Why (For The Fed) It Is All In The Foreplay

Tyler Durden's picture

Much has been written on the fading efficacy of the Fed/ECB grand-monetization schemes over the past few years. The following chart clarifies the market's apparent 'getting-religion' moment and that since QE1 - and the wake-up call that indeed the Central Banks of the world will inflate their way out of this mess - the market has increasingly front-run (and therefore removed) much of the actual balance sheet expansion efforts of the monetary overlords. One thing is sure, the latest ramp in stocks is absolutely front-running 'something' big from the Fed/ECB and for now, they are late!  


Fed and ECB balance sheet - upper pane - clearly its not the stock

3-month rate of change - middle pane - but the flow correlates (with a market lead) as we have long suggested...

as the market - lower pane - has switched from 'not getting it' to now front-running everything...



Does the Fed need to re-instill some discipline in order to regain its omnipotence?

Chart: Bloomberg

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vmromk's picture


All they are is a gang of criminals masquerading a do-gooders.

CPL's picture

Unless you have something to sub in place of the Fed, you are left with no choice.  Here's what the Fed did for people today.

  • Coffee was traded with FAIT.  
  • Newspaper purchased (traded really) with Fed paper.  
  • Electricity paid for with the Fed currency.

Name something else on the planet that is just as fungible with the same benefits?  


People don't haggle for stuff, they don't even haggle on the price...they are complicit with what is given and offered using the tools available.  If you live in the "first" world, it is more than likely that you don't know how to sew a button on a shirt to restore it's value to you.  Most first world people run to purchase a new shirt instead of acknowledging how completely and totally inept at technology they are.  Think of Greece.  Only people left behind are the ones that are self suffienct enough to take care of themselves with no government.  The rest are traveling to Germany or north somewhere.  Farming, sewing, building, repairing...these are all human technologies.  Computers are such a small and insignificant piece of the human story so far.


While being profienct in computers is a skill that is required in today's first world age, there are hundreds of other skills that are MORE useful in my opinion than the Dodo-phones or IT Appliances that we view as valuable.  Communication at the speed of light is a nice thing to have, but most of us would give our left nut for a beautifully prepared steak (or Tofurkey for those that eat such things).  Or the ability to fix a shitter without the need of a plumber.



Piranhanoia's picture

You seem to understand but don't want to believe it.  You still have time to learn and prepare.

CPL's picture

I agree with the statement "fuck the Fed" completely.  I am a stacker with the rest of the goons here.  I grow my own food and as an Engineer enjoy building, making and repairing.  Plus I believe community involvement in the countryside is not a nice to have.  It's crucial to living in the Canadian country side...


I am only stating the obvious.


The phrase "FUck the Fed" is nice and all but it offers little in the way of a substitute for trade.  

Where were the clothes and shoes you are wearing come from?  Did you make them...haggle for them from someone local?  I would guess like everyone here, China.  

How does that trade happen?  FIAT and central bank skull-fuckery.  I despise the corruption the system invites, but I will not pretend we are all trading in silver and gold.  


Yet...let me underline yet.  Until then, announcing to "fuck the fed" is just pissing in the wind.  We are all complicit, use it and trade with it.  It is just the way it is.

old naughty's picture

may be not...

time is running out fast.

samcontrol's picture

Don't give away your nuts. Come to South America, beef and plumbers are cheap.

CPL's picture

I've been through Brazil and Chile on business before, had a lot of fun.


Things stay cheap...until they are not.  Canada used to be cheap as well 20 years ago.  Now people's personal debt obligations here are at around 145% versus 120% when the US real estate market collapsed.

Random_Robert's picture

My guess is that you are being junked by Financial industry analysts, and by AAPL "investors"


I liked what you had to say.


WhiteNight123129's picture


I am afraid Tyler goes not get it, the stock market is totally wrong, and is going to get fucked by declining corporate margins, increasing wage inflation. Consumer which have no savings anyway will pay their debt with this increased amount of nominal dollars. Teh Gold bugs will first be hurt when inflation comes because it will be interpreted as ~things are back to normal~, the Equity will cheer first, but then the corporate margins will suffer massively, the bond holders will get fucked and the equity holder will lose money in real terms. Then people realize that we are in stagflation and we have the second leg of the bull market of Gold. We are getting closer and closer to no need for more printing since the Fed will have managed to kick start the beginning of the stagflation beautiful deleveraging.

IS there anybody here who will suffer from stagflation? Beware though when the inflation kicks in because it will mean no more printing and first the Gold will go down on those news, until stagflation is finally hitting the mind  of the market.




Dr. Richard Head's picture

The Fed has no discipline other than handing out digital currency to the most insolvent and TBTF banks that hold turds as assets.

Cognitive Dissonance's picture

Discipline? OMG!!!!

Discipline is for the little people.........but only when we order tell you to be disciplined.

<Not yet though. Still more thieving to be done.>

xtop23's picture

 I doubt we will ever get outright QE if the gd market keeps ramping up in anticipation of its implementation.

 Glad I demolished my 401k. Other than levering oil for the upcoming ME pyrotechnics, I haven't got a dime riding on this bs.

TheFineKid's picture

Are you saying the fed is about to Bitch-Slap the market?

CPL's picture

No...the charts show deminishing returns and time between QE's.  So the Market priced in QE3, the market is now preparing for QE4 in Dec sometime.


So...like Obama inheired the shit show from bush...whoever sits in the chair next inherits a bigger problem.  If the republicans truely gave two fucks they would select the third option.  Offer no one to vote for.  If a democracy with a legal system truely exists that would completely lock up the entire process.  Politically it's playing chicken, in terms of process to build consensus in an electorate it would be the time to fix it properly.


What is an election with one party running?  A complete waste of resources on behalf of the republicans...that's what it looks like so far.

Piranhanoia's picture

agree with you.  Check out the Repug convention at http://libertyblitzkrieg.com  There is no representation in representative governments.

spastic_colon's picture

check the VIX as the term structure is being gamed, leaving room for another 100 ES pts upside and will still only be at 14 on the VIX by then

samcontrol's picture

I sure hope so,. everyday that passes by i am more  ready..

Today just a little SH.   I know , I know it's paper .. 

ebworthen's picture

"No soup for you!"

larz's picture

fine Ill trade with the damn FED dont care who is on the other side just care if im trading well

Milton Waddams's picture

The S&P500 is forming the apex of a - greater than a year long in the making - rising wedge.  

Ben's small business benchmark, the Russell 2000, is near the breakout point of an ascending triangle.

IMO the last thing BB wants is his paper asset reflation doctrine to begin a parabolic liftoff.

Robslob's picture

How much bigger do we need Mr. Market?

You have had QE1, QE2, TARP, TALF, Twist, negative interest rates and ZIRP...I mean really?

Only 1 way to Fuck the Fed...by Gold or Silver.

samcontrol's picture

I don't know about that . BB has that look on his face or its diarea or he's BI.

RSloane's picture

Maybe the Fed just likes to watch.

Snakeeyes's picture

No money velocity, banks aren't lending, how can the Fed do anything BUT maybe goose the stock market?


Elmer Fudd's picture

Wouldn't even call it foreplay. 

geewhiz190's picture

no front running in bonds today that's for sure. weakness in many resource related as well, it's different this time

insanelysane's picture

Stocks are starting to slide.  Might run red tomorrow as FED will disappoint, Mideast in turmoil and higher oil will kill economy in US and Europe.

GreatUncle's picture

Love this bit ...

wake-up call that indeed the Central Banks of the world will inflate their way out of this mess

or put another way ...

wake-up call that indead the Central Banks of the world will deflate the worth of people to get out of this mess.

Ask that of any central banker and his response would be "oh no, we are not doing that".

Your response should be we are carrying on the same then? Seeing as your are not prepared to allow it to go bust and you lose all your worth like everybody else will! There are no other alternatives other than bust or not bust or as in the case of central bankers we are not bust the population is.

You can also add this it is all they have ever done! But it was not noticed before BECAUSE THE RATE THEY NOW HAVE TO INFLATE IS GOING TO BE FAR BIGGER than it was the last 40 years or more. The fundamental goal of the inflationary game is before you die all your value is devalued to nothing unless you are one of the priviliged thereby passing it onto your offspring.

What is currently happening is that an ever larger number of people are being devalued before they reach any retirement.

remoran's picture

I like CPL's comment about technology. He is spot on in terms of just how clueless many people are in terms of knowing how to do everyday things like sewing a button on a shirt. As a techie, I am well aware of the amazing dependence society has on all things digital, something that could prove extremely problmatic with the dire aspect of global warming, financial meltdown and resource depletion heading our way, concepts people ignore at their peril.