgan stanley will show it's "customers" how to trade what appears to be derivatives during this circus and make a freaking pile! no shit!
i guess if this NWO thingy is too big to fail, it can't fail. 200 Bil EUR here, a Tril EUR there, some dollarz, some yen, some yuan, some baling wire, visqueen and duct tape, and we can get thru anything. together, BiCheZ!
if i told you this shit you would have me committed, which i always enjoy, btw, but when it comes from the "central planning authorities" which is a moving banquet combined with a masked ball, everybody will go along w/ it b/c christine l. looks freaking great in chanel, and angela m has cleavage!
No need to start behaving now, Slewie. Too late. Besides, what would we do without our resident wordsmith?
I'm confused here...
From http://www.zerohedge.com/news/operation-twist-expectations-or-lsad-returning-vengeance-explains-todays-moves-stocks-and-gold:
Tyler says "when the Fed announces Twist it will be extending duration, it effectively means selling everything 10 Year and older" and "The goal of this action: make the 2s10s will go vertical and to pancake the 10s30s"
In this current piece, he says "And once again, we don't like to gloat, but we did "tell you so" - the Fed will target not the 10 year but the 30 year" regarding MS's claim that "By purchasing in the 30y sector in addition to the 8-10y sector (scenario 2), the Fed could achieve a $436bn purchase of 10y equivalents" and "We believe that if the Fed implements Operation Torque, it will purchase a significant amount in the 30y sector of the curve as well as at the 8-10y point."
So in the last piece, he is saying that the Fed will be selling everything 10 years and older (which is what confsued the hell out of me) and in this current one, he's saying "see, we told you they would be buying 10s to 30s." I don't get it, can someone explain?
Of course the Fed will be bidding and twisiting in the 30 yr. The Chinese and Russians need bids to sell into. They have alerady pushed lil Timmy's face in the mud and told him what to do. He passed the message onto BB brain Bernake.
Provide bids or else.....
Can someone explain in simple english the meaning of
"commodities have far greater marginal purchasing power",
and if the first answer doesn't also answer the second question, why then
"commodities will be bigger beneficiaries will than bonds or stocks"? (seems to me stocks went up side by side with gold during QE1/2)
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