The Mainstream meme for the end of QE is as follows: The economy has improved and healed to the point where the Fed is comfortable with a normalization of it 6 year extraordinary policy measures.
Why do you think the Fed has ended QE? I am curious to see what many of you think. Do you agree with the above statement and if not what is your reason for the discontinuation of QE. Let me know what you think.
On a side note, if Draghi does not announce monetization of sovereign debt tomorrow then we go lower in global markets. If he does we go higher but the day of reckoning will only be temporarily delayed. A mere threat to do it will not be enough to keep this Frankenstein market levitated.
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Pretty simple…..they probably are a little uncomfortable with the amount of total supply they own.
To share the fun of currency devaluation? In order for the yen to crumple….which is desired…and the Euro….let’s face it they need to export deflation…There needs to be limited USD debasement at work. Those two economies seem to need help right now more than the US. I’m a making the assumption that CB’s work together a bit. Wouldn’t be that surprising.
To save the greenback. Total guess.
They stepped back so that when the next leg down occurs they will go nuclear with QE4.
the end of QE3 is a side show
At the end of the day Joe retail is left holding the bag. My thinking is on next leg down Joe gets scared into bonds, fed distributes balance into retail and then you govs across the globe work on thr suggestions tabeled from IMF about duration extension.
They ended it because with the $USD rallying, commodities (in particular oil) deflating, the stage was set and the window of opportunity opened to declare inflation dead, therefore all the inlation hawks were wrong, they were right, mission accomplished, finito.
I think they realize that this bull market is long in the tooth and if a recession hits before they have pulled back on the stimulus, they will have no ammo left to fight with.
The economy in the U.S .has improved.
Most young people with a degree have a job. Interest rates are low and
seem stable. I think the Fed ended Q.E to see how resilient the Economy is.
Take away the walker and see if
it walks.
They ended it because they said they would. Now time for QE4.
I would like to say because prudence dictated they end the cash infusion to allow markets to stand on their own and begin to function as intended and having an improving economy (not a great one) lowers the risk of a crippling downturn. Is that really why? Conspiracy K-Mel says someone is working to influence the 2016 elections.
I think Jason and Jimmy two times have it right. We are now in concerted global QE… follow the sun around the world. They’ll be back. We are all Japan now. What I do seriously wonder about is if we are trading ‘dead’ markets.. .as in beat a dead horse.
They are tightening so that they can ease at a later needed date when it is needed more…
Blue,
What would be your answer to this survey? Thanks.
they are just the ringleader, step right up Japan and Europe you’re turn for a few legs…nothing to see here continue to believe in nation states lol
They also own too much of the Treasury market… smaller deficit due to shale oil production.
To keep power dry and reload.
At that high level I think it’s really a pretty simple thought process and decision.
The main thing for the Fed is staying in character and executing the script. It’s just theatre. Much smaller people are getting much more agitated about this than the Fed staff. i.e. bring on the next act! oops sorry about the collateral damage to the citizens, what’s for lunch?
get the intern to bring back Shake Shack….
Meant to say.. keep powder dry.
Two main reasons: make it seem like they aren’t just monetizing debt and so they can restart it when the market crashes again
there is no REAL growth in the world expect for debt
to maintain our standard of living, we are fighting the beast of deflation with the printing press..our turn for more paper mache will be soon..
I don’t really believe it’s been ended. I think the baton was just passed to Draghi for the time being. If Yellen decides she wants the baton back, she will get it and we will call that QE4 – or QE to infinity (whatever)
End it on a high note, look awesome in the process, keep things propped up behind the scenes (extra conspiracy theory) and then when the poor underlying structure to the market peeks it’s ugly head out they can say it wasn’t them that caused it.
To allow Japan and eventually Europe to have their turn.
Presume for a second the fed’s two main concerns are really the rate the gov’t must pay on its debt and the US economy. Stopping QE helps both, commodity price deflation helps the US economy if consumers drive 65+% of the economy, and the continuing increase in the dollar provides a return to foreigners as they step into the resulting void left by the Fed (that is, the lack of interest% available on sovereign debt is made up by fx). No need to increase rates if fx provides the investors the return.
this has been happening since 2011
It ended?
They didn’t end it. They just said they did. I believe very little of what they say.
The amounts, the timing – damn lies.
I do believe it when Belgium bought all those bonds – yea right.
Everything is for perception.
They ended it because they had no choice. Pension funds and insurances must hold a certain percent in bonds. They cannot survive if yields stay near zero for more than a small number of years as their laddered portfolios eventually are all yielded 2 pct or less. The fed had to stop to give rates a chance to rise so those massive funds won’t go belly up.
QE hasn’t ended, their balance sheet is still expanding despite the fact that their flows of buying are over. As long as they hold the assets they have, we aren’t tightening. The USD is rallying and the economy is slowly improving. They knew that the BOJ was going to take the baton, and this buys them some time to save up some bullets for the next time they have to support the market.
…and to maintain a perception of control; look, we did what we said we were gonna do kinda thing, we got this…in the meantime, all sorts of shit is going on behind the scenes…transparency my ass 😉
Bluestar, interesting overnight action that bears monitoring .. gold reversed a further slide and now sits poised for a counter-trend rally .. /es also reversed further gains to be slightly neg at the moment .. but a $1.65 billion SPY SOS# has my attention .. never seen one that big, ever .. today will be interesting & informative
http://online.wsj.com/mdc/public/page/2_3022-mflppg-moneyflow.html?mod=mdc_leader
BlueStar – What are you thinking in here? Did he say enough by saying he was going to expand the balance sheet?
I think that they are aware that is has been ineffective and are getting scared of the amount of debt (insolvency) that is on their Balance Sheet.
JohnJay,
You just replied to yourself four times consecutively……whats weirder is that you repeat the same thing in each comment just re-worded. You are truly an odd human. For the sake of innocent people in your community, please get back on your meds immediately. That is all.
Billiejones,
Keep coming
I will tabulate responses and my own soon. Thanks for your participation.
Hi BlueStar,
I have no idea why the Fed ended QE. That’s not really important to my trading. But I find it fascinating that not one person that I’ve come across thinks that the Fed ended QE because it served its purpose and is no longer necessary. I’m not saying that’s the case, but it’s interesting that no one seems to think that’s the reason.
5 days later .. no tabulation. Did you go to Vegas and are still there? Woke up on a random couch? Chop chop son. Your blog rocks but you don’t post enough. We want more!!
…the illusion of the Fed having a firm grip of the situation is of utmost importance to the CONfidence of the dollar..
Rags to riches,
lol
TraderX,
Great point.