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Wall Street Pundits' Kneejerk Response To FOMC Statement
Here is the summary kneejerk response out of a panel of Wall Streeters, all of whom perfectly anticipated just this announcement.
DOUGLAS BORTHWICK, MANAGING DIRECTOR, FAROS TRADING, STAMFORD, CONNECTICUT:
"It was as expected, and the market is taking this as no new information. There was some pullback on the euro from those who expected something a bit more aggressive. This buys time for the Fed but we don't think it will do much to stimulate the economy. We don't expect to see an uptick in home buying, especially if people think homes will stop decline in price another 10 to 20 percent. So a drop in mortgage rates won't make much of a difference. For now the trade is to be long dollars as people wait to see what will happen with Greece and the EU/IMF aid."
DAVID ADER, HEAD OF GOVERNMENT BOND STRATEGY, CRT CAPITAL GROUP, STAMFORD, CONNECTICUT:
"$400 billion was in the expected range size, but given they will use maturing MBS proceeds to buy MBS, this actually is a bit less than we expected (say 16 billion per month times nine months so about $150 billion less due to the switch into mortgage paper). The offset is that in the mix there's a lot, 29 percent, of buying at the very long end.
"Selling in 3s and under was a given but without the offsetting IOER drop so this is very much a flattener that favors the very long end.
"The (Treasuries) market is behaving accordingly with 10s/30s nearly 10 basis points flatter, and 2s back about 4 basis points. This is a technical break in 30s, but 10s are struggling a bit versus 1.88 percent, so, dare we say, pretty well baked in but hardly a reason to sell."
PAUL BALLEW, CHIEF ECONOMIST, NATIONWIDE INSURANCE, COLUMBUS, OHIO:
"They certainly set the table for us and they delivered.
"It will help a little bit on the margins. But the problem we have is that the issues we're facing restraining the economy are not the issues the Fed can directly control, or even influence. It's not that it won't have some help on the margins, but we're facing structural issues that go well beyond the Fed's mandate.
"The market has already priced everything in ... the market now is not seeing anything in the statement that's dramatically different from what they had already assumed."
MARK LAMKIN, CHIEF MARKET STRATEGIST, LAMKIN WEALTH MANAGEMENT, LOUISVILLE, KENTUCKY:
"As you look deeper, they added the word 'significant' in their assessment of the downside risk to the economy. They could be setting up for 'QE3.' They are remaining accommodating, but they can't use all the arrows in the quiver right now.
"There were three dissenting voters again so that doesn't give us a clear path. They might do more, but it wouldn't create 4 percent GDP even if they do more.
"The Fed is in reaction mode not only to the economy, but also with politics. The Fed will keep an eye on the super committee on debt reduction in Congress.
"With stocks, it's buy the rumor and sell the news. Some traders were hoping for a bolder move from the Fed."
ROBERT TIPP, CHIEF INVESTMENT STRATEGIST, PRUDENTIAL FIXED INCOME, NEWARK, NEW JERSEY:
"The Fed had a very difficult path to navigate, but if the ultimate objective was to bring down long-term rates, the initial reaction from the market was positive.
"The Fed had a difficult path because any aggressive steps to stimulate growth through these extreme monetary techniques could raise concerns about inflation. So the fact that even after the rally that preceded the announcement, rates have moved even lower, particularly 30-year rates, suggests the Fed has successsfully kept that balance between monetary accommodation that is aggressive enough to help the economy, but not enough to stoke a backlash of inflation fears."
JOSEPH TREVISANI, CHIEF MARKET ANALYST, FX SOLUTIONS, SADDLE RIVER, NEW JERSEY:
"Medium and short run this policy will have little impact on the economy and even less impact on the dollar. This is what was expected."
JOSEPH ARSENIO, MANAGING DIRECTOR, ARSENIO CAPITAL MANAGEMENT, LARKSPUR, CALIFORNIA:
"The market is deteriorating because the Fed didn't reduce yields on reserves. There is no additional impetus for banks to lend. It wasn't sufficiently stimulating. The stock market is reacting to that and since that has been fairly closely coordinated with oil markets, we're seeing declines there as well."
STEPHEN MASSOCCA, MANAGING DIRECTOR, WEDBUSH MORGAN, SAN FRANCISCO:
"I don't see anything of a big surprise here. The economic outlook -- everyone has got a focus on this economic outlook comment and that is what has driven the market down. In terms of the actual substantive action, the 10-year (yield) is moving down because obviously you have now created $400 billion of buying here."
CARL LARRY, DIRECTOR OF ENERGY DERIVATIVES AND RESEARCH, BLUE OCEAN BROKERAGE, NEW YORK:
"They (the Fed) is putting on the "twist" which should be weaker dollar near term and stronger long term.
"The one thing that weighs on any decision here is that we are still seeing dissenters in the Fed. And that doesn't bode well for a stable recovery.
"That is probably going to make crude weaker here until people get a better picture of what holds the Fed together.
MOHAMED EL-ERIAN, CO-CHIEF INVESTMENT OFFICER, PIMCO:
"The Fed has revised downwards its economic outlook and also pointed to significant downside risk. The outcome points to an even more divided FOMC."
BRIAN DOLAN, CHIEF STRATEGIST, FOREX.COM, BEDMINSTER, NEW JERSEY:
"This is pretty much what the market was expecting, though the size is a bit more than people expected. I thought the dollar would weaken because it was as expected, but that is not happening at the moment. ... I think we might see some dollar profit-taking at some point. Europe's still a mess and the global economy right now seems to be stagnating. And this seems to be the Fed's final shot." G
ENNADIY GOLDBERG, INTEREST RATE STRATEGIST, 4CAST, INC., NEW YORK:
"They've kind of hit it smack on the head. This is kind of really in the middle of where the market expectations are lying. This is what the market was expecting. The estimates were running at about $300 billion to $500 billion.
"The interest on excess reserves was a close call but they probably decided not to do it because it would cause more problems.
"This is good for Treasuries, obviously. Whether this will create economic stimulus remains to be seen. It might have kind of limited economic impact."
Via Reuters.
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Biggest surprise = stepping back into MBS...
Who says dogs don't enjoy their own puke?
Somebody had to. If not the shit-holder of last resort, then who?
very interesting
http://covert3.wordpress.com
silly
http://covert3.wordpress.com
holding % on long end is way too high
Sorry, but this isn't going to do a damn thing other than kill the banks.
Awwww, too bad that. Where do I send the flowers?
i disagree, this is a gift.
mortgage refi income
bond capital appreciation income
interest on borrowed reserves income
times infinity income.
it also will encourage banks to shorten the carry trade duration exposure which will perfectly coincide with the 2013 guarantee, keeping them out of trouble. Papa Bernank is on the job.
... necessitating QE ad infinitum once the big scare sets in.
...and (soon-to-be former) small business owners.
need to bust some kneecaps..
Can anyone believe this madness. What has this Jewish banking cartel done to America?
Back under your rock, maggot.
Back under your rock, maggot.
It's AAPL and AMZN stock versus everyother risk market in the world right now going into the closing hour...
Tyler, you guys are genius level.
Best website hands down on the web.
Keep it up. Thanks.
Second that. Tyler, u r awesome!
3am here. Too curious to miss the fallout from Bernank Two-Point-Five Times!
Thanks for the enlightenment, ZH.
Disclosure: Bullion (bitchez)!
BAC at 666 is giving me problems
think how Buffett feels...
Buffett has feelings? LOL
Amused Buffet is the silver lining.
Where's Becky?
wheat futures went to 666.6 as well.
Non-event. Weaker, and weaker.
The dollar is going over 80 and gold will see 1500 before it sees 2k...deflation baby. That's just the way it is.
correct, 1500 comes before 2000. TD bring back the captcha to keep the mouth breather responses to a minimum. some serious shit going on here!!
doubt that seriously. Asia knew what was coming and anyway you look at it, they want the real money, not the money that is backed by IOU's which are promises to pay dollars, which in the end are a promise to pay nothing. I'm certain the treasury can make good on that and in the Chinese and other nations that are actually fiscally sound are going to buy every US/UK/Swiss paper market sell off in gold.
The opening of the Pan Asian Gold Exchange next month is going to expedite the ability to transfer the physical gold from the Western world to the Asian world much more expeditious.
Gold rises in proportion to debt. Debt increases even with so called "austerity" because austerity causes the GDP to shrink because of the massive dependency of consumer spending on government spending and so as the economy implodes (call it depression, deflation or whatever), debt increases as tax revenues drop and the need for safetynet spending increases. So, contrary to all the years of bull shit put out in the mainstream financial media, real money, that which is not encumbered by debt, insolvent counterparties and the associated risk thereof, becomes the natural recipient of wealth preservation.
Asia knows this and anyone looking at the US and European banking system know that despite today's announcements, the Fed will either have to expand its balance sheet at some point not to far in the future or we will have Lehman x 50 in the derivatives markets. Gold is heading to $5000. Its only a matter of how soon.
"...backed by IOU's which are promises to pay dollars, which in the end are a promise to pay nothing."
= IOU(Nothing)'s
Ahahahaha! Asia! You mean China? Those f__kers made Ben's printing press look like it was firing on one cylinder! How do you think China maintained the Yuan's "peg" to the US dollar despite an enormous trade imbalance? They printed Yuan to soak up all the excess dollars floating around in all those Chinese export businesses, then used the soaked-up dollars to buy US trasuries. That's how.
Get a clue. China's printing is what led to America's printing. It's as simple as that. Otherwise, the exchange rate between the two currencies would have adjusted to nullify the trade imbalance, and there goes the Chinese "miracle growth."
The only thing I can't understand is how Americans can be so stupid as to allow this scam to destroy their economy, all the while shrieking about "free trade" -- as if that had anything to do with what was actually going down.
The dollar is going over 80 and gold will see 1500 before it sees 2k...deflation baby. That's just the way it is.
************
Deflation is correct-but you have the Gold part assbackwards-
We have never been out of Deflation since 08 and Gold has performed great-
You call Deflation now--can you show the decrease in money suppply?
I can and i can show you its been ongoing since this shitshow started in 08 and has the price of Gold dropped?
Gold might correct back to its 200 DMA-but its nothing to get excited about-
I'll check back with you in a couple months and see what you think then.
Wow, let's get some more plates spinning.
I'll tell you what I told CNBC.
This means deflation. DEFLATION. Say it out loud. DE-fucking-FLATION. We are still combating deflation.
gh
Please explain how the Fed buying more longer term treausries means deflation? That is inflationary and inflamitory. THe more money going into a system the lower he value of the money. Fed buys Treasuries, I don't care when they roll or yield, they ADD money to the system. How is that deflationary? General goods and services are not going down. The real inflation rate, if you factor food and energy is more in the range of 12% annual, not 0%. However the government wants to spin inflation to the masses, the truth is, we are being inflated out of homes, jobs, food, consumer goods and energy. So please, using real numbers such as food and energy cost inflation explain how more money is deflationary. Just asking.
The Fed has been losing this fight. They are still fighting deflation. They see deflation. The 10 yr Treasury bond at 1.8% means deflation. It means the bond market is not at all worried about inflation. If the bond market was worried about inflation the fed would be the only buyer of long bonds....I don't care what the govt/fed does, I am just looking at the markets. The are saying deflation. Oil down. gold and silver weak. ags weak (DBA etc..) coal weak. nuke weak. If we were expecting growth these would be strong. Particularly with the China thing....
gh
now if I can just remember where I buried my greenbacks, I'll be well positioned for the upcoming bargains.
Correct...just check out the transports. They were headed way south before the announcement.
Expect a Rollercoaster with substantial drop in equities. To see the exact dates of peaks and bottoms here is a snapshot of Rosecast Bradley Sideograph based on Financial Astrology:
http://inkom.com.au/sites/default/files/marketmap.jpg
What a timing!
10 yr T-Note from 3.20% to 1.88% in 2 months? I'd say QE3 is over, folks.
....to 0.25%
"Limited economic impact"
So, why not actually do nothing if your nothing is going to do nothing?
Because doing nothing makes it look like you're doing nothing. Nobody wants to see nothing, even if nothing is done we want our nothing to look like something even if it does nothing in the long run.
"It's a show about nothing."
"Perfect! I like it."
This is what the market was expecting?....I think the market was hoping for something that would have a positive effect....now it is up to the politicians. The Fed just put the economy in the hands of the politicians....we all know what that menas....crap they haven't gotten a budget out of the Senate since 2009....
aaaahahhaahhahaahhahahahaaaa (breathe) ahahahahahahaaa (breathe) aahahahahahaaa
Damn, i need to change my diaper again.
Can we get NATO to do a "humanitarian" intervention on Wall Street? We can call it "bankster spring".
cheaper money, except for the walking dead banks, in a world drowning in debt. that should do it ...
the only solution is time, that and pain, the words americans fear the most.
Of course! Hindsight is ALWAYS 20/20!
The first time I heard about the possible Operation Twist 2 was on this website. You guys are doing a great job and the community really appeciates it.
www.thecashflowisking.com
and Retwist
Actually, Rickards called this long ago... ZH disagreed and guaranteed QE3 (had lots of company on that call though).
When Jim Rickards speaks, I think he's generally correct. I'll confess to having heard a somewhat small size sample of his public speaking, but his delivery of insight isn't subtle--it's more like an earthquake and tsunami. Where am I gonna scrounge together my next spare 1800 Bernank$?
Makes sense to load up as much of the debt for as long as maturity as you can get...
These long maturities seem popular.. Perhaps the Treasury should consider to issue some 50-year bonds.
At -0.25%. Gotta prevent hyperdeflation.
let's send a Zerohedge Tshirt to Ben Bernanke
Everyday.
I think traders need a day to really think about all that was said and done by the Fed today.
Tomorrow will be a better indication of where markets are headed.
Buy the rumor, sell the news says it all.
Bye bye Gold. When the Greeks finally throw in the ouzo, the world will flock to the USD.
And when the USD goes titsup they'll flock to gold.
I'm still sitting here wondering where the US government is going to get buyers for the debt they hope to sell at these rates.
The one place is obvious: Europe. Euro tanking would likely send investors into Dollars to try and hang onto their capital while the "potential" bank crash in Europe - providing a supply of bond buyers for Uncle Sam.
Just had a discussion with a friend, and we were contemplating the logic behind this move.
a) It supresses the upward movement that the longer bonds would get once the QE2 money starts to show in the economy
b) Gives the government better rates - in the short run
c) Attempts to take the wind out of metals (perhaps - unclear on this point due to global events)
d) Also sets artifical "stops" in place on interest rates when.... QE3 rolls around (?)
e) Assures lower mortgage rates for a while longer.
Down side:
Market manipulation aside
1) Savers get killed
2) May push savers into more risky assets
3) Banks get clobbered. Which makes no sense to me with a weak banking sector. Maybe this is an attempt to further consolidate (bankrupt) smaller banks into Mega-banks.
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So why do this?