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Summary Of Wall Street's View On The Upcoming Operation Twist
As Chazz Evans just noted, QE3 can not come soon enough, and it can certainly not be big enough. Wall Street, bonuses entirely contingent on this fiction becoming fact, is therefore more than happy to shape Fed opinion, and confirm that QE3 is now priced in to such a degree that a disappointment will raise the terrifying specter of bloodthirsty, demonic hyperdeflation once again. Below, via Bloomberg, is a summary of what the various Wall Street "strategists" also known as groputhink lemmings, because none of these said Op Twist was coming as recently as a month ago, think is coming out of the Fed as soon as 2 weeks from today...
- BAML: Purchases likely concentrated in 7- to 10-yr sector
- Barclays: Fed likely to sell $440b of securities maturing in 1-4 yrs, buy $660b in the 5.5- to 30-yr sectors
- Credit Suisse: Fed can buy $360b in the 10-yr sector, matched by sales in the 1- to 3-yr sector, before running into position limits
- Deutsche Bank: Buying likely to be concentrated in 7- to 10-yr sector; Fed has limited ability to buy longer-maturity paper
- FTN: Baseline expectation is $300b of sales of debt maturing in 0.5 to 2.5 years, reinvestment contcentrated in 8- to 30-yr debt
- Morgan Stanley: Fed likely to sell all 0- to 2-yr debt, buy the 8- to 10-yr and 30-yr sectors
- RBS: Fed likely to sell 0- to 3-yr sector, buy mostly 7- to 10-yr sector
Source: Bloomberg
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"but wishing did not make it so, which was very upsetting for Alice."
-Lewis Carroll's "Alice in Wonderland"
MELT UP ALERT!
Time to get cranking on the melt up post. LOL
Time to wake up and smell the coffee.
QE3 is already in place.
Or haven't you heard? The Swiss are in the game!
(Not that I think it's another beginning of the end mind you, rather more like a key long term macroeconomic pivot.)
So apparently debt doesn't matter. How did we all miss the jubilee. Fine with me, commidites and PMs to the moon, awesome.
You will find that, in the not too distant future, that too was wrong.
How many times have I told you all that what everyone knows ISN'T WORTH KNOWING?
If everyone knows all paper will soon be worthless then why are so few doing anything about it? Why are so many people still chasing various forms of paper? What are you doing to protect yourself? Are you suggesting there is nowhere to hide from this disaster?
I'm suggesting that we're 20+ years early on the "disaster".
I hope you're right.
And this benefits main street how?
No recession.
Maybe.
It doesn't and it isn't meant to.
The welfare queen banks must get their monthly check and their giant Fed EBT card.
Wall Street and the Ghettos of America are now indistinguishable complete with white Mercedes, pimps and ho's, and back alley dice games.
Sounds like my beloved Detroit.
"Wall Street is OUR MAIN STREET"
place this over your trading screens and all willl become clear.
Someone has to pay the taxes that support the sheep. May as well be MAIN STREET.
QE = welfare for Wall St
NOT Main St!
crank rates down on the long end and cap the 7/10/30 perfect for keeping credit inexpensive as the system absorbs bad debts and works off the excesse
Market's at 11,300 and these assholes want more free money.
uh, huh.....whey isn't the 10 yr 1.5%?
why doesnt the prime dealers buy this shit with 100x leverage?
why?
The gold bull is over.
BWAAAAAAAAAAAAAAAAHAHAHAHAHAHAHAHAHA!!! Wait, you were serious...le sigh. The fundamentals have NOT changed.
'The gold bull is over'...I see, so we've suddenly printed LESS then? All I see is more trillions being rammed thru as fast as they can. Gold 'bull' hasnt even started running yet.
Exactly. Like all WS analysis, they're looking at it from one tiny perspective: does this make for a fat Xmas bonus or not? Reality is far far mreo complex in today's world than their kindergarten economics. The post-war equations don't work anymore at all. Do we need any further proof of that with a full on grinding depression, costs climbing at all levels and the credit of the USof A downgraded? We walked through the looking glass this summer. From here it just gets more perplexing, less predictable and more spooky
Holy good God, man. Consenus. Therefore, just like Ben's letter to the TBTF's asking them what their expectations were for QE2, to get a mean consensus of $500 billion, only to up their annie by $100 billion to surely not disappont, he will all too likely surprise to the upside in some way, shape or form on Sept. 21st because he has to since Operations Twist was priced in already. And surely Ben doesn't want to lose the Keynsian game just yet, does he?
Hey.. Bennie boy knows who he works for.... (hint) it damn sure isn't "main street".
Quick...someone put up safety tape and flags in front of the cliff. Or not....
Complacency?!
Just noise sheeple, more foreplay and still no action. It's high school all over again.
So if they're selling short term bonds and using the proceeds to buy long term bonds, where does Wall Street get its free money to pump up the stock market?
I still think the focus will not be to pump up the stock market but to pump up the real estate market.
Obama has his Wall Street money now he needs Main Street votes and that will allegedly be accomplished by bringing the real estate market back from the dead.
They added Fannie Mae and Freddie Mac as counterparties in reverse repos in July. Thats where the money is headed.
We may see 1% mortgage rates.
re is dead and that isn't coming back in time to help owebama, no matter how many free houses he gets.
I still think the focus will not be to pump up the stock market but to pump up the real estate market.
Indeed, and moreso, getting 30 year mortgages down to 3%, along with Obama's plan to let underwater mortgages that have kept current on their payments refi at 3%, is the plan to not only keep real estate propped but also goose stocks because all the extra cash flow that will find it's way into CMG AMZN NFLX APPL, etc. Oh wait, those stocks multiples already have that priced in too.
.....and when the NIM get squezzed like a lemon on these hot summer days do indeed expect to hear another TARP. Because the market cant really levitate permanently without the banking coakroaches.
The primary dealers get a 5% commision plus a premium on the Fed purchases. Maybe they'll get a commission on the maturing debt as well as the sale of the new debt; double-dipping so to speak? They've gotten at least $100 billion in commissions so far. This is money they don't have to pay back. They can also borrow at 0% for play money too, but this money assumedly must be paid back. Who really know WTF is going on? The bad thing about going to longer term treasuries from shorter term is that they won't get to run this scam as often and will have to rely on some of their other scams.
When the market continues to go up in defiance of common sense they also take profits from millions of dumbass small investors that don't have the inside information. This money they also get to keep.
Youre calling for a 'rebound' to what, the all time largest bubble top in history? And it hasnt even fallen very much at all really. RE will never 'rebound' because its still an inflated superbubble, still 30% overvalued at least. Print and throw money just down a different hole, it will do nothing at all.
I'm not calling for a rebound in the real estate market. What I'm saying is that Bernanke threw free money at the stock market and temporarily inflated it for a year so they may now try to do the same thing with real estate through expansion of bank credit with super-low interest rates.
gonna buy me some 1/2 ounces of silver today. can't wait!
If the dumb asses are going to buy why wouldn't they focus on the 30 year? As least then the government could finance their ridiculous spending over a longer time frame.
So the poor and pensioners get to pay banksters bonuses through massive increases in food and fuel.
Thank you Genocidal Chair Satan
You will go down in history as THE most evil man ever and who was responsible for the most deaths
Hitler was a saint by comparison
Sure am glad I chose silver last year. This stuff is scary. Does the range of Operation Twist options mean anything?
I mean other than the fact that nobody knows anything, including our illustrious Fed.
http://www.creditwritedowns.com/wp-content/uploads/2011/09/Silver-best-p...
Goldman is absent from the list. What Goldman wants Goldman gets.
So is the opposite of moral hazard immoral safety?
They are ball park correct.
They know the money games more than anyone.
QE I & II were toxic in their names and the bad PR. Bernanke is mad about that.
They will institute stealth QE to infinitiy and now even have the Swiss on board.
Instead of all the debt swap and paper pushing games why don't we just force a reset of consumer debt interest rates. Instead of defaulting more people would pay their debts back and the banks will still get money. At the same time you contract the credit limits so people can not leverage themselves so far again. If current balances are subject to a rate reduction to 2% then real debt de-leveraging can begin and we can start getting the economy back on track. We don;t need debt forgiveness, just forgiveness on interest paid.
Oh yeah I forgot... Banks have actually already sold off securities and used derivatives based on the 30% interest rate and booked the future gains on their current earnings reports. So if we reduce interest rates on consumer debt then it will screw up the books.
So Obamas $1 trillion 'stimulus' nonsense, plus $2 trillion QE3, plus Operation Twist $500 billion? Gee where did they find all this new free money?
One thing is obvious, gold at 2,000 will look like the old $1,000 gold real soon!
Someone is in the woodpile..........................
You telll me WHY GOLD drops like a rock, BEFORE, and AFTER the ONLY semi safe haven currency on panet earth, sells it's soul to the DEVIL?.
This HAD to be manipulated, GOLD and all PM's should have moonshot over that Euro peg to Swissie...........
I smell shit, and it isn't on my shoe.
Same action that happened when gold was nearing 1,000. THen pretty soon that was history. This is not a get rich quick scheme. Most people are in it for safety ie slow returns over long periods that outrun anything else with no risk. Unlike stocks, gold has never gone to zero. It rises and rises
They took it down quick at the beginning of trading. Pulled their bids and hammered away.
Their hope now is to raise margin rates, but that will just make gold a more physical market like silver.
I give this a few days before it wears off.
Main street. Ha. Irrelevant. GDX day high. Oh, sorry already posted that earlier. :)
Going to take time all. Just be patient.
Bestow OTMO
Who says the Fed isn't smart? Buy a bunch of shorter-term Treasuries, then promise to keep rates low until at least 2013 which ignites a rally in these things, then sell them (per Barclay's opinion) and buy even more of the longer-term shit. Great work if you can get it.
I just bought a tube of 25 Silver Maple Leaf 1 OZ Royal Canadaian Mint coins. I have never been so happy with a purchase like this one. For $1,200 USD, i have peace of mind. Trust in God, Gold & Silver!
Also trust in stocking water, guns, ammo, food & shelter for family in case all hell breaks loose. Trust in God is standard for a Christian like me. But a 12 guage buck shot to intruders face will be fun! Hopefully God will forgive me later as i take the passage, "the violent shall inherit the kingdom of God" perhaps a little too literal lol.
http://lonerangersilver.wordpress.com/2011/08/30/pyramid-of-capital-syst...
"What about my New Yacht!....my kids need new BMW's to compete with the other Harvard Elite......oh yeah, and my wife wants to re-do her Villa in France......"
Oh well. These CEOs may have to wait a bit longer.
HyperDEflation? Hmmm... Is that when I can buy all the ink I want for a silver dime?
Maybe throw in a unicorn.
Since this is a game within the fiat money compendium of riding round in circles pretending that anything the Fed does can make any difference (rather than just moving money away from productive "real" assets to unproductive "fiat" assets, let's assess the risk of the "where will my 1 million dollar bonus come from" suggestion box by self interested bankers.
We all know that 1 tick on a short asset is worth a lot less than 1 tick on a long asset. There are insufficient ticks left in the short end out to five years in Treasuries to pay sufficient bonuses with a well signalled rate move (downwards for the last 3 years).
There are a 100 ticks or so left in the ten year before Bernanke completely replicates the Japanese experience that he is following religiously and around 150 ticks left in the 30 year.
What is more interesting is the case made by Ron Paul that we may as well cancel the debt held by the Fed since it is entirely meaningless and laws have been passed that indemnify the Fed against any losses on its $2.6 trillion of SOMA holdings ($2 trillion of treasuries).
Of course, on a risk basis, extending the duration of the SOMA book from say 3 years (just ball-parking, not sure of the real duration) to ten years on a face value for face value basis, for an amount of say $300 billion (not the same $300 billion upcoming Obama jobs package). Means the risk of the portfolio goes up by the odd 7 years duration extension times 300 billion or c. 21 billion per one per cent.
Now consider that we are already in the biggest financial market bubble in mankind's history in the Government debt markets (bigger than the internet bubble pror to Y2K, bigger than South Sea Island, bigger than black tulips, bigger than Japan in the late 80's, just BIGGER than anything in history for complete lack of actual value). The actual "correct" unfettered interst rate for a poor credit like western Governments with stagflation ought to be around 6-7%. Not very high in the context of ten year interest history inside or outside a 40 year debt monetised bull run for rates.
6-7% means a 4-5% rise in rates and a loss on the Fed SOMA holdings for an incremental 400 billion of the odd $100 billion PLUS a loss on the 2.6 trillion in current SOMA holdings with a duration of say 3 years of $312 billion in losses. So total of not far short of half a trillion in losses that the Fed will land on the Treasury.
This is not to say that, for some reason that we don't know about, there is no need for any Fed intervention because the economy actually picks up (I'm in the camp that says any Fed action reduced economic activity and is counterproductive, but who knows optimistically there might be a railroad/internet/motor car invention we can remodel the economy on, just around the corner).
Point being, if the Fed actually succeeds in delivering a return to 3-4% growth with 2-3% inflation, ten year bond yields will be 5-7% as well with the concomitant loss on its holdings. Let's not talk about Fraudie and Funny (FHFA) assets.
So if the tax payer is going to pick up a tab for c. half a trillion from a bank (the Fed) where is the advantage to the taxpayer? Further, is Ron Paul right and the SOMA holdings are meaningless and can just be cancelled?
Who is on the other side of the fed sell of short duration?
banks who get utility out of posting treasury collateral to secure p/l on ever increasing swaps in the 600 trillion market plus margin securities for commodity futures trading when cash simply doesn't pay enough interest.
on too more upbeat news!
A former vice president for Citigroup pleaded guilty Tuesday to embezzling more than $22 million from the company and funneling the money to his personal bank account.
http://www.banktech.com/risk-management/231600907?cid=nl_bnk_daily
Keiser Report: Fake Assets (E180) http://www.youtube.com/watch?v=lgVBWQ99IgM&feature