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Is Today's Market Pricing A Forthcoming Reactionary-QE By The Fed?
Our earlier discussion of the relationship between ECB and Fed balance sheets as the driver of risk correlations this year seems particularly timely as we are seeing quite notable divergences among US asset classes and FX flows today. EUR is now up relative to the USD on the day (DXY is down and tracking stocks higher), Treasury yields are falling fast and the curve flattening (2s10s30s dropping rapidly) and Silver is rallying hard off its lows (Gold perhaps being held back for now by collateral/cash/redemption calls for now). Oil is back green for the week also. Is the market starting to comprehend that the non-QE of the ECB's LTRO and SMP is in fact QE and implies the currency wars just went to 11 - forcing the Fed's hand?
Dollar (inverted) vs S&P 500 vs 10Y Yields.
Commodities are starting to surge again. Even Gold is now on the move too.
Charts: Bloomberg
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STOP GIVING THE FED EXCUSES TO START QE3! They'll have enough reasons soon.
Just wait for China to attack Taiwan in the second half of January. You'll see PM go to the moon.
no need to attack, seems that Taiwan imports 99% of its energy from China (except the 17% from the nuclear reactors)
My New Year wish is for the slaughter to happen already. I don't think I can take another year of this manipulation bullshit!
Yea really, just sick of the whole thing! A whole year, and from start to finish its basically a no gainer in anything? Total waste of time of a whole year....could have just put everything in a CD last Jan and beat the whole market with 1%.
My guess you will have to wait another 9-12 months. They can push it that much, but beyond that all cards are off the table. Month 10 is a pretty good guess when all Obama's money will run dry again. Right before the election and that ain't gonna be pretty. Tipping point soon after.
Why 9 to 12 months, how do you figure that?
Because while they can prop up th EU situation for some time with more swaps and QE how the heck are they going to prop up the US when the money runs dry next time? No matter when it hits or who wins somebody during an election cycle or right after it is going to need trillions of more dollars to run the country. Whoever wins or loses if there is devided houses at that time it will mean stalemate. Way worse scenario than last time because of the elections and/or the results of them.
So S&P downgrade and checkmate.
Technically it took them nearly 9 months to work out their differences over the debt this last time. Obama and or the new president will have nowhere near that luxury of time this time.
OK so if it took 9 months last time, why not tack on another 9 months and call it 18 months, or just throw in a multiplier of 4X and say its 3 years.
I know what youre saying, but Im so damn fed up with everyones timelines and tables 'We're good for now, for another 6 months or a year, but THEN we're in trouble'...hell the whole thing may blow up tomorrow.
Oh I agree it could blow up any day and going by that swaps chart they were very close to another Lehman moment middle of this month. But of course they saved the day again with more printing through swaps. Bernake cannot have anymore Lehman moments right, right.
At the end of they day I said it is just a guess, but it is a very real scenario that can and likely will play out. Can they prop up the US if congress provides no way forward by stalemate?
Nope
And this time.....time is not their friend.
If you think about it Obama was asking for an increase this time last year which he didn't get until August. He's not doing that now because he had to ask for the second set of raising he was promised to get him through the election. Which as of now looks like it could very well run dry early. Either way this fight will come to a head in or around the elections making it an election issue and a recipe for disaster.
We're already beyond some surreal tipping points. Japan at 200% debt/GDP. The U.K. at 950% public+private debt/GDP.
The denominator problem will get them all in the end.
go with the "lowest common" denominator, seems to all the rage in modern social engineering
The best part is the Eu banks depositing cash ONLY at the ECB since they don't trust each other.. what a farce. How's that for confidence in your faith based bank deposit? Your deposit is a Loan to the Bank.
What would happen if they did QE, but instead of printing money to buy worthless bonds they bought GOLD....would that break the temporal junction point for the entire space time continuum and send the world spinning in a never -ending loop?
Everyone seems to have it all figured out, another QE certainly coming soon so we'll go ahead and price that in for the umpteenth time, we've got (X) number of months left till 'trouble', more bailouts, more easing, endless 0%...hell for all anyone knows the whole thing capsizes tomorrow.
Gold and Fiat are natural enemies. If the FED starts buying gold, people would dump the FIAT and then it become worthless in a hurry. It would be better to buy something else. Build up the government oil reserves maybe or spend it in infrastructure.
I finally broke down and ordered some platinum from Tulving this morning. I figure if they have a bank holiday and revalue/confiscate gold in 2012 I'll be covered. Plus. How could you not like platinum at this fiat price?
You may be right about platinum. Seems pretty cheap copmpared to the other PMs right now.
Platinum has looked cheap for months now.
holy cow!
I'd overlooked last weeks (Dec.22) balance sheet from the FED, but big things happened.
1. Bank reserves (the whopping $1.5 trillion plus account that was typed up to pay for the FED's QE) dropped a whopping $108 bn. That was a very big move.
2. the Treasury's checking acct at the FED (the main source of funds to pay bills) rose $80 bn, another outsized move, while 'Other' Liabilities rose $34 bn, yet another relative biggie.
I've speculated that during Nov and early Dec that the prior big rise in 'Other' simply masked a data punch transfer of reserves to Treasury checking (one week reserves drop while 'other' rises, then the next week 'other' is transferred to the Treasury checking. Here, they appear to being doing both an indirect transfer (via 'other') and just flat out typing reserves over to Treasury checking.
At a minimum, this last week's action puts to lie the claim that the QE generated bank reserves are sterilized. Instead, the QE reserves are now entering the real economy as soon as the Treasury writes checks on its account at the FED.
Fear not for the reserves, since the FED can always type the reserves back up at which the whole process recycles itself.
How is this not a prime variant of QE? Indeed, this is more impactful than just letting the reserves 'sit there' (albeit to be played with for stock and commodity speculation purposes via Fed funds lending) to the extent the Treasury is effectively writing checks on the bank reserves.
This week (Dec. 29) is not out yet, but I predict we'll see a large write down of the Treasury checking (money injected into the economy), which the FED then covers by typing up bank reserves.
Dec. 29 Fed BS now up.
Bank reserves back up by a big $62 bn, which covered $15 bn of Treasury checks.
Other liabilities fell by $42 bn as the FED's liability there got transferred by the bank reserves.
ON the 'asset side' Central Bank liquidity swaps up a big $37 bn (basically over a 33% increase for the week), offset by unloading $27 bn of MBS securities and Treasury notes and bonds.
What would they have done with $492 billion dollars in a week?
i sure could use a vacation from this bullshit, 3 ring circus sideshow...
IT IS ALWAYS AMAZING HOW THEY HIDE THESE POLLS OR HAVE A CERTAIN TYPE OF NEO-CON SET READY TO TIP THE BALANCE INTO THE SAME OLD PILE OF SHIT.
PLACE YOUR VOTE HERE:
http://www.politico.com/
When was the last day gold was up, while stocks were down?
At times, the analysis of central bank moves reads like an account of a game of Bridge or Poker. We watch the balance go back and forth, watching the next card drawn or played. In this game, we don't know if anyone is going to get a decent hand to play.
http://georgesblogforum.wordpress.com/2011/11/02/the-daily-climb-2/
Has our government stopped overspending and borrowing $150 billion a month?
No, not last time I checked.
So QE never has stopped. It just went went behind the scenes and came off the front page.
QE always was about financing deficit spending. Granted, on the surface it was about buying (worthless) securities from TBTF banks. But they merely turned around and bought newly issued Treasuries with the money ...and flipped many of them to the Fed of course.
The US government is still borrowing $150 billion a month. Other nations aren't stepping up with the money, which means the Fed is stepping up with the money somehow, which means QE is still going on and the dollar is still being debased.
It's just not in the headlines anymore ...maybe because people just got tired of hearing about it.
If QE really stopped, the Treasury market would implode, yields would spike up, and the US government couldn't borrow any more money to speak of
...which won't happen because funding deficit spending is Fed's #1 priority in real life.
So it doesn't really matter what "the market" thinks. QE is an ongoing thing.