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Goldman's Response To The NFP Miss: Here Comes QE3

Tyler Durden's picture


Not a lot of commentary in Jan Hatzius' response to the horrendous NFP number, although what he says, speaks volumes:

BOTTOM LINE: We now look for the FOMC to announce a lengthening in the average maturity of its balance sheet at the September 20-21 meeting.




1.    Following today’s worse-than-expected jobs report, we now look for the FOMC to announce a lengthening of the average maturity of the Fed’s balance sheet at the September 20-21 meeting, with sales of relatively short-dated Treasuries and purchases of relatively long-dated Treasuries.

Short, sweet and to the Torque.

And more observations from GS on the NFP:


1. Nonfarm payroll employment was unchanged in August, in contrast to expectations for a moderate gain. Payroll growth in the previous two months was also revised down by 58k. Special factors in the report-the return of state workers in Minnesota and the Verizon strike-likely subtracted about 20k on net. The latest figures still therefore would have been quite soft excluding these effects. Additional details from the payroll survey were also disappointing. First, Job growth softened across a variety of sectors-manufacturing fell by 3k, construction declined by 5k, and retail trade declined by 8k. Second, the average workweek declined by one tenth to 34.2. Third, average hourly earnings fell by 0.1% month-over-month, and year-over-year growth was three tenths weaker than expected at 1.9%.

2. In contrast, the household survey of employment was reasonably healthy, showing a gain of 331,000 jobs (adjusted for methodological consistency with the payroll report, household employment would have increased by 134k). The official unemployment rate was unchanged because an uptick in the labor force participation rate to 64.0% caused the labor force to rise by a similar amount. Still, the broader "U-6" measure of unemployment-which includes "discouraged workers" (those who want a job but have not looked for one in the past month) and part-time workers who prefer full-time employment-rose a tenth to 16.2%.

3. The preliminary August reading for our Current Activity Indicator (CAI) is a decline of 0.5%. As discussed in Thursday's US Daily, survey-based indicators for August deteriorated sharply, and most "hard" data for the month are yet to be released ("The Hard/Soft Data Divide." September 1, 2011). In general we believe it is correct to put a high weight on soft or survey-based indicators. However, it is possible that the last four weeks of soft data may have overstated the deterioration in the outlook.

4. Following today's worse-than-expected jobs report, we now look for the FOMC to announce a lengthening of the average maturity of the Fed's balance sheet at the September 20-21 meeting. As discussed in a recent US Daily, one hypothetical implementation would be to sell Treasury securities that mature over the next two years and purchase Treasuries that mature between 10- and 30-years, apportioning the buying based on outstanding amounts in the market. This type of operation would be the equivalent of 80-90% of QE2 in terms of duration risk removed from the market (for more details see "For More Easing, Will Fed Go Big or Go Long?" US Daily, August 15, 2011).


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Fri, 09/02/2011 - 08:56 | 1625816 scatterbrains
scatterbrains's picture

I don't see how torque supports equities at least for the time being ?

Fri, 09/02/2011 - 08:56 | 1625822 Thomas
Thomas's picture

Gold and silver seem to agree.

Fri, 09/02/2011 - 09:31 | 1626069 Mactheknife
Mactheknife's picture

It won't because the Fed will not be expanding their balance sheet.

Fri, 09/02/2011 - 10:03 | 1626240 MFL8240
MFL8240's picture

Torque is only half of the issue, also expect the gansters to throw billions into equities to keep the ponzi party going. Equities relative to this economy (Global) are so stretched they have no place to go but down on fundamentsla.  The fundamenstals have been thrown out the window and its all lights and mirrors.

Fri, 09/02/2011 - 08:57 | 1625817 wang (not verified)
wang's picture

here it comes but

will it work? (longer than a week or two, if that)

Fri, 09/02/2011 - 08:56 | 1625820 Cash_is_Trash
Cash_is_Trash's picture


Fucking doom fatigue.

Fri, 09/02/2011 - 08:57 | 1625823 Debtless
Debtless's picture

Yes, because we all know QE works nicely to create jobs. Asshats.

Fri, 09/02/2011 - 14:29 | 1627305 Lazlo Toth
Lazlo Toth's picture

In the south we say: Naass - Haat.

Fri, 09/02/2011 - 08:57 | 1625826 Dr. Engali
Dr. Engali's picture

And there you have it. Print a zero and let the heroin flow.

Fri, 09/02/2011 - 08:57 | 1625827 alexwest
alexwest's picture

## purchases of relatively long-dated Treasuries.


what for? 10yy is  under 2%.. what is going to happen if it falls to 1%?

any ideas?




Fri, 09/02/2011 - 09:09 | 1625905 snowball777
snowball777's picture

PST puts get exercised?

Fri, 09/02/2011 - 08:57 | 1625828 disabledvet
disabledvet's picture

Let's take a closer look:
Who knew you could boogie-woogie to it!

Fri, 09/02/2011 - 08:57 | 1625829 chump666
chump666's picture

DAX just hit 3 neg, a very bearish signal...not looking at all.  something brutal is lurking.

Fri, 09/02/2011 - 09:04 | 1625866 LawsofPhysics
LawsofPhysics's picture

The arguement and "something" you refer to is about who controls the new world currency.  No one trusts anyone else at this point.

Fri, 09/02/2011 - 09:07 | 1625893 Caviar Emptor
Caviar Emptor's picture

Hence gold

Fri, 09/02/2011 - 08:58 | 1625835 nmewn
nmewn's picture

Should be some nice volume today ;-)

Fri, 09/02/2011 - 08:58 | 1625838 Dick Darlington
Dick Darlington's picture

And like the earlier iterations of the FED bs it WILL make things WORSE. But banker bonuses for this yr shud be secured by it.

Fri, 09/02/2011 - 08:58 | 1625841 Dr. Engali
Dr. Engali's picture

"0" Is that what the O in Obummers symble stands for? Yes we can print a zero jobs report.

Fri, 09/02/2011 - 09:51 | 1626165 JohnG
JohnG's picture

Without change.

Fri, 09/02/2011 - 09:00 | 1625851 Raynja
Raynja's picture

Did I miss something, I thought they announced the maturity shift at their last meeting.

Fri, 09/02/2011 - 09:01 | 1625853 buzzsaw99
buzzsaw99's picture

because things suxk we get more money therefore things will always suck.


it's a man baby

Fri, 09/02/2011 - 09:01 | 1625854 TradingJoe
TradingJoe's picture

But(there's always a BUT somewhere eh!) before QE something S&P will see at least 1000 if not 950, at a minimum! SO my puts get IT after all :)))! AM locked and loaded for long calls before Sep21st :)) I have to agree with the notion of the efficacy of QE something, how long it will work and IF it will for stocks as QE2 did?!?!

Fri, 09/02/2011 - 09:01 | 1625855 LawsofPhysics
LawsofPhysics's picture

They will over torque this and break the dollar.  Mission accomplished, new world currancy.  Fuck this, I see a very profitable carry trade in the ruble as we march closer to the world currency.  I used $1,000 (FRNs) in 1996 to buy 2,562,500 russian rubles (exchange rate was ~2,500 rubles per dollar).  I will be happy to repatriate these rubles into dollars now that the exchange rate is 28:1.  For those of you in situtations like this, that tax free repatriation day is coming.  BRING IT!

Fri, 09/02/2011 - 09:02 | 1625856 scatterbrains
scatterbrains's picture

Can I get a 1% 30yr refi ?  I promise to contribute to the eCONomy

Fri, 09/02/2011 - 09:16 | 1625966 Overflow-admin
Overflow-admin's picture

By doing what? Buying gold?


You look like Peter the pickpocket speaking like this...

Fri, 09/02/2011 - 09:02 | 1625859 Racer
Racer's picture

How moronic can you get, if QE1 and QE2 didn't work, bash your head against a wall and go for QE3? For goodness sake how thick are these people???

Fri, 09/02/2011 - 09:07 | 1625885 CrimsonAvenger
CrimsonAvenger's picture

Have you ever watched 7 year olds play soccer? They're focused on the ball, not on the goal. Same with these guys.

Fri, 09/02/2011 - 09:16 | 1625967 Commander Cody
Commander Cody's picture

It worked well for bankster bonuses.  That's what Goldman cares about.

Fri, 09/02/2011 - 09:02 | 1625862 Flakmeister
Flakmeister's picture

Not really the thread for it, but the Katia models are looking more and more like Irene and Floyd....

Don't make any plans to visit the East coast next weekend....

Fri, 09/02/2011 - 09:05 | 1625873 LawsofPhysics
LawsofPhysics's picture

Awe come on Flak.  Bullish for windsurfing and my empty fresh water storage tanks.

Fri, 09/02/2011 - 09:22 | 1625962 Flakmeister
Flakmeister's picture

Not sure where you are but the system in the GOM will have the potential to dump massive amounts of rain.. >20"

It is sitting there moving at 1 mph just gathering energy... Sitting over an eddy of the Gulf loop current, i.e. very hot water....

It will be officially upgraded to TS Lee at 11 AM (if I am deciphering the lingo of the Hurricance jocks correctly...)

Fri, 09/02/2011 - 09:36 | 1626090 LawsofPhysics
LawsofPhysics's picture

Some property in Alabama.  Irrigation channels and tank diversions wide open.  The amount of rain isn't the problem, it is the speed with which it comes.  Obviously, the best case is to have the storm sit over us for several days and slowly dump it.

Fri, 09/02/2011 - 09:03 | 1625864 Zedge Hero
Zedge Hero's picture

The economic collapse blog had an article about Goldwoman secertly predicting economic collpase today too.

Video on the uprising in Chile

Fri, 09/02/2011 - 09:24 | 1626016 j0nx
j0nx's picture

Of course they believe a collapse is coming because they f'ng created it.

Fri, 09/02/2011 - 09:37 | 1626096 Bringin It
Bringin It's picture

Re. Chile - Watch out or Simon Black will get on your case.

Fri, 09/02/2011 - 09:03 | 1625867 caerus
caerus's picture

even so...that's three weeks to short

Fri, 09/02/2011 - 09:04 | 1625870 digalert
digalert's picture



Barama jobs speech: "uh we need to fix the schools and the uh economy. Green jobs and uh the free college, free homes for the uh people. Uh yah jobs green jobs, fan powered cars, battery powered fans. Uh, none of this is my uh fault, it's Bush and them uh enemies repubs and uh tea party, uh and we need more stimulus for uh the green jobs..."

Fri, 09/02/2011 - 09:05 | 1625872 SMG
SMG's picture

The banks and large corporations (Oligarchy's proxies) are flush with cash this time, when they weren't as flush in 2007-8.   They would have more to gain by letting a collapse right now, they would be able grab assets and labor on the cheap, lowering the middle class's standard of living even more, robbing smaller corporations of their assets.   They can also use the excuse of the collapse to put off the blame on them.   Saying something like "well everyone was screaming to stop printing money, so we did."

Is currency collapse coming?  Without a doubt.  But by putting it off a little longer the bad guys get a lot more bang for their buck.

At least this is my current theory, feel free to critique.

Fri, 09/02/2011 - 09:08 | 1625895 LawsofPhysics
LawsofPhysics's picture

Exactly,  by the way, the banks are not the only ones that are flush with cash (that is what scares the banks).  Got physical? buy or become your own bank in the future.  This really will be a huge "turning" event for our financial markets.  It is a reset, just not what most had hoped for.

Fri, 09/02/2011 - 11:04 | 1626545 Savyindallas
Savyindallas's picture

banksters are off the hook (in their minds) Market recovered most of their massive 2008-2009 losses on bogus recovery through QE and QE2 - now they can collpase it again and blame it on Congress, as bernamke did last week. Combine that with another false flag attack -for which it appears they are ready to blame on Ron Paul supporters and Liberty minded folks  -and they can pull off another massive fraud/scam on the American sheeple.

Fri, 09/02/2011 - 11:44 | 1626706 Bringin It
Bringin It's picture

I too smell the FF in the air.  When backed into the corner, what else are they going to do?

Fri, 09/02/2011 - 09:06 | 1625877 Caviar Emptor
Caviar Emptor's picture

I still maintain that the QE3 crowd will be disapointed. Fed is in a very sensitive and precarious position right now. QE has not stimulated GDP or employment, but it has raised input costs globally through the excess liquidity factor and the hit to dollar credibility. More would add gasoline to the fire. Bernank has also indicated at Jackson Hole he expects the politicians todo fiscal stimulus, and they will. Probably big. 

Fri, 09/02/2011 - 09:06 | 1625882 props2009
props2009's picture

Am not American but am stunned at buffoonery of the US government. How difficult it is to pull the US out of unemployment?


A trillion dollars in to job creation would have put the whole of US to work twice over with little time to even sleep. And yet here we are after 18 months of spending 2 trillion dollars, there is very little to show!

All that money has fettered away to GS, BaC, MS and the brothers and sisters of these. I cannot believe this country was once a superpower.


Unless of course Obama is hand in gloves with these people. Which I doubt as I dont think they would want to share the spoils. So Obama is outside the sphere of influence but man is he that foolish to not see through what the Ben and his banksters are upto....Sitting in Zurich I can see that...

Fri, 09/02/2011 - 09:10 | 1625914 Caviar Emptor
Caviar Emptor's picture

He was their hand maiden up to now, favoring banks and Wall Street, big oil and large corporations. But things have changed and the stakes are high with systemic risk back on the table. You may see a brand new man

Fri, 09/02/2011 - 09:45 | 1626131 Bringin It
Bringin It's picture

CE - I'm sure his range of allowable actions is tightly controlled. 

Jackson - misfire




Am I missing anyone?

Fri, 09/02/2011 - 09:19 | 1625985 Overflow-admin
Overflow-admin's picture

I am not american but I am stunned at the buffoonery of the SNB, lobbies and government.


Sitting "chez les romands" I can also see that. And I also call for angry mobs to trash down UBS, CS & co

Fri, 09/02/2011 - 09:35 | 1626057 j0nx
j0nx's picture

1. Immediate tariffs to Chinese-made goods irrespective of what threats or bullshit come out of Chinese mouths.

2. Immediate cessation to offshoring for US-based corporations. Want to offshore your workforce? Then get the fuck out of the USA and don't plan on selling your goods here without running into that nasty tariff from #1.

3. Give all illegal aliens 30 days to self deport and then aggressively round up and deport any of them that remain after that.

These 3 things alone would create millions of jobs here in the USA and it took me all of 5 minutes to scribe it. Our leaders ARE bought and paid for by banks and corporations. It's so obvious to see based on the fact that they haven't enacted these things. They don't want to put jack shit back to work. They just want to stretch this ponzi turd out as far as it will go before it snaps. It's not buffoonery as much as it is greed which by its utterly destructive nature to the country then makes it treason.

Fri, 09/02/2011 - 09:08 | 1625902 Erin_Burnett_fo...
Erin_Burnett_footfetish_society_of_TrentonNJ's picture

Contrary to most observations QE2 did work, today market is higher than it was 1yr back. In 401(k) dollars, that translates to big-money.

Fri, 09/02/2011 - 09:31 | 1625961 the not so migh...
the not so mighty maximiza's picture

I don't agree, "big-money" would be hiring more servents and liv-in chefs.  There would be more jobs going on.

Fri, 09/02/2011 - 09:49 | 1626153 DefiantSurf
DefiantSurf's picture

She said as the market tumbled to 2009 levels...


Fri, 09/02/2011 - 10:19 | 1626329 LawsofPhysics
LawsofPhysics's picture

LOL!  Your 401k (which you can't touch right now) is up 25% while the cost of things you need is up over 30% and the cost of your assets (like your house has flat-lined or down).  You will have NO purchasing power when you retire either.

Yeah, winning for sure.  < sarc off >.

Fri, 09/02/2011 - 09:09 | 1625906 lizzy36
lizzy36's picture

How is more QE going to help end demand? HOW?

More QE is basically a "circle the drain death trap".

More QE is going to bring higher input costs. Which does not equate to MORE JOBS. 

The US does not run on $4 a gallon gas. Period. FULL STOP.

Fri, 09/02/2011 - 09:09 | 1625908 Oh regional Indian
Oh regional Indian's picture

Quietly Eerie III

Like an ice-berg in the night. 

Let us tell you this

Job-Seekers, take a piss

The wind is head-wards

Watch your shoes

Under your feet are all the clues.



Fri, 09/02/2011 - 09:09 | 1625911 Bansters-in-my-...
Bansters-in-my- feces's picture

Fuck You !...Jan Hazius.

Fri, 09/02/2011 - 09:12 | 1625926 exnihilo
exnihilo's picture

would someone please explain to me how flattening the yeild curve will not cut off lending even more??  if your (as a bank)  intrest on your loans decreases and the intrest you are paying on your deposits are increasing......   not bullish for lending. 

Fri, 09/02/2011 - 09:15 | 1625959 buzzsaw99
buzzsaw99's picture

the squid et al have to unload their long dated securities on the fed at a hefty profit before they can go to step 19.

Fri, 09/02/2011 - 09:15 | 1625954 monopoly
monopoly's picture

Printing has not worked. Some say we would be much worse off if we did nothing and left the system alone.  It would have been tough to let all the major banks fail at the same time in 2008-09. But now we have an opportunity to break them up one at a time in a somewhat orderly manner. Plenty of solvent smaller banks out there to pick up the pieces.

But just printing, all that will do is move our gold, silver higher, create absurd inflation and do nothing long term for the economy. You just cannot keep doing the same crap again and again, thinking next time it will work.

The sad part is, even if we went to a full on depression in 2008, with some of us losing jobs and income, by now my guess is we would be climbing out of the deep hole we dug. Now, we just added another excavator, and we are digging deeper yet.

No easy solution although our politicians would like us to think there is. Going to get ugly.

Fri, 09/02/2011 - 09:16 | 1625963 Caviar Emptor
Caviar Emptor's picture

THis report puts a period at the end of the sentence: QE and all the monetary stimulus of the last 2 years failed. 

It stoked biflation: In the US and globally, input costs are still rising in the face of a double dip which has taken down GDPs, PMIs, global trade levels, and employment. Here in the US the pattern is clear: annualized inflation is at 3% In The Middle of a Double Dip with demand destruction. Housing has no bottom in sight, incomes are falling in real terms and now as per this report in nominal terms. Perosnal net worth is dropping as a result. Margin squeezes for business have become the norm as demand tanks but input costs rise. 

QE has been a disaster, repeat disaster for Main Street. It has rotted out the core of the US economy: the middle class consumer and small business. 

Fri, 09/02/2011 - 09:47 | 1626143 DefiantSurf
DefiantSurf's picture

Once again you are assuming that QE was designed to help main street, if that were the case, then yes, Epic Fail!

However what it was designed to do was quite successful, it transferred a buttload of wealth from the middle class to the banksters.



Fri, 09/02/2011 - 09:35 | 1626085 Comay Mierda
Comay Mierda's picture

the only way the fed will bring in qe3 is if the public is BEGGING for it.  how will they get people to beg for it?  they will let big banks fail and depositors will lose a lot of money.  then people will hit the streets demanding their money after they realize the FDIC is a joke and finally the fed and the govt will announce more stimulus, qe, etc

Fri, 09/02/2011 - 11:18 | 1626614 hettygreen
hettygreen's picture

Hmm, the people AND Wall Street begging for the same thing? Now that's some kind of alternate universe for sure.

Fri, 09/02/2011 - 09:47 | 1626140 sbenard
sbenard's picture

QE is Wall St's Fed entitlement!

We are ALL entitled now! And that's why calamity is certainty!

Fri, 09/02/2011 - 09:51 | 1626156 Stuck on Zero
Stuck on Zero's picture

Quantitative Easing is like pouring on the gas when you're stuck in the mud.  All you accomplish is getting stuck harder and deeper.

Fri, 09/02/2011 - 09:56 | 1626193 SITruth
SITruth's picture

Love fest between Obama and Wall Street is over.  Obama will turn against them and go after them civilly and crimnally in an to win over Main Street votes. He has suckered them into giving him enough money.  Now he needs votes.

QE3 money is going to Fannie Mae and Freddie Mac and will be used in an attempt to pump up the housing market by expansion of bank credit.


Fri, 09/02/2011 - 09:59 | 1626214 SITruth
SITruth's picture

The banksters are going to get caught with their pants down this time. Hedge funds are under water for the year, they have 4 months to make money and they're going to do it by going short.

Fri, 09/02/2011 - 09:58 | 1626208 sbenard
sbenard's picture

Fed QE is Wall St's welfare!

Fri, 09/02/2011 - 10:08 | 1626268 aquagreen73s
aquagreen73s's picture

Don't know if this has been posted here or on another thread, but I woke up this morning (West coast), checked the price of gold, and wondered when Phoenix Captial Research is going to come out with anohter musing about why gold is going to correct back to 1600 and QE3 will not happen. PCR...yooohooo! PCR....ya' there!

Fri, 09/02/2011 - 11:14 | 1626590 hettygreen
hettygreen's picture

Everyone expects QE and everyone expects it to be grrrreat for absofuckinglutely everything (again) except the USD and the average joe trying to stretch a paycheque. And yet, so far today stocks are looking a tad under the weather and gold still has the better part of another forty dollars to best the high set August 22. Also, if you look really closely the $ put in some kind of a bottom on Monday and if it closes above 74.62 today I'd say equities, commodities and quite possibly the precious are due for a good old fashion thrashing, to a degree that might surprise many in a rather unpleasant way.  Is that rapids I hear before the waterfall (decline)?

Fri, 09/02/2011 - 11:17 | 1626609 choorles
choorles's picture

the revolution will not be televised. you need

Fri, 09/02/2011 - 12:06 | 1626798 jmc8888
jmc8888's picture

Well if that's the plan they can accomplish that by selling the short end.  Oh whoops. They mean lengthen the maturity by buying.  But they don't want to say that, so they say, lengthen the average maturity.  Oh yeah, they need to help their ponzi friends some more at the expense of a few hundred million 'useless eaters' (their thinking) in the third world.  Too bad they don't realize the whole world outside the bankster's front doors is becoming the third world.


Fri, 09/02/2011 - 12:17 | 1626839 warchopper
warchopper's picture

Who cares what the unemployment rate is when the rate for college degree holders is 4.3%. Seriously, QE is effective for those who hold a college degree. Which makes sense because pumping billions of dollars into the system through banks would only affect white collar workers vice blue.

Mon, 09/05/2011 - 08:39 | 1633796 shacai
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