QE3 Levitation Day 2

Yesterday we said that the "2010 Post-Jackson Hole No Volume Levitation Has Begun." Sure enough Day 2 is in the books. And anyone who recalls those fun days of deranged volatility from a week ago, when the DJIA moved +/- 400 points in a day, you can kiss those goodbye. The new no volume levitation regime is the same as the old no volume levitation regime, experienced so well between August 2010 and March 2011. The market will proceed to price in central planning in its most recent iteration of QE3 day, after day, after day, until September 21, and if nothing is announced then, until November 2, and then December 13, and so on, because the levered beta pursuit, aka "career risk" trade is now back on. It also means that the Fed will soon have to resume monetizing the $2.4 trillion in debt, well above the total excess reserves held by banks currently, that will be issued over the next year (did our good readers forget about all that debt that needs to find a buyer?). And while stocks are picking up the now standard 10 ES points per day, gold will one day very soon declare its independence from this centrally planned bullshit and just take off on its way to a self-imposed gold standard, which also means first 4, then 5, then increasingly more zeroes when expressing its price in reserve bank toiler paper terms. Incidentally, just like last year "nobody" could see QE2 happening, it may be time to put some money in Paulson & Co. which has been all but left for dead - somehow he always pulls out the centrally assisted hail mary in the last minute.

What is truly sad is that our fearless centrally planned leaders have officially run out of ideas and the only thing they can do is regurgitate the same policy error that did not work last year.

Oh well, at least everyone knows by now how it all ends: stocks unchanged for the year, gold up 30%


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