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Goldman Goes Short The Dollar On QE3
Yesterday Goldman finally made it clear that Bill Dudley's marching orders are given: QE3 or no soup for you. Well, it didn't take long for the order from top to hit Goldman's FX desk, which has just issued this logical note: "Going short the USD on additional Fed easing." Odd, no easing has yet been announced, and according to so many none will come. But Goldman said so. So it must be.
From Thomas Stolper:
We have long argued that structural imbalances in the US will lead to more Dollar weakness. There are two main transmission channels: First, the current account deficit combined with the lack of investment inflows into the US and, second, more accommodative monetary policy by the Fed than elsewhere.
We would expect these Dollar-negative forces to strengthen. The Fed yesterday shifted to a more dovish stance, including with a commitment to keep rates at exceptionally weak levels until at least mid-2013. The Fed also said it stands ready to increase its balance sheet further, leading our US economists to think QE3 now has a more than even chance of becoming reality. Moreover, the recent macro evidence of continued sluggish growth suggests capital inflows into the US could weaken further. This would likely increase the current account funding pressures, even if the latter start to improve slowly.
All this suggests the Dollar will likely continue to weaken on a broad basis, and hence we would look to express this view against a broad basket of currencies. Our choice has been focused on commodity exporters, countries with strong external balances and strong cyclical stories across the major regions. Specifically, we suggest an equally-weighted basket of NZD, RUB, SEK, KRW, MYR and CLP. We would recommend going long this basket at an index level of 100, with a 1-day stop on a close below 98, for an initial target of 105.
There is, of course, the risk of the now traditional dodecatuple reverse psychology when dealing with Goldman. Although following the firm's disastrous Q2 performance, this could merely be one of those trades designed to lose the bank money, and thus, shockingly, make money for its clients. Either way, Jackson Hole is just over 2 weeks away, and the market will have to crash another 10% for QE3 to be demanded.
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Why do I get this nagging feeling the real people in charge just threw Goldman under the bus?
Everybody in financials got some sugar yesterday but them.
Their trading desk didn't get no lovin' last quarter either.
God's work isn't paying so well anymore, is it?
The GS FX desk is the worst one to follow or even to fade. Follow their CDS division--much better.
Pretty sure the Bernank quit GS and went to work over at the JP Morgue. Somebody call Jamie and see what he says about it.
This is the ultimate Goldman fade.
They won't get what they want.
Given the bad taste the name of Goldman Sachs, alone, produces in response to those who hear it, Goldman Sachs is being set up as the proverbial election year sacrificial lamb by ObaMao, who has cast his eyes upon Jamie Dimon (who claimed just yesterday that QE3 is not wanted or needed) and JP Morgan as the new de facto King of Finance (and King of Financing Obama's re-election).
Jamie Dimon has waited a long time to be able to eliminate Goldman Sachs and swallow up their client base.
Pardon me.....but doesn't Goldman run bartertown?
Bartertown is pretty fickle these days.
Time (& QE-III) will tell.
+1 I like it & this is why I come to ZH: To take a look at the current theories contrary to my own.
Possible, if I didn't believe that ObaMao is the puppet and the big banks the puppeteers (Not the other way round as TruthInSunshine states), I might have looked into this. I won't discount his theory either.
So apparently we have two divergent squids (GS & JPM), and the Fed being coy about QE. Like the rest of the planet waiting to make a few bucks on the next dump and pump and dump, all I want to know is when and how much QE is going to be implemented (If ever, thanks to Jamie), and how far the fall will be in the markets before they take action. I think old Warren predicted bounces of upto 20-30% and we haven't seen anything close to those numbers yet so let's say bounces of 8% to 18% on ES.
Frankly, I've given up trying to guess the economic breaking point because the debt riddled countries constantly on the verge of a breakdown seem to be incredibly resilient and flexible. It could be any time, or it could be years ahead, and that's the way I'll have to play this game.
What portion of what I wrote indicates that I think Obama, or any government official for that matter, is not the puppet of Wall Street?
In fact, I've maintained always that Deep Capture of 'elected representatives' by corporate interests has never been this powerful in American History.
What I did write is that Goldman Sachs has lost its perch as Apex Predator, and has been replaced by JP Morgan (and those who back JP Morgan), and Goldman Sachs will be the sacrificial lamb used by the big boys of finance to try and get Obama re-elected.
Don't be surprised to hear Obama mentioning Goldman Sachs by name while campaigning, and other politicians railing against Goldman Sachs, also, in next years election season.
I inferred the puppeteer/puppet theme from your statement about ObaMao setting up GS as a sacrificial lamb, but I'm glad you cleared that up, thanks. Anyway, JPM usurping GS has a nice ring to it, and we'll see in the months ahead to the elections if indeed that is the case.
Don't be upset if I don't buy it wholesale, I'm just a a few random bits floating on a server and travelling the ether, remember? I do however appreciate any reasonable theories, and yours fits rather well. Cheers.
No offense taken at all.
I'm throwing the idea of Goldman Sachs as sacrificial lamb out there for a variety of reasons, from the activity of GS stock price, to the rumored departure of many GS top traders, to the looming departure of Blankfein, articles in widely disseminated MSM sources highlighting Goldman's Abacus/Timberwolf/Hudson or LME warehousing of aluminum (etc.) activities, and then contrasting Goldman's stance on QE3xx with Jamie Dimon's, who has literally been out since yesterday loudly proclaiming that the economy doesn't need any further help from The Bernank.
Maybe Jamie Dimon is setting up his own run for political office?
At any rate, it's me thinking out loud, developing a working thesis.
Well, there's a bullish signal. For the Dollar, that is.
Agreed. This is an effort to backstop the Fed's see-though jawboning yesterday.
One thing is completely clear: QE3 was most definitely **not** anounced yesterday. The Fed is out of bullets. The Fed put on a wonderful piece of kabuki, acting as if they still have a full clip.
24 hours later, Goldman comes out with a press-release timed with the market open which attempts to add credibility to the Fed's acting.
As usual... it's prudent to call BS on GS whenever they make a public statement. Watch the money, not their PR department.
"QE3 was most definitely **not** anounced yesterday. The Fed is out of bullets. The Fed put on a wonderful piece of kabuki, acting as if they still have a full clip."
How right you are...
I predict there will be no QE announcement at the next Fed pow-wow.
Among other reasons, including the disasterous results of QE2, I say the Fed is afraid of ANOTHER down grade of the US. S & P brought the Fed to heel when nothing else could. Witness the continued whinning from all quarters.
The Fed's room to manuver has been constrained further and the corner they have painted themselves into is now smaller.
I'm afraid I'll have to go the other way and predict there will be QE. When and how much - I don't have a clue.
Somebody else mentioned yesterday that they can't call it QE any more, so maybe it'll be called, "Proactive Investment Social Strategy Of the Fed." or PISS OFF for short. (Not directed at you mate, but kind of evokes how TPTB feel about the general populace).
I can't imagine these egomaniacal cretins being afraid of anything.
When it comes - QE-III will have to be BIG - or it will just flop and make the Fed look more flacid than it already does.
Either way - we're on the second step down with more to follow.
Yep.
Reds galore when/if BAC does the old chapter 11 break dance on their heads, let alone the general malaise.
yes... let's all do what GS does...
I'm pretty sure the market will close even or green today. The only question is, what does the PPT do with all those stocks it bought?
Puts them on the pile, I suppose.
IF the market closes green today me thinks that QE3 is at work but they just forgot to announce it.
Sell them to Robo?
+ 1000 Fuu
Too funny
yea I'm feeling it too.. feels like they skimming the creame (traders) off the top with a panic open, only to to trigger a ppt induced short covering rally into the close kinda thing.. plus Pricter is being bandied about now.. or so I'm thinking.
THe United States has two currencies.
THe Dollar for the plebes,
The Treasury Note for the rulers.
Is GS also going to short the Treasury Notes?
Rhetorical.
They'll know the exact bottom of the Treasury market, and will trade accordingly.
S&P @ 1000-1100=QE3 or whatever the hell they will call it!
That trade is pretty crowded, dude. I would consider fading it opportunistically--by opportunistically, I mean trading every plunge and spike on the way to the opposite direction.
First rule 48. Then comes the Inverse Cramer rule. And now Inverse Goldman rule, too?
Good grief...my counterintuitive joint just dislocated itself. These three things MUST MEAN the bounce continues.
EXACTLY!! S&P 500 1180 coming soon to a trading screen near you.
Oh, I forgot, I cannot make my calls public here without being stalked and trashed.
I wouldn't assume that many folks here pay much attention to your calls. If ZH had an ignore button feature (which many of us have requested) you and Robo would likely disappear.
They seem very pleased with themselves calling further weakness in the dollar. (golf clap)
Hey GS, I've got a currency for your basket, gold.
There is a reason they won't even lend to solvent borrowers, they know the currency is being destroyed and will lose money on those loans whether you pay or not.
At this time, I would highly recommend hedging your gold.
WOOO HOOO!!!
Breakin' out the "DOW 10,000" hat again...
Watto: How are you going to pay for all this?
Qui-Gon Ben: I have the threat of QE3 to keep rates low.
Watto: Threat of QE3 ? Threats are no good out here. I need something more real.
Qui-Gon Ben: I don't have anything else...
[waves hand]
Qui-Gon Ben: But threats of QE3 will do fine.
Watto: No, they won't-a.
[Qui-Gon waves his hand more firmly]
Qui-Gon Ben:Threats will do fine.
Watto: No, they won't-a. What? You think you're some kind of Jedi, waving your hand around like that? I'm a Toydarian. Mind tricks don't work on me. Only money. No money, no green markets!
What r the "hot shit' ETF's to short da $$$?
UDN
If the market keeps crashing, the dollar is going up.
But man, Goldman sounds desparate.
the FED is committed to keeping interest rates as low as possible, which G/sachs sees as "bearish for the dollar" (yawn)
Finally a clear indicator that USD gains are coming!!!
Could goldman be making a power play?
Clowns to the left of me, jokers to the right...
Headfake?
ZIRP to drive me into risk assets, HFT and FED central planning manipulation to push me out. That leaves real estate (hahahahahaha) PM's (and margin call plunder).
Fvck. All storms, no ports.
A behind the scenes QE3 started? seems there keeps being mentions of it, but it has not started. A CNBC talking head with Cramer just said one has to start immediately to prop up the economy. Funny, he didn't mention how the other two did not work.
GS better hire Meredith.
GS prefers to plunder Meredith's research via cybertheft and woo her on their conference calls. No need to pay her.
I learn every day, thanks
insiders have given GS the finger--and others are using HFT against them-- GS is on its own, as doors slam in its face.
Will gold getting to 1776 have any significance?
Relax - CNBC just announced market beginning to stabilize and then expert Steve Leisman announced algorithms were put in “oscillation mode".
"oscillation mode"--second time a comment from this site makes me spray coffee out my nose onto my trading set-up. I am going to get electrocuted before end of day at this rate.
Broke my own rules yesterday. Bought TNA in the morning in my small Scott Trade account, got slammed then made out with the huge rally at the end of the day. Thought we might be getting the "bounce back" a lot analysts were expecting, got my face ripped off at the open this morning.
The only way to "save" or profit from the ponzi is simply sitting on the sidelines fully in gold. I will never ignore the "golden rule" again.
SDS + 6.66% Just sayin'
+$1776!
How patriotic.
http://www.zerohedge.com/news/macro-commentary-endgame-tbtf-banks-and-ri...
"The Fed WILL NOT try QE3. You "gold bugs" are about to get slaughtered. Gold will drop $200 at 1:15 PM CST. Watch & learn!"
Buahahahaha.
you just have to love this. there has been months of nauseating "QE3" chatter from all comers on ZH, how it is just there to bid the stock market up if it falls a few % blah blah blah. now, with the stock markets shattered, the FOMC doesnt even come close to announcing QE3, and all ZH has to say is that "Goldman said so. So it must be true." NO, ZH and its band of followers said so. repeatedly. over and over. and it didnt happen.
at least man up an eat some humble pie, instead of still wanking on about willliam dudley and things you wish he had said to justify past fantasies.
fat chance.
http://www.youtube.com/watch?v=oB6bk5S2_Zc&feature=related
**Duplicatre**
Can sombody please explain wat the 7-3 diagreement at the FOMC was about?
Plosser, Kocherlakota and Fisher think that the circumstances mean that the Fed should keep "exceptionally low levels for the federal funds rate for an extended period."
What is so differenet between that and what the Bernake/Dudley/Yellen group said?
they are dissenting because 0% interest rates any longer will kill the dollar. Who in the world would want to cast a consenting vote for such madness?
But "to warrant exceptionally low levels for the federal funds rate for an extended period" means keep rates at near 0%.
http://www.federalreserve.gov/newsevents/press/monetary/20110809a.htm
which means NEGATIVE in real terms, below the rate of real inflation.
Currency destruction.
Yes I know, I agree with you, but im not convinced that the statment indicates those 3 no votes agree
Goldman probaby got ass raped by the drop in crude and needs a falling dollar to prop up the oil stockpile they hold. QE3 would give us a quick shot up to at least $110 a barrel.
of course i've never believed the BS about a weaker dollar truly affecting the price of oil. the dollar is up today and crude is moving up. over the past week the dollar got hammered but oil went down almst $20. the truth is when 95% of trading is done by speculators you can't make any corellations.
Has anybody noticed that there has been a huge resurgance of the strength of the dollar a week before expiry for the past 5 months? It wouldn't suprise me if the Fed waits until all contracts are settled to announce QE3
gold at 1776. f*ck yea
Wait until they are caught up in an epic short squeeze of the $ next week or so due to Europe banking problems. There may be QE3. But some banks are about to blow up in Europe so I'm long USD
GS didnt get the message, no QE
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