This page has been archived and commenting is disabled.
FX Market Sees NEW QE Probability At 25%, Down 50% From Week Ago
For a while now we have suggested that, based on the relationship between the Federal Reserve balance sheet and the ECB's, a 'fair' value for EURUSD is around 1.20. The difference, we felt, was inspired by hope for a sizable (~$700bn 'pure' NEW QE). The last month or so has seen that hope fade (as well as European stress rising as ECB rates align with the Fed's ZIRP) as EURUSD now implies the probability of NEW QE now at only 25% (and falling).
From EUR strength implied by a sizable NEW QE weakness in the USD to the current reality of considerably lower chances of QE anytime soon (and ECB also on hold). With 1.30 implying around $700bn NEW QE and 1.20 'fair', the shift in the last week from from over 1.27 to under 1.23 has cut the probability of a sizable NEW QE in more than half to around 25%.
Chart: Bloomberg
»
- 6534 reads
- Printer-friendly version
- Send to friend
- advertisements -
By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens. John Maynard Keynes
OK, So Ben Shalom wants a TRUE USA Depression ???
depression now or worse depression later -> no qe minor correction -> more qe -> fake gamed up mini surge back -> worstest depression
Remember that not once has anyone begun to discuss a bailout of municipal debt. All the conceivable QE on the planet still falls far short of bailing out state and local pensions. and consumer spending goes down with them.
Unemployement at 3% is simply not coming back in a globalized world where Chinese labor costs $10 per day.
So even if they bail out the banks, there's still a deflationary collapse coming.... Unless they QE to infinity, and then do it again for local government....and then turn every citizen into a government employee. It ain't going to happen. The math simply doesn't work, no matter how desperately our central planners want it to.
Deflationary collapse incoming.
...and then war.
This is already totally obvious, but I'll re-state it... The 'depression' part of the cycle is only for the banks to be able to call in the loans (created out of thin air), to all those who overly invested in capacity during the last inflationary expansion...
Too many are still stuck thinking that the housing bubble was the last bubble that popped, but to me it was probably something more along the lines of nat gas exploration (not in aggregate terms, mind you, but moreso in 'critical infrastructure' terms)... Natty went from $16 (China 2008 Olympics) all the way down to a $1handle... My guess is that a lot of those assets are being gobbled up for pennies on the dollar as we speak (or have been recently, I should say ~ as it has clearly turned the corner ~ whereby you're led to believe that it has to do with record breaking summer heat)...
Of course, the confiscation of PM's is an ongoing thing, but it has run into certain unanticipated snags for TPTB because too many would be buyers of physical have emerged... It's not as low hanging a fruit as it used to be...
The 'food' issue is a political football & will swing back & forth within this cycle...
In any case these maneuvers are nothing more than the money changers, once again, trying to enrich themselves using the same old techniques that they've used for centuries, through periods of boom & bust... Nothing has really changed, only the tactics must be altered slightly as more and more become aware of the subterfuge...
To argue over QE when we have ZIRP going on is like being worried about being hit by a raindrop before a tsunami roles in.
The premiums on fractional gold coins are starting to get real nasty. That tells me more than whether or not Bernanke is admitting to printing trillions of dollars.
No way!
Forget QE, fed is not doing anything until the end o/t year.
an observation that was obvious a year ago............prop up the stock market, let other central banks play around.....just enough to get through the elections...........
I disagree. The elections are set no matter who wins it's all good with TPTB. Ben needed some deflation for cover and he is getting it. I stand by August or September for QE. If Ben waits too long he will need to print at least double what is needed now.
Yeah, the Euro pushing towards parity is a big green light for Ben. It doesn't make QE less likely, it enables it.
It's like like the S&P front running QE up to 1360 and the Bernake saying it's not needed. In reverse.
That's the same wa I see it. A "strong dollar" has not been the policy so far. Why would they want it that way now?
i will bet you a ham sandwich that there is no qe till at least december/january........and only then will gold hit 2000.........
Gold's range is going to pop when the debt ceiling is reached and is raised again. Which will be close to election time, and the bigger stink the GOP makes of it and the bigger threat of default via gridlock the higher it will go.
I will take that bet. The markets won't wait that long and there will be chaos just like the 08 elections. They aren't going to let it happen. Make mine a turkey sandwich though....with pepperjack cheese.
Kito I thought you were in the no QE camp? You (IMO) have made a good case that it won't happen. The trillions in derivates will implode and cold hard cash will reign as digitized money evaporates. I don't have every chip on the QE side of the table because I see 3 scenarios 1) QE to infinity 2) deflationary collapse/reset 3) One of the first two but with an outcome different than what people would normally expect.
The scariest scenario is the one where they somehow keep putting air into the tire with a hole in it and this situation keeps on for longer than any of us could imagine.
regarding qe3, i have always said no way until after elections at the earliest. after elections, i have said all bets are off. there was/is no way the fed will use themselves as election fodder for the republicans, and qe3 would be a sure way to have themselves thrown into the campaign mix. there were already rumblings against the fed early on, which seem to have faded (now that ron paul is not in the race).
additionally, the fed is not going to leave obama hanging with 150 oil right before the elections. now, when qe3 doesnt work, i still believe bernanke may just throw his hands up and leave it to the politicians. since there will be a collapse regardless, he would rather save the dollar then burn it into hyperinflation (thats if the deflation tsunami even allows him to react fast enough to try anyway). either way the ships going down, might as well save his source of power, the almighty fiat.......
@the good doc, bet is ON. i will forward you the info of my favorite italian deli, and you can call in the sandwich order for me. that includes a side and a drink i presume.....................
Doc the good news is if you hold onto $5 now in a safe place when the deflationary tsunami hits that should easily cover the sandwich and sides.
You're on kito.
great.
ben has stated several times it is now up to the "fiscal" authorities, foreshadowing that he is out of a job next year, and allowing the markets to enjoy a temporary resurgence with new leadership. The Lion King may have been more prophetic than we think!
I will either be right, or when I wake up I will recall this as one of my most lucid dreams in a while.
because if everyone thinks it's coming, it won't work
its coming in the long run.. just, as has been said often.. the meltdown must come first
What is XO at?
What is the FED going to do for QE3 if and when?
They may as well send $100,000 to every household in the country - will do as much good as the other QE's.
Actually, that is probably the only stimulus that would actually work to get us into a true recovery. 100k is too much, but something along the lines of the average household debt excluding mortgages would be ideal. Sudo-debt jubilee, doesn’t harm savers, and provides tons of powder to the real economy (and the banks). Certainly no more inflationary than QE. But since it makes sense, it would be the last thing anyone tries.
Not that I give a fuck anymore... I’m rooting for the collapse anyway, so don’t bother.
Are we talking about the QE that was supposed to come in March, April, May, June?
So now I am hearing it's not coming in July. Future is a bitch, it's never what it should be.
QE was always coming in August and later. The markets are just trying to front run it. The bitch is the "markets" need their liquidity fix now.
wrong again!
Wrong a week ago but right this week. Lovley. Where's the bullsheet meter with this type TD? If it were CNBC you'd be all over it. You're just as bad just on the opposite side
Its that time they need the masses to beg for the FED to print so that the new charter is signed next year.
The pusher (Bernanke) is having trouble with the addict (congress & the market). The addict is getting out of hand and the pusher will be forced to act. Is it time to dump the body or will the pusher force the addict to do more immoral acts resulting in another crack baby? Leverage is hell.
Yeah, the meltdown must come first. That means gold and silver too... Dollar wins...for now. EURUSD will hit 1.10 by end of summer and before election. Gold at 1100... Silver sub 20... maybe even around 15/ounce. Makes sense though. Gold and silver to pre-QE levels, which puts gold at 800 and silver at 15. This is EXACTLY why gold/silver as safe haven assets won't work in the near term. The world is tied to the dollar for safety, not precious metals. So, as QE burns out, so do the assets that were propped up by it. Gold must retreat to 1100 before its inevitable climb to 2500 and beyond... has to.
How are going to have a meltdown in asset prices? The mechanics of how banks can be forced to sell anything after 2009 escapes me. A bank panic is impossible when they get free money. If stocks or commodities are down for a day or two, it is because they wanted them down. The only reason oil is down is because they just raised margin on it for the tenth time this year.
The Fed is spewing cash right now. No banks are going under due to the global sovereign debt implosion. That should tell you something. I don't need an official announcement.
The banks are insolvent. Thats not the issue. The issue is contraction. Our economy is contracting and quick. With the dollar gaining strength and other currencies falling, our exports are gonna get slammed. Companies arent hiring. The market will soon recognize that holding equities is dangerous in this environment. Then, no bids. Illiquid markets create a panic... look out below.
i still have credit card debt left over from my divorce..how come qe hasnt lowered the rates on credit cards??
marriage (& dissolution therof) all on a credit card...
You're a bankers dream...
Thinking they even stopped QE is laughable.
More short term white noise. Inflate or die (deflate). It's a mathematical certainty.
Here are my thoughts, being typed for no one's benefit but my own catharsis.
1) Fed chairmen care about NOTHING so much as "Independent Central Bank" and if they pile out some sugar in September and get Obama elected, that will be the end of an independent Fed the next time the GOP has the presidency. The Fed WILL be punished and they know it. Hell, they don't even need the presidency. The GOP can cut off employees from the Federal benefit package by defunding access procedures, and printing money won't authorize that.
2) Bernanke is a very smart guy. He is a bit like Merkel. He has not printed any money for over a year. This bespeaks profound reluctance. All T buys since June last year have been offset by bill sales. There has been no net increase in Fed balance sheet and therefore no sugar. Amid the devastation around us He Has Not Printed. I personally think he knows it is not working and he fears oil maybe more than he fears anything else.
3) He has said several times recently that he doesn't know "why it's not working". That is intellectual honesty. In an perspective of first do no harm, he very possibly is the only thing holding Yellen and the doves back.
I know the gold nazis around want printing, but I don't think it's in the cards from Bernanke.
Selling fake T-bills did not end so nicely last time.
There is no such thing as independent. It makes the assumption that gov doesn't have options which force the Central Bank to play ball. All the Treasury has to do is announce a print fest or a new type of money and the central bank monopoly is over. The Fed is not and can not be independent.
Bernanke and other world CBs are simply injecting the dollar with performance enhancing drugs in the hope when they next ease, the dollar index will not breach the 72 level. The dollar's going to end up like Lyle Alzado. Count on it.
Last year, at this time, the US$ was doomed. Today, the US$ is much stronger than the euro, gold ... funny how a sure thing is not necessarily a sure thing. And even if it sounds weird, a 1% CD in US$ was a much better investment than gold over the past 10 months.
$ still doomed, just delayed, best looking horse in glue factory for now
I agree. But Europe was the turning point. The only reason the dollar is strong is because of Europe. That's it. We have a year, maybe two, before this comes home, and much worse than what Europe is seeing right now. That's why short term GTFO of precious metals and domestic equities. Earnings season is gonna be a laugh and Jackson Hole is gonna be the biggest dissappointment of the decade. Everyone will be speculating for QE3. No matter what. LOL. Then, the rug gets pulled. Gold to 1100....S&P 1000....and one depressing holiday season. Long Dollars...Long Rum....
plunge protection team held the fort at dow 199 today......way to go mr. sack, and welcome back...........
Yup, and they roasted metals in the process and torched the miners for fun. They are laughing their asses off.
Thanks Americans, you are giving Eurozone exporters yet another summer turboboost! Spanish exporters for example just hit the monthly record in March this year, maybe they will be hitting another one this summer or during the fall....
Who will buy those toxic [fraud] MBS from PIMCO ? PIMCO was banking on dumping the fraud on the citizen via the FED . The FED pushed inflation is showing up in housing the only sector keeping inflation in check .
We will see how 10% inflation in housing looks on the CPI .
well it's interesting now, because uup/ udn weekly charts is about where you'd now consider buying based on the weekly chart. but of course the s and P and stocks haven't come nearly back to their suppport line, so what's going to happen
Eat your meat!
http://shutupnsing.wordpress.com/2012/07/07/scaling-the-wall-with-tyler-roger/