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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scatterbrains's picture

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

Thomas's picture

Gold and silver seem to agree.

Mactheknife's picture

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

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.

wang's picture
wang (not verified) Sep 2, 2011 8:57 AM

here it comes but

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

Cash_is_Trash's picture


Fucking doom fatigue.

Debtless's picture

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

Lazlo Toth's picture

In the south we say: Naass - Haat.

Dr. Engali's picture

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

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?




disabledvet's picture

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

chump666's picture

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

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.

nmewn's picture

Should be some nice volume today ;-)

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.

Dr. Engali's picture

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

Raynja's picture

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

buzzsaw99's picture

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


it's a man baby

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?!?!

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!

scatterbrains's picture

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

Overflow-admin's picture

By doing what? Buying gold?


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

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???

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.

Commander Cody's picture

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

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....

LawsofPhysics's picture

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

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...)

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.

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

j0nx's picture

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

Bringin It's picture

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

caerus's picture

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

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..."

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.

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.

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.

Bringin It's picture

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

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. 

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...

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

Bringin It's picture

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

Jackson - misfire




Am I missing anyone?

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

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.

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.

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.

DefiantSurf's picture

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