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The Market Is Expecting $850 Billion NEW QE
Last week we discussed what the expectations were for Draghi's OMT - approximately EUR250bn - which coincidentally provided cover for the rest of the year (conditionally) for the entire new issuance of the European Union. Based on EURUSD's recent exuberance - something we saw ahead of QE1 and QE2 - the market is now more than primed for some serious USD debasement. The current EURUSD of 1.2850 implies a Fed-to-ECB balance sheet ratio around 1.11x. If we assume the ECB wil not have to fire its conditional bazooka (of which is priced in 100% likelihood of EUR250bn), then the Fed is expected to conjure a monetization scheme of around USD580bn - anything less would be a disappointment to the market. However, if we assume the ECB will be doing it's bond-buying monetization thing - as per the equity market's expectations - then the Fed will need to come to the table with a bag of swag around USD850bn in order to debase the USD just enough to regain some hope. It seems like the market has priced in a great deal of monetary policy exuberance - especially considering how 'confident' consumers appear to be.
EURUSD vs Fed/ECB balance sheet 'expectations'
and via Citi - the action of EURUSD leading up to QE1 and QE2 was positive only to be followed by the more significant sell-off...
[chart shows EURUSD performance rebased to 100 at T-40days]
Given the market's very tightly related correlations, a 3-5% drop in EURUSD could damage US equities quite severely if the USD debasement does not arrive. A shift to 1.20 (which is where Fed/ECB balance sheets are currently positioned) would imply a drop to 1340ish for the S&P 500...
Chart: Bloomberg
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850 billion or don't even bother... bitchez!
and like now, man.
Im having hopium withdraws.....hurry....print me some fresh FRN's
Boehner can't control his own party members - that's the problem!
OH MY GOD!!!! 1340!!!!! OH SAVE US P-L-E-A-S-E, MR. BERNANKE, FROM THIS DIRE TRAGEDY!!!!!!!!!!
So, 17 Trillions of debt ??
Not a big deal, let's go for approuval into the next year, no problem!!
And the Heidelberg meeting? is it running now?? isn't?
But what about Apple?? what about berni? what about supermario? what about germany? what about oil prices? what about unemployment? what about deficit all over the world? what about commodities?
Ah ok, Heidelberg meeting is just about 650 Trillion of derivatives... ah it's ok! not a big deal, IS JUST LOTTERY. Betting now...
I don't stampede with the herd for anything less than $2 Trillion.
$850B is chump change bro.
I read the headline and thought exactly the same thing. The markets will probably tank outright if they don't come out with a combination of gimmicks totalling $2T.
$850B was the number 3 years ago. And before the Eurozone came unglued. Hell's bells they'll need $1T in liquidity just to inject dollar swaps into the ECB. Those guys are toast.
I've just changd my mind. Bennie needs to come out with $3T total (or in coordination with other CBs) or the global wheels come of before January.
I bet the sisters wouldn't pussy foot around. In fact I know they wouldn't.
http://madscienceunlimited.com/fiction/
Is it time for another chapter yet? Are we there yet? :>)
Oh oh! Have you caught this one yet?
http://madscienceunlimited.com/fiction/keepingAppearances.html
What's wrong with a little out of control psychotic raging feline insanity between friends? It's all good fun.
I kinda works with the current topic too. I need to update the main page.
New to me bro. I will devour it later. :)
Thanks
But I thought those swaps 'don't count', as they say. Maybe the fed could just do it anyway and not bother telling anyone. Hell, they did it big time in 08/09. Why not now, why not since?
"But I thought those swaps 'don't count', as they say."
They don't count. They're just units of measure, cogs in a gear really. You just swap out one cog for another and the books balance like magic.
I like COGs! :)
Giving away money worth more than apple to all of the banks is going to be a huge bonus to all corporations connected to those banks via credit feeding tubes... this includes the lawsuit-dependent apple.
These companies will take this free money and spend it on real world assets (not employees). The herd is not everybody, it is the 1% with all of the money.
The herd is left with a choice and only one choice. To invest in themselves with this beautiful 850 billion gift. And to invest in themselves is to ramp up the stock market, about 20% of which profits the middle class. Forget the poor, qe isn't for them.
Conclusion: its definetly time to buy large cap stocks that have feeding tubes filled with qe3. The time to short comes in another year, around Dow 20,000.
I need me some QE; pretty please Ben
No need with ZIRP and NIRP.
NO QE thursday
Is the "Market" really this stupid?
Tell Ben not to go to Texas..
http://www.youtube.com/watch?v=OP3uscEk-4w
Tell Ben to go to Hell
As Low Rates Depress Savers, Governments Reap Benefits
Jonesing Friday.
BTFD in gold.
Forward.
Affirmative
Why would you think that there might be a limit to how stupid the market can be?
This is just silly.
There is no market. There is only HFT.
HFT doesn't give a shit about QE. If Bernanke says he's not doing QE and is actually going to nudge up the discount rate 0.25%, the market would drop 0.5% and then grind back up to flat by the end of the day.
You guys need to stop looking at it. It's just a computer warfare arena. It doesn't mean anything anymore.
Not so much by HFT (in and out in milliseconds) as by algos (20-60 minutes of non-stop Knight-like hitting the ask straight line mark-ups).
$ 1 Trillion, crash the dollar; drive rates to - negative real cost, watch 25 million business layoff everyone, rehire part time, at 1099 subcontractor independent contractors.
in protest; bankrupt the govt.
this shit is just so fucked up
... and bullshit?
what jamie wants jamie gets.
So everything and everyone is going to be sorely dissappointed when the truth comes out. Oh wait . . . bad news = good news. Good news = good news. No news = good news.
I hope Bernanke tells everyone no QE at all . . . ever again. Would be an interesting day to watch the carnage.
I hope Bernanke tells everyone no QE at all . . . ever again.
dream on.
As I said above, there will be no carnage.
THERE IS NO MARKET. There is only HFT.
HFT won't allow carnage. You'd see a 0.5% drop and then they'd grind it back up to flat by the end of the day.
Stop watching it. It's not a market anymore.
it is a market; but it is THEIR market. You are not invited to the insider talks so you walk in at your own peril.
Reality goes on and its going strong for them as they pull all the levers. Wake up to the increasing Oligarchy power to run the market, our lives and those of the world; until they pull the plug where ever they want to; to DEFINE at their own behest the new normal.
Our only grasp of reality is not our actions but our words, and the only thing that can change that is if and when these feudalists slip into a battle of T-Rexs; out of more greed or more desperation as losing oligarch in musical chairs mayhem; 'cos we pose them no threat at all! We don't even exist to them.
They have only one enemy; themselves.
HFT doesn't care about direction, just change. So far, as ZH has pointed out, we are only trading on government policy and central planners...who ALL claim they will do whatever it takes. all positive. sure most of us are calling BS, but you never trade against the central banks. but, eventually the CBs will be out of meaningful bullets....and i fear that one hiccup will cause HFT to run a massive flash crash...only this time there will be no return from the abyss. This rediculous run over the past 3 months will only serve as a catapult making the crash bigger. i hope i'm f'ing wrong.
The two words "no" and "QE" will not appear together in a single sentence, in any combination or in any order. Probably, not in any paragraph.
In fact it would be safer just to keep them outside the room the entire time.
There is a storm brewing and the algos are restless. Can't afford to spook them on a day like this.
verbally the door is always open to more qe, zirp 4evah, etc., etc.,...
It stopped being monetary policy the instant it became perception management.
At least $700 billion, because China did $350 billion and China is half the GDP of U.S.
How far down does the market go if we don't get the QE announcement this week?
It doesn't. Disappointment immediately turns to hope that it will happen at the next meeting. Rinse and repeat.
"market" (aka goldman and co.) isnt expecting anything..."market" is duping gullible muppets into buying the rumor.........and then WHAM!.........
Judging by boatloads of gloating longs online, I think they bought the top.
You are right on this one. No QE yet.
I need some ZH 'er help. harddrive took a crap. I lost link to a chart showing the increases in the fed buying our own bonds in time elapsed form. as time moved forward the hole chart turned red with amount of puchases. I used to show it to people and they were blown away. any assistance helpful.
This one?
The Fed vs Carl Orff: http://www.youtube.com/watch?v=QWMCWAqPnoQ
Behold The Fed's Takeover Of The Bond Market
Did you ever think to try the search function?
For some reason your link just took me to the news page.
http://www.zerohedge.com/news/behold-feds-takeover-bond-market#comment-2712681
Shall we try again?
http://www.zerohedge.com/news/behold-feds-takeover-bond-market
the Shalom and ECB in a race to the bottom!
http://www.youtube.com/watch?v=pYSY6ofqUCE&feature=related
All the Bankster HFT BOTs will take any extra liquidity and trade with it.
Bendover Bernanke will keep printing and is building the biggest bubble in history.
Hope-N-Change
Addicts always need the next fix to be bigger than the last.....just sayin'
More made up money invented from fresh air given to the banks for near zero-per cent interest to not lend to the populace for 20%+ interest?
Interesting..... How bout, the non-federal, with no reserves gives every man woman and child in America 50,000 grand?
Would this create moral hazard? Would this reduce the wages or bonuses and re-numeration of our overlords?
A storm is a brewing, people are waking up fast and in numbers, they realise its bollocks. They know their labour is being stolen through inflation. May you live in interesting times bitchez. :-)
It would cause massive deflation, as Americans pay off credit card and student loan debt. They have to keep the iDebt iBubble growing.
and here I thought it was just them trying to DIS-prove the 9/11 syndrome
calling Graham Summers, who should change his name to Winter if this happens...
Just goes to show that Draghi and Ben are the true Laurel and Hardy team of fiat ponzi.
Madoff must be really pissed off; why ONLY me...?
Silly comment.
He stole from the 1%.
Its only legal stealing from the 99%.
Its only legal stealing from the 99% if you're in the 1%.
Winner
Place your bets now, Benny's ball is spinning
No QE3 until DOW 11,000. Why "do" when you can "talk" and muddle through.
why are gold and silver prices 'tied' to whether or not the fed issues QE xx. Doesn't the fact that our debt continues to climb at robost pace justify higher metals prices?
Yes. Price is an adjective, it is an utterance. You agree or don't.
In 1913 the National debt was about 3 billion dollars. At this rate, in 2113, the national debt will be 85300 trillions.
where will Israel keep all those yearly purchased jet fighters from USA debt by then?
The "market"
lol, 'market'. good one!
The market may expect $850 Billion but I'd just like my $3,000 Thingamajigs.
Every bull I talk to is expecting good news from German Court and from Fed. Caution.
http://wp.me/p2CT0a-5C
"market" isn't anticipating shit. They need to sell off at some point. Maybe when the "market" has tanked, can Ben resume his printing fest. At least the next massive sell off is coming with the narrative that "anticipated hopes for more QE were smashed".
All propaganda, all bullshit, always, all the time.
Too funny, the New New Deal is nothing but endless rounds of paper asset purchases allowing government to finance the Old New Deal.
What are they going to buy with that $850 billion is the question? I don't see that much available as ZH has rightly been pointing out. Could that much issuance be sterilized? I don't think so. In my opinion the market is being setup for a disappointment and we shall see soon enough.
What then is left in the Fed's quiver after that size of a purchase? Also, I wonder if that is the plan what kind of assets to leverage would that leave the Fed balance sheet?
I don't think they will "buy" anything but time as the boomers retire, cash out of the system, and go the equivalent of rogue. Tantamount to a bank run on the central bank.
6 weeks before an election? 100+ crude guaranteed. ? Increasing discontent from the pubic? nope not gonna happen. This has been the goal since last year when the test balloon was out and a market without pomo didnt look good at alll. So ben launched QE 2.5 (opt twist) AND anytime sellers got the upper hand his MSM hoe bags and lap dogs "leaked" positive stories thus getting inside the heads of any short seller or anyone who wanted price discovery. As we speak anyone is terrified to short and ben can ramp up the pac man game without the MSM's beloved QE3
As long as you're asking, why not go for a cool trillion?
BDI now officially in the belly of the beast after breaking through Satan's 666 previous "bottom".
850 billion.. Bullshit gas is 3.94 here . 6 more cents and everything stops.. I normally see more traffic in the fall than the summer. Traffic is approaching sept 2008 levels
Pre 2008 travel to work took 75-95 minutes. Now 40 tops.
Gas will crush whatever is left
There's an SPR for that.
Really theres anything left in the SPR after the last 3 dumps?
There should be enough to get Obama reelected.
Is it just me and my dyslexia, or does the article say $580B and the headline $850?
"Fed is expected to conjure a monetization scheme of around USD580bn"
Inflation pressures, between the time the article was written and the headline was added.
850 billion more nails in the coffin. They are bound and determined to make sure that when this ponzi falls apart there will no option short of a total reset where every man, women and child will be willing to give up everything just for the simple essentials in life to survive... We are in a very scary place, a place that is not real, something that has been created and controlled by only a few.
Pay us back!!
Taxpayers still owed more than $200 billion from bailouts
And when no QE'z is delivered then that will be even better news and DOW = 14,000 whatever what is anyone going to do about it anyway?
QE? :) In Europe everybody is awaiting the ESM, supposed to be there to bail out Spain and Italy. Supposed to have 700 B € Deposited by the Euro member states....
Seems people have forgotten that Spain a Italy are due MORE than 30% of that amount in capital to the ESM. Will be interesting to see just how they are going to
solve it. Spain will have borrow its part 100+ B € at 4-6%................
Dear Ben please print 50 trillion....and i'll keep the barberous relic, beans and bullets...
"The current EURUSD of 1.2850 implies a Fed-to-ECB balance sheet ratio around 1.11x"
WTF? This is the stupidest thing I've read in a while.
why would Ben stop now? the ECB is giving him room to run here. At the very least he can argue he is keeping the dollar weaker for exporters. I just wish he'd see that it doesn't matter how cheap the dollar is compared to EUR if no one is EUR is purchasing. Ben always has and always will want inflation.
As much as i still think he will show up with a big plan, I have to believe he is questioning this Keynsian beliefs. you can't tell me he isn't doubting his beliefs a least a little bit. I think he hedges his action and releases a massive plan (possibly bigger than expected), but also says it is the last one. PERIOD. This would allow his stimulus to flow into the economy w/o the market driving up 20%. it also puts the ball back in the government's court (budget).