The "New Normal" Upside Market Catalyst - Fed Doves Emitting Hope

Tyler Durden's picture


When that canned remarks by Fed Doves is all that is left as a hope-based upside "risk catalyst", as was just defined by Citi's Steven Englander, things are really sad for those who have to justify their excess testosterone by trading every uptick (Econ Ph.D. dissertation on the topic most certainly in progress).

From the head of Citi FX:

SF Fed’s Williams – today's hope for FX risk-on


The SF Fed’s John Williams speaks today at 11:55 (followed by Q+A). He is probably best characterized as a moderate dove, but is much closer to the FOMC center than either Rosengren or Evans who spoke earlier in Asia, and his views have been more responsive to economic conditions than either the extreme hawks or doves


Recently he has discussed the economic outlook and monetary policy in a speech early each month. In early May he was quoted as indicating that he was “increasingly hopeful that the recovery has entered a phase of self-sustaining growth”.  In his June speech on the economy in early June (after the May payroll numbers were released) he took a more cautious tone: “If the outlook for growth worsens to the point that we no longer expect to make sustained progress on bringing the unemployment rate down to levels consistent with our dual mandate, or if the medium-term outlook for inflation falls significantly below our 2 percent target, then additional monetary accommodation would be warranted. In such circumstances, an effective tool would be further purchases of longer-maturity securities, potentially including agency mortgage-backed securities.”


Significantly in that speech he downplayed the May jobs number, focusing on the 12-month average being above 150k. With the June release, NFP growth has averaged 148k over the last 12-months and private NFP has been up an average of 162k. How he now characterizes the labor market and whether he indicates a need for more response will be the signal investors will look for.


Part of the reason for the Friday FX response to payrolls is the concern that the Fed is on hold till after the election on anything but extreme indications of economic weakness – and 80k jobs does not quality as extreme weakness. Were Williams to re-emphasize his view that the numbers are soft but still in line with a moderate recovery, we could see a further sell-off in FX risk. By contrast, if he signals that three months of weak data represent a shift in trend that the Fed to which the Fed ought to respond, the speculation on additional measures would mount again.

Remember when stuff like EBITDA, FCF, PEG, Leverage, Coverage and macro mattered? Neither do we.

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Mon, 07/09/2012 - 09:15 | 2598382 vast-dom
vast-dom's picture


Mon, 07/09/2012 - 10:22 | 2598571 Precious
Precious's picture

The Fed hangs precariously by a thin thread of relevance.

This market is over until after the elections. Take cover.  I'm calling it today.  The only direction is down.

Mon, 07/09/2012 - 09:17 | 2598391 francis_sawyer
francis_sawyer's picture

what's EBITDA?... /sarc

Mon, 07/09/2012 - 10:32 | 2598597 financial apoca...
financial apocalyptic contagion's picture

something they mention in b-school, as a way to imply "value" and provide cover for fraud and manipulation

Mon, 07/09/2012 - 09:18 | 2598393 Cursive
Cursive's picture

I thought the Greenpsan purse watch was pathetically bad, but we have now come to the point where we are no better than the guy who would collect the emporer's stool and smell it as a way of prognosticating our future.

Mon, 07/09/2012 - 09:29 | 2598426 vast-dom
vast-dom's picture

soothsayer's recompense. 

Mon, 07/09/2012 - 09:19 | 2598394 khakuda
khakuda's picture

And I will be even less likely to purchase a house if the Fed further manipulates mortgage/interest rates even lower because, at some point, when they stop or even reduce the manipulation, house prices will fall again as rates/spreads increase leaving the average Joe as patsy once again if he buys now.  It's already a fake market for rates.

What ever happened to letting markets clear?  It worked so well for so long.

Mon, 07/09/2012 - 09:30 | 2598428 LawsofPhysics
LawsofPhysics's picture

I presume you are referring to pre-1913, because there hasn't been a fucking "market" since then.  We did have a stable currency up until 1971, but we gave that away.  We had somewhat reliable banking until the late 90's until Glass-Steagal was repealed.

Please, wake the fuck up.

Mon, 07/09/2012 - 09:18 | 2598397 orangedrinkandchips
orangedrinkandchips's picture



Try to manipulate that "central bankers"

Mon, 07/09/2012 - 09:19 | 2598398 fuu
fuu's picture

"Remember when stuff like EBITDA, FCF, PEG, Leverage, Coverage and macro mattered? Neither do we."

I've been wondering if it ever was.

Mon, 07/09/2012 - 10:29 | 2598587 Nobody For President
Nobody For President's picture

That statement was the first LOL this morning, and is one of the reasons I read ZH so faithfully. Truth in Reporting!

I actually do remember being rather fond of PEG ratios - they used to seem to have some bearing on valuations.


Mon, 07/09/2012 - 09:21 | 2598399 Mugatu
Mugatu's picture

Bring on the stupid QE rumors!  Sanity now!

Mon, 07/09/2012 - 09:21 | 2598402 midgetrannyporn
midgetrannyporn's picture

imo too much fed watching rots the brain.

Mon, 07/09/2012 - 09:21 | 2598404 ThunderingTurd
ThunderingTurd's picture

Is it not a safe assumption that these 'blowhards' will always emphasize a position of more easing EVEN IF it isn't on the table?  We have seen time and again that rhetoric will inflate equities (even if for a brief period).  The third mandate, after all, is a rising S&P...

Mon, 07/09/2012 - 09:24 | 2598408 orangedrinkandchips
orangedrinkandchips's picture

Once again, the desperation is as thick as peanut butter!

The attempts to "save the baby" EACH AND EVERYTIME is as fake as a Lady Gag-Gag concert!

How stupidly obvious they are sending out rumors right as we start to tank.....




Mon, 07/09/2012 - 09:25 | 2598409 sablya
sablya's picture

Drool, drool, I'll gladly pay you next week, for a hi(n)t of QE today. lol

Mon, 07/09/2012 - 09:26 | 2598414 AccreditedEYE
AccreditedEYE's picture

things are really sad for those who have to justify their excess testosterone by trading every uptick (Econ Ph.D. dissertation on the topic most certainly in progress).

LMAO! Fantastic as always. I suppose these less-intelligent, blog spewing S.O.B's, incapable of using a search function, need ZH to draw them a schematic...

Mon, 07/09/2012 - 09:26 | 2598416 LawsofPhysics
LawsofPhysics's picture

Roasted dove...

...I hear it is delicious.  Perhaps it is time to try some.  Nothing short of a revolution "fixes" anything at this point.

Mon, 07/09/2012 - 09:27 | 2598419 SheepDog-One
SheepDog-One's picture


Mon, 07/09/2012 - 09:55 | 2598453 Cognitive Dissonance
Cognitive Dissonance's picture

I love the coo coo sounds coming from the Fed doves.

But those damn birds shit all over the place.

Mon, 07/09/2012 - 09:39 | 2598461 eclectic syncretist
eclectic syncretist's picture

The credibility of these shills for fraud against the US constitution is eroding.  A new amendment banning fiat would be in order once this mess goes full retard.

Mon, 07/09/2012 - 09:39 | 2598462 Quinvarius
Quinvarius's picture

They are too late to save the economy.  But they can still save the stock market.

Mon, 07/09/2012 - 09:39 | 2598464 GMadScientist
GMadScientist's picture

Taste the rainbow!

Mon, 07/09/2012 - 09:41 | 2598470 Meesohaawnee
Meesohaawnee's picture

im so sick of these criminals destroying this country im gonna puke

Mon, 07/09/2012 - 09:45 | 2598480 Everybodys All ...
Everybodys All American's picture

The Fed Reserve has become a pump and dump.

Mon, 07/09/2012 - 09:53 | 2598505 RobotTrader
RobotTrader's picture

Anybody buying the dip?

Mon, 07/09/2012 - 09:55 | 2598511 Cognitive Dissonance
Cognitive Dissonance's picture

You go first. I'm right behind you.

I promise.

Mon, 07/09/2012 - 09:56 | 2598514 Everybodys All ...
Everybodys All American's picture

what dip ... you call this a dip?

Mon, 07/09/2012 - 09:57 | 2598516 Vince Clortho
Vince Clortho's picture

Recovery?  BS Meter bounces into the Red Alert Zone each time one of Goebbel's minions uses the word "recovery"

Mon, 07/09/2012 - 09:57 | 2598520 alfred b.
alfred b.'s picture


     The Fed feeds the Fed (and banksters)...crumbs for all others, maybe!

     Buy physical gold and silver.



Mon, 07/09/2012 - 11:40 | 2598748 mick68
mick68's picture

Of course stimulus works! Just look at Japan....

There are only two reasons the FED's games keep the market afloat.

1)Ignorance. Some fools actually think it will work.

2)Greed.Traders today are money worshiping willing dupes of the FED.

Neither of these reasons has any legs, and one minor shock will be all it'll take to start the run for the doors.

Do NOT follow this link or you will be banned from the site!