Market sell off can resume. Next up August 26th @ Jackson Hole bitchez.
NO QE3 [Yet]
Gold just launched
And so it must be asked, if no QEx is forthcoming, who will be buying the 50% - 70% of our debt that the Fed was swallowing on a weekly basis? Unless I missed a memo somewhere, China is choking on what they already have.
Even at these levels of induced fear, there's only so much private demand out there seeking the 'safety' of Treasuries and I would guess not near enough to keep the lights on in the dear old USAA+.
On the other hand, perhaps all the Bernank needed to do today was buy 3 weeks until the meeting in the Hole...
Possibly, all the B needed to do was instill a kind of "reverse fear." I think that rip your face off end-of-day move did quite nicely in that respect. Wasn't that a pregnant pause (in retrospect) between 2:15 when the announcement came out and about 2:40 when the dark clouds parted to let the B shine through? I wonder how much that kind of massive manipulation costs on an hourly basis.
On the other hand, how much has volume decreased over the last 2.5 years? Does high-frequency trading make up for the lower "real" trading volume? I don't know. I almost (lol, not really) feel sorry for Wall Street.
It's virtually a done deal; QE by any other name is still QE - and that is the subtext on the Fed statement today. Goldman this afternoon said the Fed presented an easing bias when it indicated that it is prepared to employ additional easing steps as appropriate. In other words, there will be barrels of liquidity until the election is out of the way.
Besides, this is the classic strategy to reduce the debt burden when it is out of control. And it makes equities preferable to bonds, which are granting no yield for the next two years.
We could see QE 3 announced (but not so named) at Jackson Hole in late August; any further deterioration in the US economy will make it that much easier to justify. I’m not sure two weeks is enough for more economic erosion to happen, but the jobs data are almost guaranteed to remain dismal, and manufacturing is unlikely to get a bounce into the fall. So my guess is the Fed will be printing large scale in the autumn.
Aaand stawks are down sharply at the open less than 24hrs after the new Fed strategy is rolled out.
In case you were wondering, yes both gold and silver are up, with the metal of kings yet again testing Santa's angel.
Is it wrong to smile at our own demise?
What is this Santa reference that I keep hearing. Who is this person?
well, it's the autumn, and we still haven't had the ink spill that some of us (including me) expected by now. Granted, the US and the EU have continued to deteriorate at breathtaking speed, but still Bernanke is not squeezing the trigger. Apart from back channeling a fortune to help sustain european banks, he has really been quite focused on choosing the moment for the domestic booster rocket. Any guesses on how much longer he will wait before unleashing more printing?