I’ve always been a big fan of QE. It made my life easier, sort of like a drug that only made me feel euphoric and safe. But ever since the evil Yellen regime took over the Fed, from legendary American hero, Dr. Benjamin Bernanke, the market has been hard.
Now, I am going to gloss over a few points, regarding the prospect of the Fed stepping in to stop the deflationary vortex. Your opinions on whether or not the Fed “should” do more QE is irrelevant. All that you’re required to do is make deductions and logical leaps, without hurting yourselves.
This is the Federal Reserve’s dual mandate:
“The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long run growth of the monetary and credit aggregates commensurate with the economy’s long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices and moderate long-term interest rates.”
In other words, the Fed is targeting inflation, availability of credit and now the jobs market. In their recent statements, they said full employment and 2.5% inflation rate was part of their new missions to make America great again.
What has transpired in recent months?
Well, the oil and gas industry, a segment of the economy that has created over 1.8 million jobs since 2008, is in ruins. Am I exaggerating? ABSOLUTELY NOT. If the price of crude is permitted to go to $40 or $30 per barrel, every single worker in the Bakken shale will be laid off. The result of massive job losses and calamitous drop in oil will result in a much lower than 2% annual inflation rate.
Ask yourself this question:
If the Fed was perfectly willing to stimulate asset prices when oil was $100 and the oil industry booming, why wouldn’t they opt to stimulate now when the world is 100% assuredly sliding into a deflationary vortex?
Do we simply sit around and wait for Russia to implode, then work out a deal via the IMF 3,000 Dow points lower? Or, does the Fed, for once in their pathetic lives, step in front of this crisis and offer price stability?
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FIG
Bam, +1
But QE is “deflationary at the margin” because @Groditi said so.
sort of like a drug that only made me feel euphoric and safe
SOMA?
It’s time for a change in regimes. It’s natural. It happens one way or that way. Sometimes you have to go for the flow.
Are you suggesting we send Fly to the guillotine?
No. He’s too yummy.
12/08/2014
Why James Bullard Won’t Bail Out The Market’s Next Correction
source: that one
Yellen was sent in by the Borg to clear out all the hack fund managers that thought they were god during the QE regime. Pump and dump is as old as time. Or maybe it’s just easier to explain it away like that.
Long live the USA! Everybody is taken their coin and bringing it to the great country of AMERICA! To buy our dollars and our stocks.
Prepare your gay selves for a rally.
QE won’t save us.
Bernanke needs to conduct the coup and seize control of the Fed again, for the sake of humanity.
or at the very least whiten Yellen’s teeth. Eeesh
How many S&P points and US jobs are the Saudis and obaMao axis willing to sacrifice, to take down the Russian / Iranian alliance?
I was expecting the Fed/PPT to step in Sun night/Monday. Surely we’re getting close to intervention; I can’t see them sitting back and watching the world economy fall back into recession.
Granted, they will be criticized for whatever course of action they choose, but Central Bank intervention is the new normal/playbook. Just BTFD.
No one in the media has even mentioned this. The violence and the expediency of this move demands a quick response from central banks.
The fucking media, continues to smile and clap for lower gas!
Either ignorance or obfuscation. getting more substantial either way
Is it really the end of civilization as we know it?
ok, so Fed ramped markets to all time highs with QE, it looks like they’ve built a bit of a cushion.
Crude folding like a cheap tent, some surmise to put pressure on Russia. Perhaps, and in fact this is true, US shale will be the collateral damage to try to put Putin out of business. Whatever is left over of the shale projects will be picked up by the big boys capped and shelved for a while.
In the meantime, Saudis are pleased and they are able to help put the screws to Putin as part of the deal.
CBs will step in again but not for a while, the banksters are in on this play book, and there hasn’t been a meaningful correction in some time.
correction If this is true
Tell me: Why the fuck does Sauidi (or any major country) want to “put Putin out of business”?
Sheesh maybe ’cause he isn’t playing ball and doing what he wants in Ukraine? End running Obama last fall over Syrian crisis. I really don’t know why they want Putin out.
Not up to FED. World can either have US US foreign policy of Russia/China regime change and or containment or global economic growth. Not both.
Shitters full.
Okay Eddie.
This:
http://seekingalpha.com/article/2756775-black-gold-loses-glitter
No conclusions but a succinct summary of where we are.
Sheesh maybe ’cause he isn’t playing ball and doing what he wants in Ukraine? End running Obama last fall over Syrian crisis. I really don’t know why they want Putin out.
Why the fuck is Russia going to zero right before the end of the year? For the love of bonuses that is the scary shit going on right now. Where is the stability? Godzilla can not even catch a bid. We need more coke.
https://www.youtube.com/watch?v=xFwdSLINT8o
Fly use the vid above when appropriate.
Seriously……….What can the Fed actually do? What “act(ion)” can they take?
Historically, buy the futures.
What if the Fed acts and the market ignores it? A move this early be interpreted as desperation. They might wanna save that bullet. We need something though. Expecting a more dovish tone at the very least
The type of intervention I’m referring to wouldn’t be noticed by 99% of investors.
The SP500 is 4% off it’s all time highs and you are clamouring for fed intervention. Seriously Senor Fly, you used to have bigger balls than that.
4% in the market that counts. Fuck the Russian markets and their assfuckery
Oil price falling is a double edged sword. Kills a new sector of the economy with tremendous promise, makes every single thing people buy cheaper, and gives consumers more discretionary spending right now, at Christmas.
The problem isn’t the sp500; it’s dislocations in multiple markets. Oil’s collapse is triggering margin calls and forced selling across all investment instruments. This is how contagion spreads.
Honestly, I’m shocked at how forced liquidations in oil have spread so deeply. There must be a lot of undercapitalized investors playing with oils.
And yet all these forced dislocations of which you speak have managed to whack 4 whole percent off the market.
Look at your charts, the bulk, the real meat of the moves down in gold silver copper, were done before oil shat the bed over the last few weeks. Your hypothesis that it is margin calls from overleveraged oil investors causing dislocations is demonstrably false. Look at Silver for example, a straight shot down for years
Arab Spring 2? Seems like oil would have to stay low for a protracted period of time for such a thing to occur. http://www.marketoracle.co.uk/Article48627.html
Seriously guys. Calm down. We are only down 4% in the market. Fed has to let the market bleed at least 20% before they act. If I was long I would step to the side and chill for Christmas. You were all saved by 3 central banks in October. Look at this rally as your second chance.
If they wait much longer, they won’t be able to stop it at 20%. It will be 2008 redux.
I do not understand, All the worrying
What do people expect
After years
Of stock market pumping
Does it not make you more vulnerable?
Yes! It does! Yes
You know what. It makes you more vulnerable
What the idiots who run the world cant understand is that Deflation is Good. That means that Americans money is Gaining Value so that it goes further and has more purchasing power. Look to Venezuela or Russia for the exact picture why inflation is horrible and not what you want. If the fed steps in again w/ more QE people may lose faith in the USD as they realize its QE infinity w/ no exit plan. When the majority is poor, prices must fall so that they can afford to consume. This was all an asset bubble, we havent made any progress and in many respects the economy is actually worse off than 2008. We only delayed the reckoning…
mtpennybags, deflation is good if you’re not a debtor. In this new Keynesian world, all governments are debtors which is why inflation is ‘good’ for governments and why they want inflation. They pay back their debts in devalued currency.
No need for QE at this point, but there needs to be liquidity added to the world financial markets. There are ways to do that other than QE.
Deflation is horrible you rank idiot.
Only because Central Banks royally fucked us.
The Bank ran by bankers bailed out the banks and decided to give them all of the money and not lend it out for any purpose other than stock buybacks and emini futures.
There’s both good and bad deflation.
Good deflation is being able to buy computing power at a cheaper price every year because of tech advances etc.
Bad deflation is the one which works into income and has a direct impact on
debt.
A future solution to the current problem is to require higher margin requirements. I don’t like to ever use margin, but my account is a portfolio account and if I wanted to, I could severely overlever myself. Simply put, I could not only blow myself up quickly, I could also cause unrecoverable losses for my broker if he waited until near the end of the trading day for a margin call.
http://en.wikipedia.org/wiki/Portfolio_margin
OK, now we’ve got some problems. Breaking news: Bank of England: Three UK banks need to raise more capital
http://www.cnbc.com/id/102271137
Nice writing, Senor Fly.
more QE is fine by me
Im not sure Bernanke would be doing anything differently to what Yellen Fed is doing.
Everyone needs to get off the crack pipe at some time.
come upstairs and have some coffee
Dude, listen to yourself.
You learnt to break your rules (whatever they are) precisely because of the Bernanke put.
That’s what you need to unlearn.
Juicy Lickhermore – great name!