"The Tide Is Going Out" - JPMorgan's Dimon Warns QE Unwind Could Be Far Worse Than Fed Hopes

Janet Yellen confidently stated at the last FOMC press conference that The Fed will start unwinding its massive balance sheet "relatively soon" and Patrick Harker, the Philadelphia Fed president, has said the process will be so dull that it is equivalent to watching paint dry.

Not everyone agrees...

Louis Crandall, an economist at Wrightson Icap, said at the time:

"When they [the Fed] launched QE, they were confident about the direction of the impact but cautious about projecting the precise magnitude. They should be even more cautious about estimating the impact of unwinding the portfolio, as they have even less control over the outcome."

The unwind will be lumpy for sure...

And today, none other than JPMorgan CEO Jamie Dimon poured some more cold water on The Fed's complacency at this 'storm in a teacup'. Speaking at a conference in Paris this morning, Bloomberg reports that Dimon warned...

“We’ve never have had QE like this before, we’ve never had unwinding like this before."

 

“Obviously that should say something to you about the risk that might mean, because we’ve never lived with it before.”

 

“When [the unwind] happens of size or substance, it could be a little more disruptive than people think."

 

“We act like we know exactly how it’s going to happen and we don’t.”

Central banks would like to provide certainty but “you cannot make things certain that are uncertain,” Dimon said. All the main buyers of sovereign debt over the last 10 years -- financial institutions, central banks, foreign exchange managers -- will become net sellers now, Dimon said. Investors are listening closely to policy makers to determine when and how central banks will start reducing their balance sheets. A global bond rout spilled over into equities last week on signs that central banks are taking a more aggressive stance.

“That is a very different world you have to operate in, that’s a big change in the tide,” he said. “The tide is going out.”

Will "the tide is going out" be the "the music stopped playing" quote of this collapse?

Comments

Mtnrunnr Delving Eye Tue, 07/11/2017 - 13:27 Permalink

A bloody fortune shared by an entire class of parasites starts to spread pretty thin eventually. They'll bitch the whole way to our grave and just like a parasite they'll leave us as the shit they are right before the end. Also, why does anyone think the fed, who has been given infinite power, will just let a crash happen? No way. The first sign of real stress (when yellen's bank acct flashes it's first warning sign) they'll just ctrl+P moar. Why the fuck not. It puts more of our assets into their pockets.

In reply to by Delving Eye

cougar_w jsgibson Tue, 07/11/2017 - 14:04 Permalink

I like your metaphor. Clever. But I honestly don't think it's going to be inflation that overtakes us. What has them worried is the implosion/evaporation of money. Money/wealth is burning up in deflationary destruction probably at the tune of $10B a day, globally. That is the tide they are swimming against, and have been since 2008. As consumer spending dries up and debt starts to eat up all the money people have, The Fed and their ilk cannot print enough money to keep up, and certainly cannot get that money into the hands of those who will spend it.Look around, deflation is their monster. We are in the jaws of it now, and one bad monetary misstep puts us into darkness forever.

In reply to by jsgibson

GUS100CORRINA shizzledizzle Tue, 07/11/2017 - 13:00 Permalink

"The Tide Is Going Out" - JPMorgan's Dimon Warns QE Unwind Could Be Far Worse Than Fed HopesMY response: It is looking like the DEEP STATE controlled by the illuminati are beginning to prepare the minds of the sheeple for the next world event. Just look at the FABIAN WINDOW. The HOT GLOBE on the right side of the window is symbolic of the next crisis. It is looking like the time for the arrival of the NEXT CRISIS is very close.

In reply to by shizzledizzle

Nostradumbass GUS100CORRINA Tue, 07/11/2017 - 13:30 Permalink

Once you finally realize that jeuws - all jeuws are your mortal enemy, the veil lifts and you see what must be done. They work as a single parasitic organism seeking the total control of this world. They tell you this themselves. There will be war and tremendous bloodshed if White People are to survive.Towards your education, freedom and the Good Fight: https://thezog.wordpress.com/http://lovkap.blogspot.com/http://age-of-t… 

In reply to by GUS100CORRINA

NotApplicable Tue, 07/11/2017 - 12:51 Permalink

The unwind will only go far enough to scare everyone, then they will rapidly rewind and then some.Unless, that is, the scheduled time for Armageddon is upon us.

Peacefulwarrior NotApplicable Tue, 07/11/2017 - 13:17 Permalink

I would agree that the human race is not quite ready to lay claim to this just quite yet... especially cowards and FED Central Bankers? It may happen organically in due time...According to the Book of Revelation in the New Testament of the Bible, Armageddon (/???rm????d?n/, from Ancient Greek: ????????? Harmaged?n,[1][2]Late Latin: Armaged?n[3]) is the prophesied location of a gathering of armies for a battle during the end times, variously interpreted as either a literal or a symbolic location.

In reply to by NotApplicable

Chupacabra-322 101 years and … Tue, 07/11/2017 - 14:50 Permalink

The vast majority of ZH's especially the veterans here understand fully that there are no more "Bear or Bullish" markets. There's only Fascism & Ponzi.

"If central banks purchase stocks in order to support equity prices, what is the point of having a stock market? The central bank’s ability to create money to support stock prices negates the price discovery function of the stock market."?-Dr. Paul Criag Roberts

"These questions came to mind when we learned that the central bank of Switzerland, the Swiss National Bank, purchased 3,300,000 shares of Apple stock in the first quarter of this year, adding 500,000 shares in the second quarter. Smart money would have been selling, not buying.

It turns out that the Swiss central bank, in addition to its Apple stock, holds very large equity positions, ranging from $250,000,000 to $637,000,000, in numerous US corporations — Exxon Mobil, Microsoft, Google, Johnson & Johnson, General Electric, Procter & Gamble, Verizon, AT&T, Pfizer, Chevron, Merck, Facebook, Pepsico, Coca Cola, Disney, Valeant, IBM, Gilead, Amazon."
-Dr. Paul Craig Roberts

http://www.zerohedge.com/news/2015-08-28/dollar-spikes-risk-slides-afte…

In reply to by 101 years and …

Batman11 Tue, 07/11/2017 - 12:52 Permalink

Were the tulip bulbs in 1600s Holland a good investment?As long as you weren’t one of the biggest fools who got left holding the bag at the end, yes.The lure of easy money has made the capital gains of speculation a firm favourite for four hundred years. We all love to have a flutter through real estate and hope we won’t be that biggest fool that buys at the top.When you add debt (bank credit) into the mix, this is when things get dangerous. Investors losing their money is one thing, collapsing economies and the global financial system another.We are missing that critical distinction between “productive” investment and “unproductive” investment when it comes to bank credit.Productive investment goes into business and industry; it generates the money to make the repayments and gives a good return in GDP.Unproductive investment goes into real estate and financial speculation; it doesn’t generate the money to make the repayments and gives a poor return in GDP.The UK used to know what it was doing until it went neo-liberal with Thatcher:https://cdn.opendemocracy.net/neweconomics/wp-content/uploads/sites/5/2017/04/Screen-Shot-2017-04-21-at-13.53.09.pngThe bank credit pours into real estate and financial speculation.The US has never really had a clue:https://cdn.opendemocracy.net/neweconomics/wp-content/uploads/sites/5/2017/04/Screen-Shot-2017-04-21-at-13.52.41.png1929 and 2008 stick out like sore thumbs; bank credit going into financial speculation and stocks (1929) or real estate (2008). Leveraged financial speculation with bank credit.To understand the problem we would need to understand money and debt, but we don’t.“…banks make their profits by taking in deposits and lending the funds out at a higher rate of interest” Paul Krugman, 2015.A 21st century Nobel prize winner has no idea, monetary theory was better in the 19th Century.Monetary theory has been regressing since 1856 as progress isn’t always in the forwards direction.“A lost century in economics: Three theories of banking and the conclusive evidence” Richard A. Wernerhttp://www.sciencedirect.com/science/article/pii/S1057521915001477

Batman11 Batman11 Tue, 07/11/2017 - 12:55 Permalink

People do like to have a flutter on real estate and our Central Bankers, who are supposed to provide financial stability, are not on the ball.The early 1980s see the beginnings of financial liberalisation and the late 1980s sees the following crises, e.g. US S&L crisis; UK, Japan, Australia, Canada and Scandinavia real estate busts.More financial deregulation leads to 2008; the Euro-zone crisis; Irish, Greek and Spanish real estate crashes.2008 is just another real estate bust, leveraged up and transmitted internationally by complex financial instruments. As the global bust hits the Euro-zone, it crumbles.Australia, Canada and Scandinavia are queuing up for their second real estate bust.They still haven't got it.Australian and Canadian Central banks are now talking of tightening because they have no idea what they are doing.

In reply to by Batman11

Albertarocks Tue, 07/11/2017 - 12:58 Permalink

As much as we love to hate Dimon for his gigantic part in all this, and for his gigantic part in the manipulations (admitted) in the silver markets, this time he's speaking the truth.  What he's warning about is very real.  The rush for the exits will be like nothing ever seen before in global markets.  Therefore logic dictates that once everybody 'gets it', the crash will be exceedingly fast.And that means collosal, disruptive beyond what we could imagine on a calm day like today.  Panic will ensue and that's when the banking cartel will offer up some demonic solution that would only enslave humanity further.  It's their 'solution' that worries me most.

NoWayJose Tue, 07/11/2017 - 12:56 Permalink

Oh please - we are making billions off QE - don't stop it!

The fact that they are worried about the unwind is exactly the reason it needs to be unwound!