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By Frontrunning QE, Did The Market Make QE Impossible?

Tyler Durden's picture


Ever since the beginning of the year we have been saying that in order for the Fed to unleash QE, stocks have to drop by 20-30% to give political cover to the Fed (and/or ECB) to engage in another round of wanton currency destruction. Because while on one hand the temptation to boost stocks is so very high in an election year, the threat to one's presidential re-election chances that soaring gas prices late into the summer does, is simply far too big to be ignored. Yet here we are: stocks are just 4% off their 2012 highs, even as bonds are near all time low yields, and mortgages are at their all time lows. As such, even with the latest batch of economic data coming in simply atrocious, the Fed finds itself in a Catch 22 - it wants to help the stock market hoping that in itself will boost the "economy", yet it knows what more QE here will do to the priced of gold and inflation expectations: something which as Hilsenrath himself said yesterday does not compute, as it runs against everything "Economic textbooks" teach. What is more important, is that the market, like a true addict, is oblivious to any of these considerations, and has priced in a massive bout of Quantitative Easing to be announced tomorrow at 2:15 pm. There is one problem though: has the market, by pricing in QE on every down day - the only buying catalyst in the past month have been hopes of more QE - made QE impossible? Observe the following chart from SocGen which shows 6 month forward equity vol. What is obvious is that due to precisely being priced in, QE is now virtually unfeasible, irrelevant of what Goldman and its "FLOW QE" model tell us. As SocGen simply states: "More stress is needed to trigger ample policy response."

Naturally, SocGen is not the first to get this. Recall that this is precisely the logical espoused by both Citi a month ago which warned of XO crossing above 1000 bps first, and then Deutsche Bank this weekend saying a crash may well be needed to jar Europe out of inactivity like last fall. Not to Goldman though. Goldman is confident that the 4% drop in the S&P from its highs is enough to unleash an epic episode of monetization. Well, the chart below begs to differ.

Of course, if Goldman is right, and the Fed does indeed go ahead and launch some version of a Flow-based easing program, with a $50-$75 billion monthly monetization total, then kiss it all goodbye, as going forward the market will consider even a one tick drop in the ES a sufficient reason to kill the USD, and buy every ounce of physical gold available. In the process, of course, the Weimar wheels will start turning.

Furthermore, while stocks are always in their little world, and always, absolutely always wrong in the long-run, recall that the fixed income markets are saying something totally different: no bombastic LSAP program, but a very timid Op Twist expansion, where the 3 year selling threshold is extended by one year to include 4 year bond sales. An outcome such as this will send stocks plunging as it is merely more sterilized easing - the kind of intervention that has had no real impact on risk at all as all risk gains in the past 9 months have came solely from Europe's $1.3 trillion LTRO-based balance sheet expansion.

So what will it be? More QE, whereby the Fed admits defeat and hands over the monetary apparatus to an increasingly more petulant market, or no QE, and a wholesale risk crash in one day.

Tune in tomorrow at 2:15 pm to find out.


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Tue, 06/19/2012 - 17:14 | 2540849 francis_sawyer
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rogue trading algos harshing the 'Printer in Chief's' buzz...


Tue, 06/19/2012 - 17:54 | 2540971 barliman
barliman's picture


LOL! ... but no ...

Don Bernanke does not get pulled back in tomorrow ...

If Goldman Sachs says "This is going to happen ..." by now you should know the exact opposite is what is going to happen - and the Squid will make more money in the process.

Bernanke has only one QE left in the quiver - QEEND - the QE to rule ALL QE's which will occur when the EU/euro collapses.

EU/euro collapse to be triggered by GERMexit - Germany (with or without Frau Merkel) deciding to do the ONLY wise choice left - Get out of the Pauper's Society.

The foundering EU/euro then becomes the ChairSatan's Cat's Paw ... ANOTHER currency he can control and debase at will.


Tue, 06/19/2012 - 18:27 | 2541039 gdogus erectus
gdogus erectus's picture

Why do we have to keep reading these articles questioning QE?  How does anyone think that we close the $100 billion+ a month gap in our federal "budget"?  Every.  Single.  Month.  Sheesh.

Tue, 06/19/2012 - 18:36 | 2541062 SeattleBruce
SeattleBruce's picture

Budget cuts across the board?  hahahahahahahahahahahaha

Tue, 06/19/2012 - 23:22 | 2541861 boogerbently
boogerbently's picture

Catch 22 !!

Rising in anticipation of the only saving grace, prevented it.

Wed, 06/20/2012 - 00:07 | 2541978 OneTinSoldier66
OneTinSoldier66's picture

How about a take your country back Tea Party? Uhhh, nope.


Okay, I know, a debt ceiling debate! Oops, nope. That only proved there isn't any debt ceiling.


I got it! A Super Committee! Damn. DOA there.


What will 'we' do? Not sure, especially when I don't know who this 'we' is. Sounds like it might be a bunch of people that are on either the Government's or a Banker's dole.


Here's what I'll do. 'I' will buy Gold and Silver and stash it away. I have done so in the past and will continue to do so in the future. What will 'you' do?

Tue, 06/19/2012 - 19:33 | 2541216 Rich Bagg
Rich Bagg's picture

Shalom is feeling unappreciated lately and won't do another QE until Blankfein and Dimon both get on their knees and lick his balls.



Tue, 06/19/2012 - 21:42 | 2541598 Ned Zeppelin
Ned Zeppelin's picture

I think it is the other way around. Ben is The Help.

Tue, 06/19/2012 - 20:10 | 2541317 mcguire
mcguire's picture

QE-Flow is methadone.  no true junky is stoked to be on methadone, but they dont crash either... 

i agree about QE-End... but there is also indirect QE via IMF arrangements (swap lines, etc)... 

europe will not crash until after the olypmics.  

Tue, 06/19/2012 - 23:22 | 2541841 barliman
barliman's picture


There is only one path forward for Europe.

They can either all commit fiscal suicide together trying reverse the Three Laws of ThermoGoddamics with respect to unbalanced economic flows and the euro:

  1. You can't win.
  2. You can't break even.
  3. You can't get out of the game.

Or ... they accept the inevitable Decline in Your Standard of Living Expectations (if you are already bankrupt or not big enough to bail out thy neighbors) ...

... which means everybody in the EU except for Germany.

If Germany does a clean, fast exit from the EU/euro - they can sit back and pick up once-in-a-lifetime deals around Europe.

What will the Germans do? 

Here is a live exercise for anyone who needs some perspective:

Fly to Mexico City. When you get off the plane speak English with a heavy German accent and get into the nearest taxi.

If you make it to your hotel alive ... you were not a very convincing German.  Rinse and repeat until you are dead.

Mexicans HATE Germans for a reason.  They are not fond of Americans but they truly HATE Germans for economically exploiting them for decades.


P.S. No offense, but the Olympics are not a factor in continuing the "extend and pretend" delusions. I like the British but they really should have realized hosting the Olympic Games was equivalent to painting a target on their collective foreheads. God willing, nothing bad happens but I have been there before when terrorism was just another form of free speech. I would not attend teh Olympics in London if you were giving me 10X my weight in physical gold.

Tue, 06/19/2012 - 22:00 | 2541643 Buck Johnson
Buck Johnson's picture

Your totally right, he has only one QE left in the quiver.  And that is the one for the collapse of the Euro and the implosion of the EU.  He knows that all this debt sloshing around Greece and Spain and Italy can't pay it back.  And all these games of trying to brow beat the market into going up and staying up isn't working as much.  When he uses the last QE, he wants to use it when people are screaming for it to be used and it will be big (even though it will delay the problem again for awhile).  Also Obama doesn't want a QE, not yet.  There are political ramifications also.  DThe last thing he wants is the republicans to point that more tax payer money is being used to staunch the bleeding of his economy.

Tue, 06/19/2012 - 23:27 | 2541884 boogerbently
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He needs to save his "QE/USA", in case they decide to "QE/EU".

Tue, 06/19/2012 - 21:34 | 2541583 jezzarayman
jezzarayman's picture

Tune in at 2.15pm to find out??? The announcement is at 12.30pm yer? If there was to be QE it would be announced 12.30, not at the press conference? Sorry need some clarification as Do I need to say up till 3.30am or 5.15am? from Australia

Tue, 06/19/2012 - 22:10 | 2541671 sullymandias
sullymandias's picture

Just read the news when you wake up. Jeeeez.

Tue, 06/19/2012 - 17:14 | 2540852 camaro68ss
camaro68ss's picture

this is all so much fun! what about a "simi" QE?

Tue, 06/19/2012 - 17:18 | 2540870 Sudden Debt
Sudden Debt's picture

Dude, my puts are killing me right now... Let's do a QE next quarter Okay?

Tue, 06/19/2012 - 21:32 | 2541579 HarryM
HarryM's picture

There will be nothing definitive tomorrow , as usual.

Tue, 06/19/2012 - 23:30 | 2541897 boogerbently
boogerbently's picture

What I mean is....Let me be perfectly clear....that is to say....perhaps....let me say this about that....well, um, er....

And you may quote me !

Wed, 06/20/2012 - 00:26 | 2542017 LongBalls
LongBalls's picture

Hahahahah..... I just leaked in my diaper. The night time nurse is going to get real mad this time. But it's the only thing I can do to get her to look at my penis. P.S. No formal QE and gold n silver will take a dumpski. But alas, who cares....they can't and will never stop printing. Inflation is their game. gold is mine.

Tue, 06/19/2012 - 17:46 | 2540959 fonzannoon
fonzannoon's picture

I don't follow this at all and I have not heard Bruce Krasting talk about it much. Anyone know if bitcoin is on to something in Europe?

?Joerg Platzer, a German who owns the Room 77 restaurant in Berlin's hip Kreuzberg section, has lost his appetite for euros. Instead, he has put a large fraction of his money into Bitcoin, an online currency.

"What the euro crisis and possible breakdown does is make people think about alternative [currencies] that can be used to maintain business and that cannot be manipulated by any central organization whatsoever," he told DailyFinance"

Tue, 06/19/2012 - 18:44 | 2541081 ThirdWorldDude
ThirdWorldDude's picture

Shmuck, he should've donated those moneys to charity

Tue, 06/19/2012 - 19:14 | 2541162 RiverRoad
RiverRoad's picture

Well we have fake money; why not fake QE?  Cheaper and easier.

Tue, 06/19/2012 - 17:15 | 2540853 Skateboarder
Skateboarder's picture

Dude FB is almost at 32 today. WTF!

Tue, 06/19/2012 - 17:19 | 2540873 Sudden Debt
Sudden Debt's picture

As expected, the groupon effect.
1 more week and it's shortable again :)

Tue, 06/19/2012 - 17:25 | 2540895 Skateboarder
Skateboarder's picture

These pesky web startups need to go away. I want real companies again. =\

Tue, 06/19/2012 - 17:31 | 2540917 Sudden Debt
Sudden Debt's picture

Enron, Delorian motor company....

Tue, 06/19/2012 - 19:37 | 2541222 HD
HD's picture

Delorian is back - just don't expect it to go 88 mph...

Tue, 06/19/2012 - 19:41 | 2541230 Skateboarder
Skateboarder's picture

If it wasn't for the Delorean, we wouldn't have Back to the Future. I'm fine with the course of history as it is. =P

Tue, 06/19/2012 - 17:15 | 2540856 AmenRa
AmenRa's picture

The FOMC announcement is at 12:30PM EST. The Chairsatan press conference is at 2:15PM EST.

Tue, 06/19/2012 - 17:15 | 2540857 Raisuli
Raisuli's picture

Makes sense to me. But just who is selling tomorrow that will cause such a crash? Who will be buying?

I know, I don't know much...

Tue, 06/19/2012 - 17:21 | 2540879 Sudden Debt
Sudden Debt's picture

That's why your the smartest guy on the board ;)

Tue, 06/19/2012 - 20:13 | 2541325 mcguire
mcguire's picture

who is the smartest guy?  ive been looking for someone to answer this for me, i dont get it... the citi reference  of "XO crossing above 1000 bps"   what does this mean???  thx..

Wed, 06/20/2012 - 00:38 | 2541997 slewie the pi-rat
slewie the pi-rat's picture

it is a link for people who don't know what it means to click on and read to find out?

you probably tried, but maybe didn't get it

i wouuld try to explain more but this is tyler's rant and i do not see the FED role as he does any longer

we are diverging!

i have even developed entire economic and market theories and quite simple ones, really, based upon the new role and job description of the FED under dodd/frank, 2300 pages signed abt 2 years ago

unfortunately, very few people know what's in it, yet

so they do not fully understand the FED's job description;  when billDudley's friends from the squid write volumes which show they have no fuking idea what the FED's s'posed to be doing either, then people may believe such things must happen b/c that is how it usta werk for the circle-jerks

it is like trying to order lunch in a joint where they changed the menu a year ago and the wait-staff hasn't noticed, yet

politically, the chairsatan & timmah have power that alanG and hankyPanky only dreamed of, imo;  i don't mean that as a criticism, but rather to indicate they can't be pushed around;  they can be taken out by taking out prez0. but they are trying to do something right here, imo, and they will not be politically negated;  this is old stuff, but it has new cajones in this law, imo

very much of the pro-mitten stuff i have seen that has been a cut above mindless stresses that mittens knows what is to be done and will make the personnel changes and the policy changes to fix what needs fixin

now, i'm not gonna get partisan here, ok? 

this does seem to be the main credibility issue of the election so far:  mittens can make this better economically, even if he can't do it fast (rosie)

peeps who believe that will probably vote R and change the whole dealy if they can

others (Dems) may say:  not so fast, please!  these gentlemen are doing much better than the last bunch (which ain't sayin much, but is true:  6 is much better than 2 even in a scale to 50) the argument might go, so don't stop them now;  this doesn't call for a crisis of confidence no matter how different prez0 is from who we thought he might be, whether we voted for him, or not

that carpet in the oval office does some strange thigs to people i think:  monica 101

anyhow, the FED has one or two new jobs that are real important for it to take care of before anything else; i'm not making this up;  slewie neither wrote the law, voted on it, nor signed it, either!  but the chairsatan (FED), timmah (T), dodd (senate) frank (house) and (prez)0 did;  they wrote it;  they passed it; and they signed it into law


i would say that nearly 100% of the writers and bloggers here "innocently forgets" these facts 24/7/366

as far as i know, very few people beside slewie have written about FED actions in the light of the FED's actual job description in the last six months

we see stuff about the old job description or the last one or the "dual" one;  but not about the new one

it is much more fun to pretend;  then, if the ideas catch on, people will get together and pretend they knew it all along...

win-win! L0L!!!  anyhow this is major financial legislation and summa daBoyz wanna take it down and this is their first & best shot, imo

the legislation was written to correct some of the problems, oversights, and uh, trillions of dollars in bubbled-up&out financial losses & frauds of copious pedigree and type just prior to 2010

so, politics!   there is no fuking LSAP QE b/c the FED's responsibility is to stabilty and the system isn't entirely stable, yet.  is it?  diminishing returns;  QE doesn't pay, it costs;  little things mean a lot, at times; shit like dat

the FED has slowed/stopped that 'fix' and it is all the talk of the junkie world

only the T  and sytemic cautery sites are getting the stuff;  forunately, for ponzienomics, there is no shortage of needs for decentralized QE and swaps;  and:  the checks are in the mail

next week:  $20 Tril N0W?  or: will fungibility win again?  Hahaha!

Wed, 06/20/2012 - 00:52 | 2542081 mcguire
mcguire's picture

ok, i found it.  Crossover is in reference to the Crossover index, which is basically a CDS index of 50 companies... got it.  

Wed, 06/20/2012 - 01:29 | 2542133 slewie the pi-rat
slewie the pi-rat's picture

we can vote on FED policy this year, but nobody will talk about it for fear of pissing off their bagmen

b/c of dodd/frank and the fact that the FED is administering this law the political wave would break both ways as follows: 

democrats would like to give this law a bit more time simply b/c it was projected into what had become lawlessness and chaos and may actually function as a counterbalance so they can get their shares, too

republicans want it tossed or gutted and want theTreasury and the FED back along with capturing the flag @ 1600electricavenue

one of these guys will get the nod and it will be on this or something close to it since the truth is not allowed on TV;  we'll hafta see whom the justices want this time?  or will thePeople choose one form of can-kicking as morally superior to the other?

action junkies may like the G0P here while the young&old may simply want to beg, borrow, steal for 4 more years with smaller bonuses for wall street

either way, the economy is the apple that rolled under the passenger seat two sets of tires ago...


Tue, 06/19/2012 - 17:36 | 2540929 Rainman
Rainman's picture

Fukkit I'm gonna go fishin should too. 

Tue, 06/19/2012 - 18:03 | 2540995 Raisuli
Raisuli's picture

Does your fish bite? No. <Chomp!> I thought you said your fish does not bite.

It is not my fish.

Wed, 06/20/2012 - 00:44 | 2542067 Savyindallas
Savyindallas's picture

Fukkit Dude- let's go bowling.

Tue, 06/19/2012 - 17:15 | 2540859 deflator
deflator's picture

 The need to get ahead of the curve on the sovereign debt problems in Europe or some such nonsense. Any old excuse will do when infinity is at stake.

Tue, 06/19/2012 - 17:16 | 2540862 Dagny Taggart
Dagny Taggart's picture

Perhaps a serving of unintended consequences Mr. Chairman?

Tue, 06/19/2012 - 17:18 | 2540863 Albertarocks
Albertarocks's picture

I can't imagine any announcement about any more QE at this time.  I mean what could possibly warrant it?  More QE based on what?  It ain't gonna happen.  If it were, then the bastards would have tanked the market today rather than running another bull trap like they did.  I shorted the bitch just based on the fact that JPM's corrupt practices are so 100% guaranteed.  That's why the market blasted off today and that's why I shorted it.  Just one toe in yesterday and a bigger one today.  Still have 8 more toes too.

Tue, 06/19/2012 - 18:42 | 2541077 cranky-old-geezer
cranky-old-geezer's picture



QE never stopped.  It's what keeps the federal government going.  It just went incognito.

Tue, 06/19/2012 - 19:14 | 2541165 Hohum
Hohum's picture


You sound logical, but I can see QE based on the fact that oil prices aren't that high, so let's go.

Tue, 06/19/2012 - 19:43 | 2541236 eclectic syncretist
eclectic syncretist's picture

Yes.  BS bernank said in testimony less than two weeks ago that there was no reason to ease further at this time.  The Greek election outcome last week would only solidify that position.

The Fed must try to maintain it's own credibility as well.  The perception that there is too much or indiscriminant debt creation must be avoided. 

Finally, BS almost certainly feels the situation in Europe must be more resolved before a sound plan for US monetary policy can be implemented. 

Tue, 06/19/2012 - 20:34 | 2541413 Phat Stax
Phat Stax's picture

agreed - this article makes complete sense to me.

Tue, 06/19/2012 - 17:17 | 2540865 midgetrannyporn
midgetrannyporn's picture

the bernank can pay now or pay later. the stock market owns him.

Tue, 06/19/2012 - 17:18 | 2540868 Boilermaker
Boilermaker's picture

They'll do whatever the fuck they want to do.

That's my thesis.

Tue, 06/19/2012 - 17:22 | 2540883 Skateboarder
Skateboarder's picture

Quoted for truth. The headest of head honchos calling the shots from some tropical paradise with hella booze and women and stuff... we don't know what he's deciding. We're spectators to his game. Could it be Hugh Hefner?

Tue, 06/19/2012 - 18:01 | 2540989 Not Too Important
Not Too Important's picture

The Ghost Of Cecil Rhodes and his KT fuckbuddies. No wonder they were accused of homosexuality and heresy - they'll fuck anything, then kill it.

If there is a merciful Horus, they're all fucked in the afterlife. It's a sad, sad time to know what they've done, after all they've been given.

It's a good thing they didn't make it into their redoubts before 3/11. We're all going to go at the same time, families and all. They can stockpile all the cancer drugs they want, it won't help. They killed off the human race, and will be accorded their due. Plutonium uber alles.

Tue, 06/19/2012 - 17:19 | 2540874 Aductor
Aductor's picture

Surely, you must mean unpossible?

Tue, 06/19/2012 - 17:19 | 2540875 Jethro
Jethro's picture

At least with casinos, there is a chance of winning.

Tue, 06/19/2012 - 17:32 | 2540920 Boilermaker
Boilermaker's picture

And free drinks.

Tue, 06/19/2012 - 17:20 | 2540878 Arie L Ultra
Tue, 06/19/2012 - 18:00 | 2540880 PicassoInActions
PicassoInActions's picture

Godmanites are market makers... they need to match their short positions with muppets long positions that's why they sale bs today about QE

UNless Benya is on suicide watch i don't see it happenning ( tought .. they are many things i did not see happening before they happened.)


Tue, 06/19/2012 - 17:23 | 2540881 Sudden Debt
Sudden Debt's picture

Whatever we expect... It won't be the opposite but the stuff you didn't even think about.

It's always like this.

The best trading tactic these days is to bet against yourself.

I did a test last week. I told a friend to do what he thought was the opposite of everything I said. I say a lot of stuff so that wasn't easy, but that fucker made money and I lost money...

Tue, 06/19/2012 - 18:15 | 2541019 IndicaTive
IndicaTive's picture

I am also conducting a similar experiment. I'm not a trader. Just trying to be a survivor. I dusted off my all-in-cash 401k, put 50% in an S&P index fund last week while stockpiling some more fiat to add to my physical silver, in case there is no QE. My "bet" is on QE tomorrow. My gut tells me different.

Tue, 06/19/2012 - 17:23 | 2540885 fonzannoon
fonzannoon's picture

it would be spectacular to see them not announce qe and treasuries sell off massively. That would literally be the canary dropping dead right in front of our eyes.

Tue, 06/19/2012 - 17:24 | 2540890 Sudden Debt
Sudden Debt's picture

More twist and roll overs

Tue, 06/19/2012 - 17:40 | 2540936 VonManstein
VonManstein's picture

exactly. the only reason treasuries are at these levels is because everyone is buying them to flip when the FED comes in.. if Benny isnt there to take the 39% that he doesnt already buy they gonna be dumped and fast.. they were purchased to flip not to hold..

UncleBens checked himsdelf good and propper. This will be a interesting FOMC... nothing is clear cut. could go any way. QE or no QE DXY could rise or fall.. the whole things fucked up..

but i agree with your point.. and could even see that happeing to be honest..

No QE, dollar falls, Gold rises, stocks fall.. now wouldnt that be something!!

Tue, 06/19/2012 - 17:42 | 2540943 fonzannoon
fonzannoon's picture

I think they keep the Europe fear machine running full tilt to keep everyone nice and scared and buying treasuries. But it would be something to see if people woke the fk up and decided maybe 4% for ten years was more a minimum.

Tue, 06/19/2012 - 17:49 | 2540965 VonManstein
VonManstein's picture

They will of course keep this going as a distraction, its the only saving grace the US has at the minute. Orchestrated i would say but thats another matter. The EU as a whole ran a budget surplus and for some reason the crisis is in Europe? like fuck. Indeed we are pretty bankrupt over here but the US is far beyond anything.

Merkel, Putin and old china girl know the game, i think they are holding out.. not printing anymore. take the pain as the know they can take it.. its the US that cant afford to NOT print. These guys have money, they have savings..

I dont think ECB will print QE. I dont think BRICS will print QE. Only US and UK will do it.

This game is up soon.

Tue, 06/19/2012 - 18:04 | 2540982 cougar_w
cougar_w's picture

They want stocks running hot in October but peaking a little by then, so that everyone knows they need to vote for the status quo or die. So to get that scenario they will roll out da free moniez in early August to buy an 8 week ramp into November.

Now, to roll da moniez requires a few weeks of sell-offs, being most of July.

Takes a while to get that kind of death spiral on the charts. They need to pull life support near the end of June.

That's in a week.

So: Tmrw they mumble something about "markets are ok lol" but it's enough to scare people -- what is this no QE? wtf I'm outtie luzers -- to produce a week of profit-taking and flat markets. Then they come back in a press conference around July 1 and say "markets need to get over QE becuz u r all lamerz lol" and the undertow will take hold. Then they'll come back end of July after Eurozone starts to seriously implode with "oops we bad here is some moniez anyway lulz" and the game will be on.

Obama wins reelection, 53% to 42% with 5% voting "fuckoff".


Tue, 06/19/2012 - 18:08 | 2541004 Spastica Rex
Spastica Rex's picture

53% of what - 40%?

Anyway, I like your thinking. Everything happening now is tied one way or another to November.

Tue, 06/19/2012 - 19:06 | 2541142 Animal Cracker
Animal Cracker's picture

+ Over 9000 Internets for this great post.

Tue, 06/19/2012 - 19:16 | 2541171 cranky-old-geezer
cranky-old-geezer's picture



Sign this guy up as a contributor.   He gets GW's place.

Tue, 06/19/2012 - 19:21 | 2541181 RiverRoad
RiverRoad's picture

+  100

Tue, 06/19/2012 - 17:24 | 2540887 LetThemEatRand
LetThemEatRand's picture

I really don't get why so many analysts assume that the Bernanke gives a rat's ass about Obama winning.  What's Romney -- chopped liver?  He's a banker's dream, and he can blame Obama for all the economic problems while they continue to line their pockets with new giveaways, reduce their taxes, eliminate capital gains, etc.  The bankers may love Obama, but they are in love with Romney.

Tue, 06/19/2012 - 17:26 | 2540898 Sudden Debt
Sudden Debt's picture

If you have a dog that licks your balls without bitting them, you don't trade him in for a jack russel that doesn't know all the tricks and thinks ball ball play time 24/7

Tue, 06/19/2012 - 17:31 | 2540916 Global Hunter
Global Hunter's picture

+1 for the whole comment, bonus +1,000,000,000 for ball ball play time

Tue, 06/19/2012 - 17:33 | 2540923 LetThemEatRand
LetThemEatRand's picture

But in this case, they will be trading in a dog that licks their balls for a dog with proven deep throat skills.  No training required and he won't have to worry about pretending to be a progressive with tax rates and so forth.   We'll have a better idea tomorrow, I suppose.  I predict they let the market tank big time ahead of the election.

Tue, 06/19/2012 - 18:13 | 2541016 Spastica Rex
Spastica Rex's picture

I think you'll know who they want by what happens over the next few months.

Tue, 06/19/2012 - 19:32 | 2541208 TonyCoitus
TonyCoitus's picture

I like the way you think. I need a new dog.

Tue, 06/19/2012 - 18:07 | 2541003 1100-TACTICAL-12
1100-TACTICAL-12's picture

Sea salt ,rock salt.

Bud, Bud light

Johnny red, Johnny black

Robama, Boamney

I really don't give a rats ass anymore. I'm going to shoot some .40 S&W & Canadian Mist. These motherfuckers can have it I'll take as it comes.

Tue, 06/19/2012 - 17:24 | 2540888 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

What if China et al front ran it and bought US equity because they didn't want QE?  What if they have been doing this for awhile now?

Tue, 06/19/2012 - 17:27 | 2540905 Sudden Debt
Sudden Debt's picture

And risk of having to pay more for their gold?

Tue, 06/19/2012 - 17:32 | 2540919 Global Hunter
Global Hunter's picture

Seems unlikely but from their point of view better off holding US equities (as well as commodities) when their treasuries go to zero

Tue, 06/19/2012 - 17:40 | 2540938 francis_sawyer
francis_sawyer's picture

Only thing that is certain is that Robot Trader will come on here tomorrow & tell us which stocks went up yesterday... (Unless, of course, they didn't, & he'll be telling us about how HUMANS can't get enough of 10y treasuries at 1.6%)...

Tue, 06/19/2012 - 17:46 | 2540958 Sudden Debt
Sudden Debt's picture

He's like those mexican singers that you give a 20 so they just shut the fuck up and go away...

Tue, 06/19/2012 - 18:26 | 2541038 Bizaro World
Bizaro World's picture

I much prefer Million Dollar Bonus over Robot Trader.....MDB was epic during Faceplant, er, Facebook....

Tue, 06/19/2012 - 19:25 | 2541194 Umh
Umh's picture

That really doesn't work they just walk around a bit and then come back for the sucker.

Tue, 06/19/2012 - 19:40 | 2541228 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

China could have been shorting miners hoping to drive the price of bullion down while buying T and watching Bernanke squirm about QE or not QE.

Tue, 06/19/2012 - 21:38 | 2541592 Umh
Umh's picture

OR increasing the value of theor gold.

Tue, 06/19/2012 - 17:24 | 2540889 Zola
Zola's picture

i always wondered how it must have been to live under communism and i now have the answer. truly debilitiating when nothing except the whims of some bureaucrat in his dream world in a far away capital controls all aspects of your existence. Like Reagan said , the central question is whether we believe men in a far away capital can plan our lives better than we can plan them ourselves.

Tue, 06/19/2012 - 17:37 | 2540925 Quinvarius
Quinvarius's picture

Indeed.  And they wonder why no one is starting a business that the officials might arbitrarily attempt to destroy by price fixing the commodity you create or need into unprofitablity or scarcity.

These fucktards don't understand they only have the power to destroy.  They need to get the Hell out of the markets so we can have some capitalism.

It is no coincidence that the stocks they choose for you to stick you money in are all worthless non-productive websites.  Those inflationary reservoirs consume no commodities.  Price fixing won't kill them.  They won't add to scarcity.  They are allowed to live and become bubbles.  

Tue, 06/19/2012 - 17:41 | 2540940 francis_sawyer
francis_sawyer's picture

virtual capitalism

Tue, 06/19/2012 - 17:42 | 2540945 Cursive
Cursive's picture


What is truly breathtaking about our recent history is that, in 3 years, we've totally dropped the facade that America and the Western Powers were free capital markets.  The fate of nations rests not on individual initiative, but on a group of unelected central planners.

Tue, 06/19/2012 - 19:28 | 2541198 RiverRoad
RiverRoad's picture

And whoever is holding the most gold and nukes.

Tue, 06/19/2012 - 17:45 | 2540956 Mark123
Mark123's picture

+1...great quote from Reagan....except for the fact that Reagan began much of the wall street cronyism that led us to where we are today.

Tue, 06/19/2012 - 18:21 | 2541029 kito
kito's picture

@zola, reagan was as much of a central planner as any other progressive president. he spent the countrys money at a blistering pace to benefit the military industrial complex...he created a whole new generation of govt welfare recipients in the form of pentagon handouts......please spare me the "small government" reagan....

Tue, 06/19/2012 - 21:27 | 2541561 PivotalTrades
PivotalTrades's picture

Listen you fucktards,,, running the USSR into the ground and eliminating the threat of MAD was one of the great achievemnts of the last 50 years... we have been benefiting from the peace dividend for the last 30 years...the only problem was that dividend was wasted and spent on shit like Obama care

Tue, 06/19/2012 - 21:51 | 2541628 just a dude
just a dude's picture

You're being sarcastic, right?  Not the last four words, mind you,but the Cold War was a scam so TPTB could make money.

Tue, 06/19/2012 - 20:30 | 2541400 Sockeye
Sockeye's picture

"Give me Liberty, or Give me Death!"

Tue, 06/19/2012 - 17:25 | 2540893 Burr's 2nd Shot
Burr&#039;s 2nd Shot's picture

"Sit down, grab yourself an eggroll" - Drexl Bernanke

Tue, 06/19/2012 - 17:43 | 2540948 francis_sawyer
francis_sawyer's picture

you only get eggroll with QE6...

Tue, 06/19/2012 - 17:25 | 2540896 VonManstein
VonManstein's picture

how about they want to destroy obama anyway, he's sevred his purpose. the sacrificial lamb amybe.. get the final print from his administration, dump him and ensure some hardcore right wing austerity candidate in the future.


think people

Tue, 06/19/2012 - 17:50 | 2540954 francis_sawyer
francis_sawyer's picture

there will be some pissed off [insert gong sound here] if that happens... They're not gonna understand those types of eccentricities... The vast majority are still in Grant Park waving "Yes We Did" banners...

Tue, 06/19/2012 - 17:56 | 2540975 magpie
magpie's picture

[an meine Feinde> Ich freue mich drauf, dass sie irgendwann vom reaktionaeren Mob geschaechtet werden. Viel Spass]

Tue, 06/19/2012 - 18:03 | 2540992 VonManstein
VonManstein's picture


Tue, 06/19/2012 - 18:10 | 2541008 magpie
magpie's picture

Oh, i really meant it this time, my bad. And those proscription lists were always semi-public, so vengeance and the loot would be distributed fairly.

Tue, 06/19/2012 - 18:17 | 2541022 francis_sawyer
Tue, 06/19/2012 - 18:23 | 2541032 magpie
magpie's picture

There are times i wish i could just wave with my boater hat and mind my own business.

Tue, 06/19/2012 - 19:30 | 2541202 RiverRoad
RiverRoad's picture

It doesn't matter which lackey sits in the Oval Office.

Tue, 06/19/2012 - 17:27 | 2540897 skepticCarl
skepticCarl's picture

Some sort of accommodation, whether its a new program or continuation/modification of an existing one, will be the result.  If it's only a continuation (probable) the market will react unfavorably for a day, to show it's disappointment.  Then, the rally continues through the summer, as traders realize that easy money is here to stay, forever.  Get long on tomorrow's dip.

Tue, 06/19/2012 - 17:28 | 2540907 Quinvarius
Quinvarius's picture

Since stocks have gone no where in a decade, I am going to say "no".

Tue, 06/19/2012 - 18:02 | 2540994 junkyardjack
junkyardjack's picture

And since shorts are frontrunning a non announcement the S&P will probably hit 1600 almost immediately if he does announce it

Tue, 06/19/2012 - 17:28 | 2540909 Global Hunter
Global Hunter's picture

I am really excited about the prospect of the Bernank announcing no QE because the economy is doing fine blah blah blah only for the market to get crushed within a matter of hours/days forcing him to announce QE because the economy is imploding.

Tue, 06/19/2012 - 17:33 | 2540922 LongSoupLine
LongSoupLine's picture

Frontrunning QE??


The QE hasn't stopped!!  Fuck this circus...

Tue, 06/19/2012 - 17:33 | 2540924 infiniti
infiniti's picture

20% drop and 'political cover' are rediculous ideas.


The Fed prints when gasoline prices allow, it's that simple.

Tue, 06/19/2012 - 17:37 | 2540932 eurusdog
eurusdog's picture

There will be no QE announcement and no market imposion will be tolerated. They will buy equities and continue op twist, under cover!

Tue, 06/19/2012 - 17:39 | 2540935 kito
kito's picture

So what will it be? More QE, whereby the Fed admits defeat and hands over the monetary apparatus to an increasingly more petulant market, or no QE, and a wholesale risk crash in one day.

there will be no qe and a wholesale crash in pms/commodities. stocks will be levitated by the plunge protection team....or are they out of business?.............

Tue, 06/19/2012 - 17:49 | 2540964 fonzannoon
fonzannoon's picture

Kito I agree but don't you think equities take a bath too? If the ppt can keep equities up tomorrow while everything else bombs I am buying all of Robo's favorite picks because they really have things nailed down.

Tue, 06/19/2012 - 17:56 | 2540978 Mark123
Mark123's picture

Buy BAC.  Just check out the chart since 1995....brilliant!


Up 4.5% today.  Great if you don't look at history.  But is that not the entire market now....basically day trading, front-running, insider trading, hft skiiming....REALLY healthy indeed.


Buy and hold you stupid pension funds.  Wall street is the best at sniffing out buried treasure and replacing it with shiny plastic crap.

Tue, 06/19/2012 - 18:00 | 2540984 kito
kito's picture

they really have things nailed down? come on fonzannoon!!! would take tomorrow for you to see that? there is absolutely no good reason for the dow not to be half of what it is if it werent for zirp and deficit spending to keep the pretend gdp growth so whopping high at 1 percent......equities are the last bastion of the feds wealth effect...without the mighty dow coloring americas tv screens with green, the country would be destroyed.....pension funds destroyed, 401ks destroyed, banks destroyed.......its all ben has left. there is no real employment, there is no housing, there is NOTHING LEFT EXCEPT THE MIGHTY DOW!!!!!!!!!!!!!!!!!!!.....................

Tue, 06/19/2012 - 18:09 | 2541006 fonzannoon
fonzannoon's picture

Yeah I know you are correct...Wow you just painted quite a picture.

Tue, 06/19/2012 - 18:14 | 2541017 Spastica Rex
Spastica Rex's picture

Nice. And I owe you money.

Tue, 06/19/2012 - 18:24 | 2541034 kito
kito's picture

glad you remembered......... first i need to know your definition of money.... 

Tue, 06/19/2012 - 19:29 | 2541199 Spastica Rex
Spastica Rex's picture

I can't remember - was it $5 USD?

Remember - I'm honest but poor.

Tue, 06/19/2012 - 19:39 | 2541210 cranky-old-geezer
cranky-old-geezer's picture



NOTHING LEFT EXCEPT THE MIGHTY DOW!!!!!!!!!!!!!!!!!!!.....................

That and sovereign debt paper, which banks are stuffed with (nobody else wants the shit).

Tue, 06/19/2012 - 19:38 | 2541218 RiverRoad
RiverRoad's picture

The whole world should be half what it is.  We should all just default sooner rather than later and let the daffodil bulbs reprice themselves.

Tue, 06/19/2012 - 17:39 | 2540937 junkyardjack
junkyardjack's picture

Well it will be an interesting day indeed

Tue, 06/19/2012 - 17:45 | 2540955 nflux
nflux's picture

I'd have to think that the biggest fear for Bernanke is that they announce more QE and we get a spain/greece reaction where its back to selling the news. Could you imagine the fear in the markets if they announce more QE and we get a down day?

Tue, 06/19/2012 - 17:52 | 2540970 Mark123
Mark123's picture

But the market is the Fed.  Maybe they will scare themselves...

Tue, 06/19/2012 - 17:46 | 2540957 deerhunter
deerhunter's picture

lead n brass,  water n soil n seeds,  good friends,  better neighbors and let it rain with some sunshine mixed in.  Big cities,  war zones,  redneckville will be shangri-la.  You shouldn't really bite the hand that feeds you and nothing wrong with monster trucks and John Deere green.  Rain makes corn,  corn makes whiskey,  you know the rest of the story.

Tue, 06/19/2012 - 17:48 | 2540961 JackT
JackT's picture

Damned if they do, damned if they don't. Probably error on the side of a McTwist.

Tue, 06/19/2012 - 17:49 | 2540963 PicassoInActions
PicassoInActions's picture

They need to make a time sheet when to drop dollar and when to rase the dollar.

Let's say at the beginning of the month when us companies negotiate exports drop the dollar, at the middle of the month when consumers with their 70% of gdp trying to help the economy - rase the dollar. At the end of the month let the muppets be corzined.


Tue, 06/19/2012 - 17:50 | 2540967 Mark123
Mark123's picture

Pension funds, insurance companies, mutual funds (private pension kind of)....all are stranded in the stock and bond markets.  The Fed will do what it has to do to keep this sick mockery of a capital market propped up - and will sit by and watch the financial industry skim like any good parasite.


There is no other option left now, other than real war (not the phoney wars of post WW2 era).

Tue, 06/19/2012 - 17:59 | 2540983 yogibear
yogibear's picture

LOL, Wall Street is forcing Bernanke and the fed's hand. Bernanke is very much influenced by politics as well given Obama's up for election.

Tue, 06/19/2012 - 17:59 | 2540985 cardis
cardis's picture

Did ZH refused Ben's registration? Just wondering.

Tue, 06/19/2012 - 18:03 | 2540996 Yen Cross
Yen Cross's picture

 Two days ago every so called " analyst", was bitching because more "pump & dump" won't accomplish anything. Now the same "pump & dump",  asshats are talking P/E ratios again! I can't stop laughing!

 The rumor has been purchased, and the usd$ driven into the dirt! The G-20 was a joke, and NOTHING has changed! I'll be selling the fact. I can read over bought "oscillators". 

 P.S. someone shove a Loafer up Cramers ass!


Tue, 06/19/2012 - 19:25 | 2541192 deflator
deflator's picture

 Tomorrow you will be a braggin' how you bought the head fake.

Tue, 06/19/2012 - 19:47 | 2541209 Yen Cross
Yen Cross's picture

     ( I'm flat deflator ).   I sure see the r/r to the downside though. CFD's for Asia

 This ETF chart is for you deflater.

Tue, 06/19/2012 - 22:01 | 2541646 deflator
deflator's picture

It will be fun to watch those charts at about 2:20ET tomorrow.

Tue, 06/19/2012 - 18:10 | 2541009 spinone
spinone's picture

Greed is at it peak.

Tue, 06/19/2012 - 18:12 | 2541010 RobotTrader
RobotTrader's picture

Wow, 750 points off the lows already and only 500 points off the highs.


XRT only 4 points away from making world record highs again.

Where's the recession?

Check out the acceleration up in the NYSE Summation Index.

Tue, 06/19/2012 - 18:28 | 2541045 kito
kito's picture

the recession is hiding behind the wall of 1.3+ trillion dollars of deficit spending..... lets wonder what the gdp would be without it?.....-3, -5 percent growth perhaps?...............................does dr. ben need a prescription for handing out growth hormones?????

Tue, 06/19/2012 - 18:29 | 2541047 Tsar Pointless
Tsar Pointless's picture

I don't know where the recession is residing these days, but I am pretty sure the depression is hunkered down within the confines of my house's walls.

Tue, 06/19/2012 - 21:14 | 2541530 cranky-old-geezer
cranky-old-geezer's picture



People like RT would sell out their country to make a buck.  Hell, they'd sell their daughters to make a buck.

Wed, 06/20/2012 - 00:16 | 2542024 Savyindallas
Savyindallas's picture

My daughter? Never! My wife? Totally depends on the price. If I could get a nice down payment on a new car -and if my wife could get something out of it also -I think we could have a deal. Anyone interested? If so, I'll send you some pics.

Tue, 06/19/2012 - 18:12 | 2541014 crawldaddy
crawldaddy's picture

as the computer told us long ago


The only winning move is not to play.

Tue, 06/19/2012 - 18:23 | 2541031 DrDinkus
DrDinkus's picture

FINALLY-maybe-hopefully-a market shock!


Bernacke should be my AA sponsor. Fell off the wagon a bit there during these HFT-driven doldrums.

Tue, 06/19/2012 - 18:26 | 2541037 rsnoble
rsnoble's picture

What's the problem? We could be at DOW 10k in a week and have chewy3 announced next friday.

Has anyone bothered to think about how fucked we are? This whole planet is going apeshit.

Tue, 06/19/2012 - 18:38 | 2541069 Snakeeyes
Snakeeyes's picture

What makes QE3 unlikely is that M2 MONEY VELOCITY IS THE LOWEST SINCE THE 1957-1958 RECESSION and IKE!!!! Monetary policy is not longer effective.

Tue, 06/19/2012 - 18:40 | 2541074 Poor Grogman
Poor Grogman's picture

Markets do have a way of making things difficult for central planners, don't they?

Tue, 06/19/2012 - 18:44 | 2541085 sitenine
sitenine's picture

Still using old tools for new problems I see.
Does anyone else see a paradox here?

Tue, 06/19/2012 - 19:03 | 2541104 razorthin
razorthin's picture

Assuming the equity market really is under the Fed's control - being that a 30% drop requires a 43% ramp to break even and the fact that it has seen a trend of diminishing returns on its operations, I don't think Chairsatan would let that happen.

Tue, 06/19/2012 - 18:58 | 2541123 q99x2
q99x2's picture

By Frontrunning QE, Did The Market Make QE Impossible?

Hell no. S&P going to new highs and beyond on this mother hunching version. We've seen de light and delighted we were.

Tue, 06/19/2012 - 19:15 | 2541166 khakuda
khakuda's picture

Great post.  At the very least Bernanke will have to get new excuses.  S&P is up 9% and we're not even half done with the year, hard to say that the stock market is holding anything back when you got an above average year ALREADY.  Housing has picked up, mortgage rates at all time lows, commodity prices off their highs with nat gas near record lows, record corporate profits.  Sure doesn't sound like the end of the world.

Firing the QE gun now leaving fewer bullets for a real problem would seem a fool's game.  But, hey, the FRB has some fools, and they are on balance money printers, it's all they know.

Tue, 06/19/2012 - 19:26 | 2541196 razorthin
razorthin's picture

Looks like somebody has confused manipulated markets and public numbers with the real economy.

Tue, 06/19/2012 - 20:00 | 2541279 khakuda
khakuda's picture

That is the point.  The Fed is basing all of their decisions on manipulated numbers.  Stock prices, bond prices, inflation stats, the housing market, are all as manipulated as they've ever been.  If you've manipulated the numbers to look good, how do you justify more invervention when they appear good?  That is the point of Tyler's post.

Tue, 06/19/2012 - 19:30 | 2541203 deflator
deflator's picture

Firing the QE gun now leaving fewer bullets for a real problem would seem a fool's game.

 What do you mean, "fewer bullets"? Does, "a real problem" not imply "more bullets" since real problems usually means a stronger dollar as a result of "flight to safety"?


 The Bernanks primary objective of financing the unfinanceable is harder with a strong dollar.

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