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Here Are Wall Street's Expectations For Tomorrow, As Goldman Makes The Case For $1 Trillion In QE3

Tyler Durden's picture


After 3 months ago everyone was convinced there was no QE3 imminent ever, all it took for the lemming majority to scramble to the other side of the boat was a 20% drop in stocks. Since then, following a brief stabiliziation in stocks, based precisely on beliefs that Bernanke would once again pull something from this bag of goodies, the lemmingrati once again shifted back, and the majority now pretends it does not expect anything out of Jackson Hole tomorrow, even though it obviously does, as otherwise the market would resume its plunge. UBS earlier conducted a survey among money managers, finding that 50% of the 82 respondents expect Bernanke to limit Jackson Hole remarks only to reviewing the rationale for the Fed to pledge ZIRP until mid 2013. Then there are those who actually told the truth, such as Goldman which, in a note yesterday, says that $1 trillion in QE3 is an absolute minimum if the Fed wants to get GDP higher by at least 0.5%. To wit: "Taken together, our analysis suggests that QE3 is unlikely to be a panacea for growth. Nonetheless, our estimates suggests that $1trn of asset purchases–or an equivalent increase in the duration of the Fed's balance sheet–might increase GDP growth by up to 0.5 percentage point in the first year after any announcement of QE3." And since we are talking the truth here, why not stop pretending you care about GDP - just think of the marginal impact on Wall Street bonuses...

First, the UBS responses:

  • 18% expect Fed will extend average maturity of Treasury holdings, similar to “Operation Twist”
  • 3% expect either “QE3 Max” (purchases include risky assets or a 10-yr yeld target) or a QE3 along the lines of QE2
  • “We suspect that a reasonable chunk of the nearly 4% gain in the S&P 500 this week is built on the hope that the speech is friendly to risk assets. Hence they could suffer at least a bit if the Chairman does not pave the way for QE3”

One firm that is not shy about its "QE3 or bust" policy, er, recommendation is Goldman. Here is the firm's Sven Jari Stehn defending the firm's outlook why a $1 trillion boost in LSAP (or duration equivalent extension, because see, LSAP is the same as Operation Twist from a risk preference shift perspective, but unfortunately twitter-poll responding FX traders are unable to grasp this...). As a reminder, it was Goldman who was calling for $2 trillion in QE2 only to get $900 billion. Compromise? And does this mean that Bernanke will merely implement $500 billion in Operation Twist 2 then? We shall find out tomorrow. 

That said, if the Chairman disappoints, the market will not be happy.

From Goldman Sachs:

Following the sharp deterioration in the economic outlook, we now see a greater-than-even chance that the Federal Open Market Committee (FOMC) will resume quantitative easing later this year or in early 2012. We recently discussed that such a step might involve either another expansion of the balance sheet or an increase in the duration of the Fed's balance sheet without expanding it (see "For More Easing, Will Fed Go Big or Go Long?" US Daily, August 15, 2011.) But given the disappointing growth performance since the adoption of the second round of asset purchases ("QE2") late last year, many commentators question how effective QE3 would be in boosting the sluggish recovery. In today's comment we attempt to shed some light on this question in two steps.

First, we reexamine the link between quantitative easing and financial conditions. As discussed on many occasions in the past, we think that the Fed's unconventional policies work primarily through easing financial conditions via lower interest rates, higher equity prices and a weaker dollar. Specifically, we estimated in the run-up to QE2 last summer that $1trn of asset purchases would boost our financial conditions index (GSFCI) by around 80 bps. (This estimate was derived as the average effect from three models that ranged from 25-115bp. For details see Sven Jari Stehn, " Unconventional Fed Policies and Financial Conditions: How Tight a Link?" US Daily, August 17, 2010.)

Using our previous methodology, we update these estimates to include QE2. Specifically, we explain the level of the GSFCI with three components. First, we include the announced stock of the Fed's asset purchases (that is the announcements in November 2008, March 2009 and November 2011 to purchase $600bn, $1.15trn and $600bn of securities, respectively). Second, we include the target fed funds rate (as a measure of the current stance of conventional monetary policy) and the slope of the Eurodollar curve (to capture expectations for future monetary policy). Finally, we include a number of economic variables that capture other economic influences, including Reuters/University of Michigan long-term inflation expectations and initial jobless claims. We estimate this model using weekly data between January 2000 and August 2011. We find that the first two rounds of asset purchases, on average, eased financial conditions by 101bp per $1trn (see column 1 in the table below). This estimate is consistent with our previous range of estimates, but a bit higher than their average.

The Estimated Effect of Fed Asset Purchases

There is, however, reason to believe that QE3 might be less effective in easing financial conditions than the first two rounds of purchases. This is because Fed asset purchases are likely to have larger effects during times of extreme market stress, and particularly when they are targeted at a specific market dislocation, like the mortgage-related purchases during QE1. As a result, one would expect that QE1 had a more significant effect on financial conditions than the subsequent program. Unfortunately, it is difficult to test for this empirically as we only have two experiences to go by. That said, we find some tentative evidence that the effect of QE1 on financial conditions was larger than during QE2: the effect rises to 120bp per $1trn when we estimate the model only through the end of QE1 in March 2010 (see column 2 above). To the extent that this finding points to diminishing returns to quantitative easing, we might expect additional purchases to ease financial conditions by less than 100bp per $1trn of purchases (or an equivalent extension of the average duration of the balance sheet).

Moreover, the effects of further quantitative easing on financial conditions might well be dampened by the Treasury's debt management policies. This is because in an environment where the federal funds rate is near zero, asset purchases–whether financed by the creation of bank reserves or by selling short-maturity holdings–are essentially equivalent to a shortening of the average maturity of the government debt. (For details of this argument see Jan Hatzius, "QE2 as a Shortening of Treasury Debt Maturities," US Daily, October 26 2010.) The average maturity of the privately held Treasury debt, however, has recently been increasing despite QE2–up from 57 months in October 2010 to 58 months in March 2011 (the latest available figure). If this trend continues, the effects of QE3 on financial conditions may be at least partially offset by the Treasury’s debt management policies.

Having discussed the effect of quantitative easing on financial conditions, we turn to the link between financial conditions and growth. Our estimates–summarized in the chart below–suggest that a 100bp easing in financial conditions would boost growth by 0.8 percentage point in the first year and another 0.2 percentage point in the second–i.e., raise the level of real GDP by 1% after two years. (For details see Sven Jari Stehn, "Another Look at the Link Between Financial Conditions and Growth," US Daily, October 26, 2010.) The chart below furthermore breaks down the total effect into its components, suggesting that about half of the total effect of the easing in financial conditions on GDP can be explained by an increase in consumer spending. The response of fixed investment, housing and net exports to easier financial conditions also contributes significantly to GDP growth.

The Effect of Easier Financial Conditions on GDP

Again, we see a couple of reasons why this link might be weaker in the current context. First, the disappointing growth performance in 2011H1 suggests that the effect of the easing in financial conditions in 2010H2 might have been smaller than the above estimates imply. A possible explanation is that some of the normal transmission channels seen in the chart above might be "clogged" in the current environment. In particular, a significantly positive effect on housing construction seems unlikely given the large amount of unoccupied inventory that currently hangs over that market. Moreover, the response of consumption might well be more muted in light of households' inability to extract equity from homes through refinancing due to widespread negative equity. In a simple attempt to capture these effects, we fully exclude the contribution of residential investment to GDP growth implied from the chart. (An alternative approach would have been to exclude parts of both the housing and consumption response.) Doing so suggests that a 100bp easing in financial conditions might boost growth by only 0.5 percentage point in the first year (see dashed line). Second, it is possible that rising energy prices might offset some of the growth effects of any QE3-induced easing in financial conditions. Although we agree with the view expressed by Fed Vice Chair Janet Yellen–that commodity prices are best explained by the fundamentals of global supply and demand rather than by the stance of US monetary policy–the significant increase in crude oil prices before and after the QE2 announcement raises the question whether there might have been at least some offset to the easing in financial conditions. In support of this view, our "oil-adjusted" financial conditions index–which takes into account the price of crude oil–shows less easing in response to the Fed's purchase programs than the GSFCI.

Taken together, our analysis suggests that QE3 is unlikely to be a panacea for growth. Nonetheless, our estimates suggests that $1trn of asset purchases–or an equivalent increase in the duration of the Fed's balance sheet–might increase GDP growth by up to 0.5 percentage point in the first year after any announcement of QE3.


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Thu, 08/25/2011 - 14:57 | 1600981 digitlman
digitlman's picture

Fuck you, GS.



Thu, 08/25/2011 - 14:59 | 1600990 President Palin
President Palin's picture

Fuck you, GS.

You are being way too kind.

Thu, 08/25/2011 - 15:58 | 1601301 max2205
max2205's picture


Thu, 08/25/2011 - 19:08 | 1602004 zaphod
zaphod's picture

So let me get this straight.

Increase M0 by 40%, get a one time 0.5% gdp bump, this is the best these guys got????? Seriously

Thu, 08/25/2011 - 16:38 | 1601500 Sudden Debt
Sudden Debt's picture

it makes sense.... increase the debt with 8% for a 0,5% economic growth...


Thu, 08/25/2011 - 15:02 | 1601012 vast-dom
vast-dom's picture

Fuck You GS +1


Add that to the 0H Fuck You list niggies!

Thu, 08/25/2011 - 15:22 | 1601110 TruthInSunshine
TruthInSunshine's picture




Roubini is coming onto CNBS @ 4:40 pm est to argue for MORE QUANTITATIVE EASING/LUBING.

Get your Zero Hedge on.

A million bitch slaps for Roubini to be incoming, and rightly so.

(Just who has bought off Roubini, anyways, the pompous and vitriolic little spitfire...)

Thu, 08/25/2011 - 15:25 | 1601124 Thomas
Thomas's picture

Hope he talks about the gold bubble. 

Thu, 08/25/2011 - 15:48 | 1601252 WarriorClass
WarriorClass's picture

Break the fucking code, bitches:


Bring the house down!

Thu, 08/25/2011 - 15:32 | 1601162 slaughterer
slaughterer's picture

GS and JPM send Roubini a dozen 16-year-old girls a month.  Dr. Doom's fetishes and addictions are well known on the Street, and through them he is kept on a nice tight leash.

Thu, 08/25/2011 - 17:26 | 1601708 faustian bargain
faustian bargain's picture

Roubini is a laughingstock with his juvenile Twitter tantrums.

Thu, 08/25/2011 - 18:17 | 1601871 theMAXILOPEZpsycho
theMAXILOPEZpsycho's picture

Woaa He's actually on twitter...I just said "Fuck off and die elitist SCUM!"

I suppose he'll block me or something, but I don't really know jack about twitter

Thu, 08/25/2011 - 15:06 | 1601034 SilverRhino
SilverRhino's picture

If the economy is approximately 14 trillion dollars GDP, how the hell did these fuckheads conclude that spending 7% of GDP will pump up the economy by only 0.5% GDP?   Did someone at the Goldman (Ball)Sack fail basic fucking math??

QE3 will be the golden straw that breaks the USD.  But then TPTB don't care, they're just going into the final round of looting by passing paper to asset-holding dupes.

Thu, 08/25/2011 - 15:15 | 1601076 youngman
youngman's picture

"how the hell did these fuckheads conclude that spending 7% of GDP will pump up the economy by only 0.5% GDP? "


Because its government spending....

Thu, 08/25/2011 - 15:40 | 1601203 Sancho Ponzi
Sancho Ponzi's picture

Members of Congress hold most of their wealth in the form of real estate, so it's logical to assume Bubble Ben will continue handing out freshly printed FRNs in exchange for worthless RE related assets. The vast majority of CongressCritters would risk Armageddon to protect their net worth. It really is that simple.

Thu, 08/25/2011 - 15:09 | 1601046 slaughterer
slaughterer's picture

With $2.4 - 2.6 trillion in SOMA, $1 trillion in LSAP duration equivalent extension is too much to ask.  (I would expect however Goldman would happily settle for $500-600 billion in LSAP, and will probably get it--eventually.) 

Thu, 08/25/2011 - 15:49 | 1601258 Mactheknife
Mactheknife's picture

I think the Fed is going to take that 1.7 trillion held on reserve and do a reverse repo on T-bonds and fred/fann MBS.  I think that's why they made sure to tank gold as hard as they could first. But hey, what the hell do I know.

Thu, 08/25/2011 - 16:05 | 1601337 slaughterer
slaughterer's picture

Reverse repo on agency holdings would dovetail nicely with Obama's planned homeowner equity bailout and make the Fed seem like it actually cares about something else than the Primary Dealers.  It would result in a temporary PR boost for Ben and O.   Could happen. 

Thu, 08/25/2011 - 16:15 | 1601392 Mactheknife
Mactheknife's picture

The Bernank has stated before that he is not in favor of a Twist operation with ZIRP. With that much money just sitting there already....just sayin

Thu, 08/25/2011 - 17:00 | 1601581 narnia
narnia's picture

liquidiating the Fed balance sheet would be terribly bearish for gold. 

bottom line..  the Fed & Treasury know what yield curve they want.  that's the same curve the TBTF banks want, as well.  they'll do what it takes to achieve it, irrespective of its effects on the currency.

they'll try to sculpt it with twist or some synthetic bond using MBS (the pawns and knights).  if they don't accomplish it that way or they see some other move (chinese dump, unforseen auction weakness, other event), they'll employ the rooks & bishops (balance sheet expansion).  if that doesn't work, they'll bring out the queen (changing the rules of the game).  i don't see why anyone even cares what the beard says or why he would want to telegraph the moves.

Thu, 08/25/2011 - 17:51 | 1601798 Smiddywesson
Smiddywesson's picture

Makes sense to me.  The assault on gold was either the first of a one two punch that Jackson hole will hit gold with, OR it was to take some of the steam out of the ramp in gold prices Jackson Hole will offer. 

Thu, 08/25/2011 - 15:37 | 1601190 slaughterer
slaughterer's picture

I asked my 6-year-old daughter yesterday what she wanted to be when she grows up.

She said point blank without a second thought: "A Primary Dealer."

Thu, 08/25/2011 - 14:58 | 1600987 Johnny Lawrence
Johnny Lawrence's picture

Fuck. You. Goldman. Sachs.

Thu, 08/25/2011 - 14:58 | 1600988 DeathCabfoKulaks
DeathCabfoKulaks's picture

Eat the Kulaks and Monetize dat bitch

Thu, 08/25/2011 - 15:24 | 1601109 hedgeless_horseman
hedgeless_horseman's picture

Eat your Pasta Jay's stuffed shells. 

$1 trillion was my minimum QE number from 2 weeks ago...

Thu, 08/25/2011 - 15:28 | 1601141 slaughterer
slaughterer's picture

If we get only $500 billion, you only get 1 1/2 of those Manicotti-filled beauties.   

Thu, 08/25/2011 - 15:39 | 1601198 SheepDog-One
SheepDog-One's picture

Theres been no $1 trillion gift delivered at all...lets see it!

Thu, 08/25/2011 - 16:27 | 1601443 hedgeless_horseman
hedgeless_horseman's picture

It would certainly not be the first gift to bank shareholders paid for by all who earn/hold USD via the inflation tax.

Thu, 08/25/2011 - 22:01 | 1602550 TruthInSunshine
Thu, 08/25/2011 - 15:00 | 1601001 TradingJoe
TradingJoe's picture

Yeah, yeah, GS...! What a nice day it will be tomorrow :)))! And not to mention next week!

Thu, 08/25/2011 - 15:58 | 1601294 SheepDog-One
SheepDog-One's picture

Goldman blowing smoke, hoping for some $1 trillion gift....Bernank will say theyre standing by watching, there is no more stomach for more QE madness and its political suicide as well. Fuck off, Goldman.

Thu, 08/25/2011 - 15:00 | 1601002 Cognitive Dissonance
Cognitive Dissonance's picture

Good thing I just bought more Gold and Silver.

The liars continue to lie so that they can continue to believe each other.

Thu, 08/25/2011 - 15:07 | 1601013 vast-dom
vast-dom's picture

Gold and Silver = the REAL GS!


And once again Fuck You CME!!!!

Thu, 08/25/2011 - 15:07 | 1601037 NoClueSneaker
NoClueSneaker's picture

CD .... money goes to €u-Proxies... looting turbo

Thu, 08/25/2011 - 15:00 | 1601003 alien-IQ
alien-IQ's picture

"might increase GDP growth"

Yes...just like Jessica Alba MIGHT just knock on my door, strip naked, drop to her knees and blow me.

The odds are about the same.

Thu, 08/25/2011 - 15:10 | 1601052 Doyle Hargraves
Doyle Hargraves's picture

No there is actually more of a chance of Jessica Alba showing up then QE working to increase REAL GDP.

Fri, 08/26/2011 - 01:21 | 1603030 StychoKiller
StychoKiller's picture

Guess I better answer the doorbell, then! :>D

Thu, 08/25/2011 - 15:15 | 1601066 lolmao500
lolmao500's picture

Krugman and his followers would say that she's blowing you RIGHT NOW...

Thu, 08/25/2011 - 15:16 | 1601080 youngman
youngman's picture

She might in the future if you got GOLD....and a little food

Thu, 08/25/2011 - 15:38 | 1601195 SheepDog-One
SheepDog-One's picture

I MIGHT rise tomorrow and discover a new Ferrari Dino in my garage...but its not too likely.

This whole market is now based upon rainbow unicorns.

Thu, 08/25/2011 - 15:01 | 1601008 Henry Chinaski
Henry Chinaski's picture

No QE 3.  Market crashes.  TOTUS drops the hammer on Wall St execs (see People vs GS) and gets reelected. 

Thu, 08/25/2011 - 15:37 | 1601191 SheepDog-One
SheepDog-One's picture

Hmmmm yes interesting.

Thu, 08/25/2011 - 16:08 | 1601357 whaletail
whaletail's picture

The Poet Laureate of Skid Row speaketh the truth. 

Thu, 08/25/2011 - 16:34 | 1601480 bankruptcylawyer
bankruptcylawyer's picture

oh man...that 'sounds' good. but look at who he is surrounded by and what he's done for 3 years. 


you think he's switching horses mid stream so that wall street can back rick perry? i don't. you think obama cares about 'the people'. he is not a populist, he is conventional politician bought and sold by the banks and corporations.

seems unrealistic, especially in light of the ultimate insider buying 5 billion of bank stock only 1 day before the announcement. 


Thu, 08/25/2011 - 15:04 | 1601015 john39
john39's picture

what time are the "remarks" tomorrow?

Thu, 08/25/2011 - 15:08 | 1601019 vast-dom
vast-dom's picture

<---- QE3 Tomorrow

<---- Market CRASHES Tomorrow



VOTE Biyatchez!


And Nigga Please this ain't no wish fulfillment vote this is your well researched and well informed survey.

Thu, 08/25/2011 - 15:11 | 1601054 caerus
caerus's picture

watching ES 1160 NQ 2100

Thu, 08/25/2011 - 15:12 | 1601060 slaughterer
slaughterer's picture

Look at that unanimous "MARKET CRASHES TOMORROW" vote above.  Do you think that the bots are not aware of this lopsided bearish sentiment?  

Thu, 08/25/2011 - 15:54 | 1601075 vast-dom
vast-dom's picture

wait till that vote hits 666 CRASH vs. 13 QE3 motherfuckers!


Long the Spam / Short Roubini 


//drool off/


Oh yeah let me add Roubini to our 0H Fuck You list.

Thu, 08/25/2011 - 16:01 | 1601319 Bring the Gold
Bring the Gold's picture

Yeah but do that same vote on Stockhouse, Yahoo or any other number of forums and you will see a reversal of this vote by a thousand fold. All the shills and MSM are calling for it, folks on ZH are saying it isn't going to happen, who do you believe?

Fri, 08/26/2011 - 01:24 | 1603035 StychoKiller
StychoKiller's picture

Buckle on yer Gold shield and raise yer Silver sword!

Thu, 08/25/2011 - 15:13 | 1601064 vast-dom
vast-dom's picture

Get your SHORTS on NOW people!


Bloodbath. BAC/C/GS/et. al


//no sarc to off/


Thu, 08/25/2011 - 16:03 | 1601329 Agent P
Agent P's picture

I voted CRASH, but not for any wish fulfillment.  I think the only thing we get tomorrow is more "we have the tools" and "ready to do what's necessary" talk, which won't be enough to keep the bottom from falling out.  Just my opinion.

Thu, 08/25/2011 - 16:18 | 1601403 caerus
caerus's picture

imo...ES 1160 is support going back to 11/16/2010

ES 8/23/11 close 1158.50

ES 8/24/11 open 1159

ES 8/25/11 close 1157.5? either way < 1160 i think

Thu, 08/25/2011 - 17:06 | 1601606 Id fight Gandhi
Id fight Gandhi's picture

My money is disappoint aka crash.

A market dive would cheapen the prices of PMs tho

Thu, 08/25/2011 - 15:05 | 1601024 lieutenantjohnchard
lieutenantjohnchard's picture

this last hour of trading ought to be interesting. i'll bet tptb are calling all over "town" searching for intel on the speech, if "they" don't aleady have it.

Thu, 08/25/2011 - 15:10 | 1601049 TruthInSunshine
TruthInSunshine's picture

Goldman & JP Morgan write the speech, John.

I'm not saying Bernankincide is going to go along with this leaked lead balloon.

Thu, 08/25/2011 - 15:22 | 1601106 slaughterer
slaughterer's picture

If you initiate index shorts today, you will probably have a few windows of opportunity to cover them tomorrow at a profit. But you will also have a few moments where you are racking up astronomic losses in a dizzying spiral of computer-generated bullishness. 

Place your bets on the table, gentlemen.  The hour of truth has come. 

Thu, 08/25/2011 - 15:30 | 1601152 TruthInSunshine
TruthInSunshine's picture



Roubini is the kiss of death.

He's calling for more QE.

That seals the deal for me.


Thu, 08/25/2011 - 16:00 | 1601314 Bring the Gold
Bring the Gold's picture

Which way do you see it going then? Sure seems like the shills and Goldman liar-sacks are pushing for QE 3. Makes me think they are ready to scoop up the market for pennies on the dollar in the next few weeks. Heck though who the heck knows?

Thu, 08/25/2011 - 16:17 | 1601388 TruthInSunshine
TruthInSunshine's picture



It's all downhill.

The markets will reconcile themselves with the gravity of our situation.

Until someone can prove to me that real, sustainable job creation is on the way, let alone no further material job losses - which is, in fact, happening as we speak- prognosis negative.

Nearly everyone complicates the analysis unnecessarily. It's ALL about JOBS (and derivative wages and benefits).

Thu, 08/25/2011 - 16:35 | 1601491 espirit
espirit's picture

It is all about jobs. No jobs, no mortgages - period.  Unless the endgame with Fed complicity is for the banksters to finish unloading their toxic BS on whatever sheeple is still buying.   The eurasians learned the hard way and are much wiser for it - but broke.

Thu, 08/25/2011 - 15:05 | 1601029 Catullus
Catullus's picture

Scwab suing the money center banks over LIBOR manipulation.

Thu, 08/25/2011 - 15:06 | 1601030 The Axe
The Axe's picture

Goldman is the man....bitches...

Thu, 08/25/2011 - 15:06 | 1601031 FunkyMonkeyBoy
FunkyMonkeyBoy's picture

Why are the citizenry allowing these entities to exist?

Thu, 08/25/2011 - 15:18 | 1601093 j0nx
j0nx's picture

Because 99% of the people have no idea what's REALLY going on and who the REAL culprits are and the people are more afraid of their government than their government is of them. In a nutshell.

Thu, 08/25/2011 - 15:39 | 1601200 Dr. Richard Head
Dr. Richard Head's picture

Shhhhhhh....That Jersey Shore girl was apparently banging bitchez in Italy.  Would you fucking pipe down?!?!?!?!

Thu, 08/25/2011 - 16:43 | 1601520 Mongrel
Mongrel's picture

You got that right . . .

Thu, 08/25/2011 - 15:35 | 1601183 SheepDog-One
SheepDog-One's picture

Most americans daily reality is

Drop kids off somewhere.

Fuck around all day pretending to work and try to collect a check from govt.

Pick up kids, buy McDonalds, get drunk, go to sleep.

Thu, 08/25/2011 - 15:42 | 1601215 Dr. Richard Head
Dr. Richard Head's picture

Is making sales calls WHILE reading and posting on ZeroHedge considered pretending to work?  I have had my best sales year in the past four. 

Thu, 08/25/2011 - 22:13 | 1602586 GoinFawr
GoinFawr's picture

you sneaky f'ker

Thu, 08/25/2011 - 15:06 | 1601032 TruthInSunshine
TruthInSunshine's picture



Fade Goldman, Bitchez.

This is the BIG FADE.


Thu, 08/25/2011 - 15:07 | 1601036 digitlman
digitlman's picture

Welp...3:00 PM EST....time for the Melt Up!


Enjoy your last stick-save, TPTB!

Thu, 08/25/2011 - 15:07 | 1601039 Temporalist
Temporalist's picture

El-Erian and Roubini are debating QE3 on CNBS now.

Thu, 08/25/2011 - 15:07 | 1601040 lolmao500
lolmao500's picture

And if it doesn't happen, KABOOOOOOOOOOOM.

Anyone thinking that Obama will ``save`` BAC during the week-end?

Thu, 08/25/2011 - 15:09 | 1601048 digitlman
Thu, 08/25/2011 - 15:46 | 1601240 Dr. Richard Head
Dr. Richard Head's picture

Obama: Old man Warren.  What's up cracka?

Warren: Just counting fiat in my bath tub.  How's it hanging?

Obama: Look, BofA is little short on cash right now.  How about I give you a deal on preferred shares, I'll have Michelle play with your old man balls, and we can go from there?

Warren:  Sounds good.

Obama: Just one thing.  I'll need you to suck me off for a fundraiser.  Still in?

Warren: Of course I am.  Let me give Becky a call, I think she'll want in on the fundraiser, if you know what I mean.

Thu, 08/25/2011 - 15:10 | 1601050 Seasmoke
Seasmoke's picture


Thu, 08/25/2011 - 15:20 | 1601056 j0nx
j0nx's picture

I make the case for making all under water homeowners even at par again. Why is what I recommend more or less offensive than what GS is asking for? Fuck these guys. Bail out the people for a change you mofos!

Thu, 08/25/2011 - 15:12 | 1601058 buzzsaw99
Thu, 08/25/2011 - 16:19 | 1601409 Agent P
Agent P's picture

While I do enjoy the Austin Powers, I have to admit I'm a little disappointed, as I was hoping for a Johnny Dangerously clip after you threw "bastidges" out there.

Thu, 08/25/2011 - 15:13 | 1601067 Vincent Vega
Vincent Vega's picture

I'm no rocket scientist or math wiz but I do have a question: GDP is currently $14.8T so .5% = $740B  So the logic is to spend $1T to get a $740B bump???  What am I missing?

Thu, 08/25/2011 - 15:30 | 1601151 Commander Cody
Commander Cody's picture

The vig Vincent.

Thu, 08/25/2011 - 15:43 | 1601224 Aguadulce
Aguadulce's picture

The law of diminishing returns does not imply that adding more of a factor will decrease the total production, a condition known as negative returns, though in fact this is common.

Thu, 08/25/2011 - 19:53 | 1602125 dark_matter
dark_matter's picture

Umm, 0.5% of 14$T is only $74B. Besides that I don't think you're missing much.

Thu, 08/25/2011 - 15:15 | 1601069 Doyle Hargraves
Doyle Hargraves's picture

Nothing Vincent, this is the best they can do now. Shit really is that bad when GS comes out and says do QE so you can get less back then you print...

Motherf*ckin' zombies bitchez!!

Thu, 08/25/2011 - 15:14 | 1601070 gkm
gkm's picture

It's all about churn.  You can't keep the bubble in financial jobs going if you don't have volatility.  Even if they finish the year flat, as long as we have some more pop and drop days, the banksters can make their targets.

Thu, 08/25/2011 - 15:16 | 1601083 how to trade ar...
how to trade armageddon's picture

I know it's dangerous to second-guess the workings of Ben's mind, but I just can't see what he has to gain here by pre-announcing QE3. Why would he want a public debate over QE3, at a time when the leading Republican presidential candidate has already signaled he would use it in his campaign? I think QE3 is very likely, but this time it won't be pre-announced, it will come out of an FOMC meeting as a fait accomplis.

Thu, 08/25/2011 - 15:16 | 1601086 Lazlo Toth
Lazlo Toth's picture

Little known fact:

Top listened to song on Benny's iPod is by Daft Punk.

Anyone guess the name?

Thu, 08/25/2011 - 15:24 | 1601117 TruthInSunshine
TruthInSunshine's picture

I have it on good authority that The Bernank does his economic models whilst listening to Danzig.

Thu, 08/25/2011 - 15:47 | 1601244 Aguadulce
Aguadulce's picture

Tell your children not to walk my way.. Tell your children not to hear my
words, What they mean, what they say.

Thu, 08/25/2011 - 16:17 | 1601399 Bring the Gold
Bring the Gold's picture

This is sounding VERY plausible especially if the CD (let's face it he is into outmoded thinking and tech) say's "Al's favorite mixes". That and he's a Momma's boy.

Thu, 08/25/2011 - 15:17 | 1601090 youngman
youngman's picture

Alls I want for Christmas is to become a Primary Dealer.....that is going to be a gold mine for the next few years....easy money

Thu, 08/25/2011 - 15:20 | 1601100 Youri Carma
Youri Carma's picture

Fed to target long rates, avoid QE3... Bofa Economist Levy S

Thu, 08/25/2011 - 15:21 | 1601107 Panafrican Funk...
Panafrican Funktron Robot's picture

Just wanted to point out that the call at the beginning of the year was a consensus 1400+ SPY print.  I'm pretty sure we're going to hit that number.  Which is also why gold is going at least 2K+.

Thu, 08/25/2011 - 15:28 | 1601134 Panafrican Funk...
Panafrican Funktron Robot's picture

There must be an auto-junk feature whenever somebody says that stocks are going to end the year up.  And yes, I acknowledge the retardation in stating "1400 SPY", meant "1400 SPX".

Thu, 08/25/2011 - 15:33 | 1601170 SheepDog-One
SheepDog-One's picture

Said who?

Thu, 08/25/2011 - 16:05 | 1601341 Panafrican Funk...
Panafrican Funktron Robot's picture

Pretty much every firm interviewed in CNBS's "New Years Predictions".  

Thu, 08/25/2011 - 16:22 | 1601423 equity_momo
equity_momo's picture

And? When the fuck have they ever been right on their new yr predictions?
You new to this game huh?

Thu, 08/25/2011 - 16:53 | 1601563 Panafrican Funk...
Panafrican Funktron Robot's picture

Since the Fed got more directly involved in the stock market, rookie.

Thu, 08/25/2011 - 15:24 | 1601116 digalert
digalert's picture

This is absolutely insane that the whole world waits with baited breath for word from a bank, the Bernank? That's right, the FED is/was a bank, a private bank. Then CONgress too busy managing their kickbacks, chose to allow said private bank to print money!

The Bernank should be in jail and the FED shut down. Instead we wait for the NWO, One World Bank Bernank.

Thu, 08/25/2011 - 15:25 | 1601125 Downtoolong
Downtoolong's picture

In other words, Ben, we don’t just need some of your grandmother’s savings to recover our fund losses, make payment on our debts, and buy another house in the Hamptons. We need it all. That means now O.K., unless you’ve got a better idea where we can get it.  

Thu, 08/25/2011 - 15:27 | 1601136 PulauHantu29
PulauHantu29's picture

Crash if no QE3.

Thu, 08/25/2011 - 15:56 | 1601285 LawsofPhysics
LawsofPhysics's picture

Fine with me.  I positioned the company to make it through 2012 either way.  Deflation is not a dirty word to those who actually know how to create real value.

Thu, 08/25/2011 - 15:30 | 1601142 John McCloy
John McCloy's picture

  He is not going to announce QE 3 tomorrow. We are going to see talk of "readiness to respond" but no QE3. Oil and Gold are entirely too high for that. There is already a massive spotlight on the Fed because of the two previous QE's that have proven to do nothing of substance aside from bankrupt us. Announcing 2 years of ZIRP is about the best Wall Street is going to get. If he does announce QE everyone is going long gold and silver since Ben has been trying to outlaw shorting stealthily. 

  Besides a massive QE program would shoot oil right up to 120 within a month and confirm to those on the fence about the Fed how diabolical they are and whom both the White House and the cartel truly serves which is themselves. Tyler is probably right that Operation Twist is likely to be their vehicle since they cannot label anything QE whatsoever for political reasons. At the end of the day 0% Rates, no mark to market, 2 QE programs have done nothing for the stock market aside from nominally compared to gold and destroyed savers and middle class at the pump and in Pathmark. 

   The Fed is truly out of ammunition and they have not even gotten an uptick in employment worth toting nor elevated home prices. With our Debt over 14 trillion and geopolitical black swans on the horizon related to China, Russia or the Middle east it is time to step back from intervention and allow the markets to do the rest. DEFLATION IS NOT A DIRTY WORD PRINTOCCHIO.

Thu, 08/25/2011 - 15:29 | 1601145 LawsofPhysics
LawsofPhysics's picture

If the holders of physical can't put these motherfuckers in their place - relax guys, because (just like us) the vast majority of the world (including the chinese, india, and now Russia) don't give a shit about paper or paper pushing fucknuts.  Life is good, good as gold.


Thu, 08/25/2011 - 15:31 | 1601157 NEOSERF
NEOSERF's picture

Boy the last time I encountered such conviction with words like "MIGHT increase GDP growth by UP TO 0.5 percentage points", I think I was buying a used Ford Pinto...

Thu, 08/25/2011 - 15:40 | 1601205 slaughterer
slaughterer's picture


Thu, 08/25/2011 - 15:32 | 1601163 SheepDog-One
SheepDog-One's picture

Bunch of crap, theyre all searching for 'Goldilocks' not too much, but enough to keep pumping stocks a bit longer...and what a pile of crap this article is anyway, EVERYONE has based the entire market in a $2.5 trillion QE since January. I pray Bernanke comes out with the 'we're standing by monitoring the situation' speech tomorrow....fuck all this crap.

Thu, 08/25/2011 - 15:37 | 1601192 John McCloy
John McCloy's picture

   What a failure he has been..the books written about his massive failure and corruption should be the final blow the Keynesian lala land based on nothing short of manipulation and nothing to do with a free market system. I wonder if he is standing knee deep in water fly fishing at Jackson Hole while Liesman serenades him on his 6 string. 

Thu, 08/25/2011 - 15:32 | 1601165 --Freedom--
--Freedom--'s picture

I'm curious, after all the debate about qe3 or no, how are people here who trade positioning themselves into tomorrow? I don't have the balls to be long or short anything right now (other than PHYS), which is a long term hold. Just not confident enough that I can tell what will happen.
Are others putting their money where their mouths are?

Thu, 08/25/2011 - 15:36 | 1601186 Stumpy
Stumpy's picture

Personnaly, I just don't care. I bought enough far out-of-the money index puts to cover my ass a couple of months ago, when the sky was blue and the birds sang. Green shoot? Means the rest of my portfolio is going up. Red shower? Means my parachute is still there. 

I won't lose any money on this one, and that's what important to me.

Can't help you there!

Thu, 08/25/2011 - 15:42 | 1601214 inkarri9
inkarri9's picture

Well, we do have the Q2 GDP revised number out before market open and I can't imagine that will be good.  I am tempted to short overnight but not sure.

Thu, 08/25/2011 - 15:44 | 1601230 slaughterer
slaughterer's picture

The large investment houses positioned themselves firmly in the bond market by the end of yesterday.  The interest the primary dealers have in the equity markets will be taken care of by their HFTs.  I believe many of the positions you see today in PMs and leveraged index shorts and longs will be quickly reversed and flipped tomorrow a few times.   

Thu, 08/25/2011 - 16:16 | 1601395 Panafrican Funk...
Panafrican Funktron Robot's picture

Long GLD 170 call December 30, Long SPY 124 call Sept 17 for shits and giggles.   

Thu, 08/25/2011 - 15:32 | 1601168 Stumpy
Stumpy's picture

You know what would be frustrating? A flat dull day tomorrow on the markets. Try to explain that? 

Thu, 08/25/2011 - 16:19 | 1601406 ActionFive
ActionFive's picture

The reaction to the last few speeches of impact have been flat.

That may display what is trading the market- or not/retail.

Thu, 08/25/2011 - 15:32 | 1601169 gatorontheloose
gatorontheloose's picture

the sweepers just swept out any directional guess in the last 30m.  HFT elephants on parade.  

Thu, 08/25/2011 - 15:35 | 1601180 monopoly
monopoly's picture

Wouldn't it be nice if The Squid just disappeared. Gone, Kaput. After about a month no one would even know the difference. They deserve to be shut down.

After the 300 dollar pop and the 200 dollar drop would be nice if gold stays in this range for a week or so. Chart would look better. Bought more physical gold this morning as posted. 10% drop from its high.  Long way to go to the upside me thinks. Just be patient and stay off of margin.

Thu, 08/25/2011 - 15:35 | 1601181 JohnG
JohnG's picture

Does anyone else feel like hacking Liesman's head off with an axe?

Thu, 08/25/2011 - 15:40 | 1601207 --Freedom--
--Freedom--'s picture

I feel that way most days.
What a journalist!

Thu, 08/25/2011 - 15:56 | 1601284 JohnG
JohnG's picture

He's a fucking hack idiot.  When is he going to die already?  Certainly someone in Wyoming has a nice sharp axe.

Thu, 08/25/2011 - 16:01 | 1601322 SheepDog-One
SheepDog-One's picture

Liesman now just a total FED asspuppet.

Thu, 08/25/2011 - 16:28 | 1601446 JohnG
JohnG's picture

His ass is big enough for lot's of hands.  I'm renaming him "Fat Bastard."

Thu, 08/25/2011 - 16:31 | 1601467 JohnG
JohnG's picture

There's Hoedown Tom with his hand up that fat ass right now.  Why do I torture myself with the blowhorn?


(It's because of the occasional Kayla appearance, likes that tight purple dress on Tuesday!!!)

Thu, 08/25/2011 - 15:42 | 1601218 caerus
caerus's picture

goin down...

Thu, 08/25/2011 - 16:39 | 1601509 Mongrel
Mongrel's picture

goin' down, down, down, down, down.--Don Nix

Thu, 08/25/2011 - 16:55 | 1601570 caerus
Thu, 08/25/2011 - 15:45 | 1601237 SeanJKerrigan
SeanJKerrigan's picture

What's to stop the big market players from buying big if there is no Fed announcement?  Thats what happened last time isn't it?  And didn't it stop the market from falling? The market ended up last time everyone expected there to be a QE3 announcement. Why would this be different?

Thu, 08/25/2011 - 15:46 | 1601243 Cone of Uncertainty
Cone of Uncertainty's picture


You get the finger...the middle.

Thu, 08/25/2011 - 15:55 | 1601282 Fix It Again Timmy
Fix It Again Timmy's picture

Only girlie-men are afraid to QE...QE to infinity and beyond at a ludicrous speed!!!

Thu, 08/25/2011 - 17:05 | 1601598 TruthInSunshine
Thu, 08/25/2011 - 15:59 | 1601311 lizzy36
lizzy36's picture

You just couldn't help yourself could you!!!

My god, you are tenacious (like a rabid dog) bording on NUTS.

Thu, 08/25/2011 - 15:59 | 1601312 WineSorbet
WineSorbet's picture


Thu, 08/25/2011 - 16:03 | 1601327 caerus
caerus's picture

miller time

Thu, 08/25/2011 - 16:05 | 1601339 shargash
shargash's picture

And since we are talking the truth here, why not stop pretending you care about GDP - just think of the marginal impact on Wall Street bonuses

Where else do you think the 0.5% bump to GDP is coming from?

Thu, 08/25/2011 - 16:07 | 1601343 Winston Smith 2009
Winston Smith 2009's picture

"Taken together, our analysis suggests that QE3 is unlikely to be a panacea for growth. Nonetheless, our estimates suggests that $1trn of asset purchases–or an equivalent increase in the duration of the Fed's balance sheet–might increase GDP growth by up to 0.5 percentage point in the first year after any announcement of QE3."

0.5% of 15 trillion(?) GDP is 750 billion, so $1 trillion is spent with a $750 billion return. And that $1 trillion will be BORROWED anyway, so it shouldn't be part of any SANE GDP calculation, but it is. The acquisition of DEBT should not be a factor in REAL GDP growth calculations.

Thu, 08/25/2011 - 16:11 | 1601366 wawawa
wawawa's picture

$ 1 T of QE3 means GOLD=$2500 in a year.

Thu, 08/25/2011 - 16:12 | 1601371 falak pema
falak pema's picture

Hare krishna, hare Rama, hare hare;  QE is back to solve the problems of the world. Oh Rama, oh Krishna, oh Shiva (I hope I have this right, Ori) You are the Karma of the universe. Dharma, laws of universal order, as ordained by QE infinity, Benocide is God's servant and QE is nirvana money tree. Hare Krishna ..hare, hare. 

Do you think that Benocide will transform himself into a superior being in the Samsara of the circle of life?. Hare Krishna pray for his karma to achieve its true destiny. S&P will hit 36000 if his karma reaches the summital heights it deserves. Warren Buffet will achieve immortality and we will never see a dip on WS again.

Thu, 08/25/2011 - 16:20 | 1601413 mendigo
mendigo's picture

"estimates suggest", "might increase", "up to" - useless financial speak

Thu, 08/25/2011 - 16:51 | 1601550 Platinum_Investor
Platinum_Investor's picture

It's to early for QE3.... talk to me around New Year for the suppose it Happy New Year QE package early 2012.

Thu, 08/25/2011 - 19:41 | 1602090 Tater Salad
Tater Salad's picture

Agreed platinum, even though your picture is gay...we get QE3 at 1020-1040 spx as that's when I'll see the whites of your eyes.



Thu, 08/25/2011 - 17:12 | 1601632 MrBoompi
MrBoompi's picture

I vomit in my mouth when I see a banker use the term "asset purchase".

To me this is just another way of saying I'll add about 4 zeros to your bank account overnight, and has nothing to do with what the real world would consider to be a real fucking asset.



Thu, 08/25/2011 - 18:39 | 1601939 Kina
Kina's picture

Is there a $16 Trillion ZH cap?

Thu, 08/25/2011 - 19:02 | 1601990 YHC-FTSE
YHC-FTSE's picture

It's apt that GS uses a mythical medical term, "Panacea", to describe what they are trying to do to the US (& global) economy. Somebody really ought to tell these clowns that there's no such thing as a cure-all. It is this sort of constant meddling with economic recipes that poisons the nation's body, which in turn needs another "medicine" to counteract the adverse side effects, ad infinitum until it dies. What they should have done was cut the useless gangrenous banks, and let the nation recover. Just like the human body, nations can have remarkable self healing properties if given the opportunity and leadership. 


As for tomorrow, we'll probably see a rise of the indexes whatever the fuck Bernanke says. 

Thu, 08/25/2011 - 19:27 | 1602049 Robbed by Bernake
Robbed by Bernake's picture

Perhaps Bernake & Co. want to hold QE3 until CME has 4 more margin hikes and gold is low enough for them to load up.  Then QE3+ and gold takes off again.

Thu, 08/25/2011 - 19:37 | 1602079 Tater Salad
Tater Salad's picture

Sorry bitchez, no QE3 tomorrow, not with oil where it is...

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