Are you intentionally deceiving yourselves, or do you really not understand what “Catch 22” means?
As I wait agitatedly for the coming “fireside chat with the Bearded One”, my head resting on the palms of my hands, I can feel myself slowly digging my thumbs into the side of my eyeballs. While this may sound uncomfortable, I assure you, it is much more relaxing than letting my eyes read the garbage being distributed through the internet.
How many times, people??
How many times are we going to play this stupid game? How many times do I get to listen to you declare confidently that the next round of quantitative easing is just around the corner, only to reach the corner and watch you crumble in disappointment, just to jump back up five minutes later and start the whole cycle over?
How many times can you be wrong?
Now, in light of three consecutive quarters of mistakenly calling for quantitative easing, the most vocal of the cheerleaders are trying to tell me that it doesn’t even matter if Bernanke ever announces QE3. Because he is definitely going to do more QE, so if he never announces QE, it doesn’t matter, because QE is coming…
“All that matters is the perception, Cain. PPPSHSHSHSHH. Don’t you know that?”
Let me tell you when QE3 is going to be announced…about two months after your finances have been so thoroughly shredded from retarded commodity investments that your broker’s banker is calling THEM for margin settlements.
Take a look at M1, and tell me what about this was not already thoroughly known:
Where is all the “mysterious policy response” that I’ve been hearing of? There doesn’t seem to be much responsive policy at all in these numbers; no Federal Reserve fighting to keep the dollar low.
Why would they need to? Bernanke sneezes and people short Benjamin Franklin.
It seems like everything coming out of the Fed has been pretty much thoroughly anticipated. You know where unanticipated policy has been coming from? Europe. Japan. The US is a bedrock next to everywhere else.
My point to this is simple; if you keep expecting QE3, you’re never going to get QE3. Bernanke isn’t going to devalue the currency with this much hot money pressing equities, commodities, bonds, etc.
Come on! The man did attend a prestigious school, and has done this his entire life. This is not his first rodeo. He has thought about all of these things considerably. You and your two years of policy experience are not about to outsmart the man whose life has been dedicated to this endeavor.
Bernanke wants you thinking he’s going to print. That’s when you’re putting your neck on the line.
Let me tell you exactly what’s going to happen. Ben will let you talk your talk, and bet your wad. He’ll sit patiently and let you keep the wheels of capitalism turning for him; making horrible investments at lofty prices. There’s no need for him to worry about the capitalization of banks when markets can’t seem to get enough BAC and C and JPM…expecting that Ben is secretly worried about the capitalization of banks.
There’s no need for him to worry about the capitilization of our government when markets can’t seem to get enough government paper…expecting Ben is secretly worried about the capitalization of our government.
There’s no need for him to worry about mortgages when markets can’t get enough mortgages…betting Ben is going to fret and buy more mortgages.
And then, just when the majority of people are panicking that Ben isn’t coming, and selling off hard, and the threat of dwindling investment is ACTUALLY a concern (not just a specter of concern), that’s when Ben will come in to assist. But that’s the bitch of it all, isn’t it?
In order for the mindset of the day to triumph, it first has to lose. Big.
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IMHO, your best post ever.
Thank you
Ditto, good shit!
Nice post Cain.
Just remember God takes care of stupid people and drunks. And right now we both at the wheel of trading platforms.
This QE anticipation can go on for a long time, especially in an election year. After Nov, regardless who is in office all bets are off.
I know you’re right. It infuriates me, but you are.
Nice post. I’m constantly amazed, and I’ve been doing this for quite some time, that people believe what they want to believe regardless of what the market tells them.
There will be no additional QE unless things get bad again.
.. We are ADDING jobs each month regardless of what politicians say.
.. Corporate balance sheets are in great shape.
.. Europe is in the shitter because they’ve chosen austerity over growth.
Back to trading…
Yep. The only thing that concerns me about the US is not knowing how much of our performance is tied to trade with Europe. Because when they decide to persue growth policies (Hollande), that $EURUSD is going to drop a ton.
Good analysis Cain.
While the reckoning is certainly on the horizon, I wouldn’t expect things to fall apart so quickly with FB IPO in the pipeline: we either do a quick flush and it’s off to the races, or it’ll be a sell the news event and we’ll melt up until then.
Then again, the fact alone that I’m basing my market analysis on a company that couldn’t even compete with 5% of AAPL might be a red flag. Noted.
Ben does not want you to think he is going to print. He’s been saying that forever. but people think he is anyway. He will keep doing what he’s been doing. He wants to be consistent more than anything, and keeping the banks solvent is an important thing for everyone.
Great post Cain!
I think people envision Bernanke sitting at the Fed watching the market tick for tick. Two days of selling and his mind starts plotting ways to burn shorts. Yes they have been incredibly accommodation in the past few years, but at the end of the day the Fed is concerned about whether or not a system that seems to be perpetually on the brink of disaster, will actually fail. A garden variety 10-20% correction doesn’t necessarily concern them if institutions aren’t in serious threat.
I think at this point the Fed has successfully priced themselves out of the treasury market. If the banks don’t want to lend at a rate people are satisfied with while ZIRP is in effect, then swapping more treasuries for reserves isn’t going to make a damn bit of difference. Clearly at some level lending his happening, or M1 would be flat lining. As long as ZIRP is in effect the fed can do nothing and in times of crisis we will hit another record low in treasury yields. This gives them an incredible amount of freedom to just sit and wait. Short of a major institution/country failing where money could literally go to money heaven, in times of crisis funds will eventually be rotated out of treasuries and back into equities/commodities. And America, being the best house on a worst block, is the first in line for those funds and as a result gets a constant bid under everything associated with it.
The Fed has created a machine that no longer needs them at the helm. Evil genius I tell ya.
Awesome post, as usual.
We’re just a bunch of salivating dogs as the bearded one rings his bell.
Huzzahs, Sir.
Carry on.