Pre-Fedline Open Thread

120
Wed, Jan 29, 2014 - 8:59am

With just five hours to go, here's a thread for your guesses as to what The Bernank and The Fellen will announce this afternoon.

My personal guess is a series of probabilities. I was on the record since August claiming that The Fed would offer a BLT to everyone in December. A BLT? A Bernank Legacy Taper. By trimming $10B off of the stated monthly money-printing, The Bernank could claim that "before he left office, he set The Fed on a course to eliminate QE by the end of 2014. The fact that they didn't is my successor's fault, not mine".

The Bernank is technically still the Fed Chair until Saturday so I think there is a 0% chance of a hike in QE, at least for this meeting. Instead, I see this:

  • A 50% chance of a further reduction of the stated number by $10B/month. IF this happens, do not be surprised if the entire $10B is taken from the MBS side, leaving the total stated number at $40B treasuries and $25B MBS.
  • A 10% chance that the only reduction or "taper" is $5B/month off of MBS, leaving the stated number at $40B treasuries and $30B MBS.
  • A 40% chance of no change at all due to "economic conditions", "emerging markets", whatever excuse they need to borrow this month.

Why would they need an "excuse"? Just be sure to check these charts before you post your personal prognostication:

TF

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turd [at] tfmetalsreport [dot] com ()

  120 Comments

ggnewmex
Jan 29, 2014 - 9:01am

First

Wow, what bummer of a speech from O'bummer!

My the new MyRA will be great. I am sure he promises you can keep your old IRA

!!!

Jan 29, 2014 - 9:07am

Gold price is saying 10b taper to me

Looks like a setup for a "suck and smash" on taper news, to me... suck in longs prior to the announcement with a nice pop, then harvest the new longs on "news" of taper (that everyone expects so it isn't really news at all). Suck them in, run stops, then move on. Also known as the Devil's tower Formation:

Personally, I am hoping for a quick 24 hour churn and burn, then resumption of our nice uptrend with silver doing a little more to play catch-up to gold.

JMO- and Happy Wednesday Turdites!

Sir Peter Latterman Fortenton
Jan 29, 2014 - 9:09am

always seems to get smashed

always seems to get smashed down at some point during these meetings, i agree with Pining, i've seen it rise higher pre meeting and then get smashed $30 instantly as the minutes are released

Peoples Front of Judea
Jan 29, 2014 - 9:16am

currency devaluation

looks like the race to the bottom has finally started....how long can the usa hold back interest rate rise.....taper away USA

Jan 29, 2014 - 9:29am

$10 Billion Taper, MBS Only

Playing off TF's amazingly accurate prediction from August, let's look at things keeping residential real estate in perspective.

The Fed bought MBS because all that paper was worthless, and if valued at market, would have caused TBTF banks to fail.

But now, those banks have had five years to sell off their bad paper at 100 cents on the dollar, where it is parked at the Fed. I have got to believe that the big banks have sufficiently offloaded enough of that crap paper such that the Fed can taper off those purchases gradually so as not to leave too much non-performing paper on the banks' books.

$10 Biliion is about right to both create the impression of actually, gradually stopping the free FRN flow, while at the same time telegraphing to the banks that the bad paper can continue, so the banks better not dawdle in offloading that junk paper.

As for US treasurey purchases, the Fed is trapped, and the whole world knows it.

Those purchases cannot ever stop or taper at all. If there is any slowdown at all, the interest rates will have to rise to attract bidders, and if rates rise, it will escalate the hyperbolic collapse of the western fiat scheme.

I give it closer to a hundred percent chance of this scenario.

Next month, Yellen will be tested with a crisis, and there will be a massive print fest. So for now, it is simply more perception management. The Fed is still in control, all is good, nothing to see here, keep moving, turn on the Kardashians . . .

Sandiaman
Jan 29, 2014 - 9:38am

Do Nothing

Whatever they do it all a bunch of lies.

sierra skier
Jan 29, 2014 - 9:54am

AAAHHhhh Yes, The Fed Again

Here we go again. Do we QE or do we Reduce QE and what will be the consequences?

ivars
Jan 29, 2014 - 9:58am

OK added more shorts of S&P.

OK added more shorts of S&P. Taper should be above 10 billion-25 billion-if not then 10 but I would expect above now or in some session prior to next FOMC. And most will come from UST side, if not all. There is only so much political time. This is crucial day, as Turkeys CB actions proved. It is panic time , in fact.

If FED tapers strongly Japan, UK, will follow, Swiss are already ahead. EUR shall ease.

As for usage of USA pensions, obvious that they will be used either or to recapitalize FED ( and so pay down part of debt, meaning pensions in asset side of FED, extra reserves in equity ( liability) ) and of course to mandatory purchase UST after FED will be excluded from the game. In the name of protecting pension accounts from excess risk. Fair game, easy to sell to retirees especially after stocks tank 30-40%. Which shall happen in one-2 months time.

Ability to mobilize own countries pensions to pay for UST is very good for currency as we have seen from Japan experience and also keeps interest rates low without QE. So no QE to infinity.

Silver may tank now pretty fast. Could be bottom is not far away. Gold will hold better as long as Turkey manages to continue imports on top of China; India seems to be calmed for time being but who knows what will happen in preelection months till May. Thailand though keeps fighting to maintain India's gold grey import flow through it.

Also I expect govt closing in late Feb-early March. And it could last some time since while govt is closed, there are no statistics to show economy is already in downturn after Q1 2014, and so tightening exercise can continue. Probably till Israel hits Iran and Obama on July 4th announces executive action to stave off inflation from high oil prices.

infometron
Jan 29, 2014 - 9:59am

My two bits worth (revisted)

I think Turd's predictions are more nuanced, especially the conditional he placed on this:

  • A 50% chance of a further reduction of the stated number by $10B/month. IF this happens, do not be surprised if the entire $10B is taken from the MBS side, leaving the total stated number at $40B treasuries and $25B MBS.

If the $10B is taken, in this case, from the MBS side, would that mean the TBTF banks are at greater risk of insolvency? Or would that mean they are just backing away a bit on their on-going highway robbery (with signals to that effect out of Davos and the Whitehouse with all the faux concern about income inequality)? Either way, it would seem the effect on stocks would be bearish...

If the $10B is taken away 100% from the treasury side, perhaps that would mean the FED has something else up its sleeve to compensate (e.g., compulsory MyRA's or just more clandestine purchasing?), and that the stock melt-up party is still on.

If the $10B is taken away 50% 50%, I suppose all of these considerations would still obtain to some extent, no? In any case, it appears the FED is on a tightrope here. The one thing that seems to be 100% certain is that no matter what happens, it will be used as an excuse to smash precious metals, but if not, wouldn't THAT be a surprise!!

Here were my two bits worth from last week...

https://www.tfmetalsreport.com/comment/374496#comment-374496

Mr. Fix
Jan 29, 2014 - 10:00am

It really doesn't matter what they say:

The only thing that is guaranteed, is that the size of the lie will increase!

Key Economic Events Week of 10/21

10/22 10:00 ET Existing home sales
10/24 8:30 ET Durable Goods
10/24 9:45 ET Markit flash PMIs
10/24 10:00 ET New home sales
10/25 10:00 ET Consumer Sentiment

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Key Economic Events Week of 10/21

10/22 10:00 ET Existing home sales
10/24 8:30 ET Durable Goods
10/24 9:45 ET Markit flash PMIs
10/24 10:00 ET New home sales
10/25 10:00 ET Consumer Sentiment

Key Economic Events Week of 10/14

10/15 8:30 ET Empire State Fed MI
10/16 8:30 ET Retail Sales
10/16 10:00 ET Business Inventories
10/17 8:30 ET Housing Starts and Bldg Perms
10/17 8:30 ET Philly Fed MI
10/17 9:15 ET Cap Ute and Ind Prod
10/18 10:00 ET LEIII
10/18 Speeches from Goons Kaplan, George and Chlamydia

Key Economic Events Week of 10/7

10/8 8:30 ET Producer Price Index
10/9 10:00 ET Job Openings
10/9 10:00 ET Wholesale Inventories
10/9 2:00 ET September FOMC minutes
10/10 8:30 ET Consumer Price Index
10/11 10:00 ET Consumer Sentiment

Key Economic Events Week of 9/30

9/30 9:45 ET Chicago PMI
10/1 9:45 ET Markit Manu PMI
10/1 10:00 ET ISM Manu PMI
10/1 10:00 ET Construction Spending
10/2 China Golden Week Begins
10/2 8:15 ET ADP jobs report
10/3 9:45 ET Markit Service PMI
10/3 10:00 ET ISM Service PMI
10/3 10:00 ET Factory Orders
10/4 8:30 ET BLSBS
10/4 8:30 ET US Trade Deficit

Key Economic Events Week of 9/23

9/23 9:45 ET Markit flash PMIs
9/24 10:00 ET Consumer Confidence
9/26 8:30 ET Q2 GDP third guess
9/27 8:30 ET Durable Goods
9/27 8:30 ET Pers Inc and Cons Spend
9/27 8:30 ET Core Inflation

Key Economic Events Week of 9/16

9/17 9:15 ET Cap Ute & Ind Prod
9/18 8:30 ET Housing Starts & Bldg Perm.
9/18 2:00 ET Fedlines
9/18 2:30 ET CGP presser
9/19 8:30 ET Philly Fed
9/19 10:00 ET Existing Home Sales

Key Economic Events Week of 9/9

9/10 10:00 ET Job openings
9/11 8:30 ET PPI
9/11 10:00 ET Wholesale Inv.
9/12 8:30 ET CPI
9/13 8:30 ET Retail Sales
9/13 10:00 ET Consumer Sentiment
9/13 10:00 ET Business Inv.

Key Economic Events Week of 9/3

9/3 9:45 ET Markit Manu PMI
9/3 10:00 ET ISM Manu PMI
9/3 10:00 ET Construction Spending
9/4 8:30 ET Foreign Trade Deficit
9/5 9:45 ET Markit Svc PMI
9/5 10:00 ET ISM Svc PMI
9/5 10:00 ET Factory Orders
9/6 8:30 ET BLSBS

Key Economic Events Week of 8/26

8/26 8:30 ET Durable Goods
8/27 9:00 ET Case-Shiller Home Price Idx
8/27 10:00 ET Consumer Confidence
8/29 8:30 ET Q2 GDP 2nd guess
8/29 8:30 ET Advance Trade in Goods
8/30 8:30 ET Pers. Inc. and Cons. Spend.
8/30 8:30 ET Core Inflation
8/30 9:45 ET Chicago PMI

Key Economic Events Week of 8/19

8/21 10:00 ET Existing home sales
8/21 2:00 ET July FOMC minutes
8/22 9:45 ET Markit Manu and Svc PMIs
8/22 Jackson Holedown begins
8/23 10:00 ET Chief Goon Powell speaks

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