• Putting The Fallacy Of QE Into Perspective

    You can’t turn on a financial news program without being bombarded by panelists as well as the hosts ready-at-the-draw to pounce on anyone with an opposing view as to the ‘effectiveness’ of the Federal Reserve’s quantitative easing program (QE).
    Once again this played out just the other day on CNBC where this time it was Peter Schiff who found himself in the cross hairs of today’s version of ‘ambush the guest.’
    You can agree or disagree with anyone’s viewpoint and I even encourage people to question mine if they see fit. However, you don’t have to be a rocket scientist to watch many of these anchors to witness for yourself what now has turned into all the appearances of – an ambush.
    And the recurring foil used to defend their attack? (paraphrasing but it’s the gist) ‘You’ve been wrong about monetary policy for if you were invested in this market, you would be making money. And those who have listened to you have missed out. So won’t you now admit you were wrong?!’
    Schiff wasn’t the first nor will he be the last and can defend his own calls and does so. But no one on these shows cares. And this is clearly visible for all to see in these exchanges.
    You hear calls of ‘Admit it!, Admit it!’ over and over again as someone is trying to clarify a position. Clarify in the real sense of the word. Not obfuscate it as the hosts or other ‘guests’ are trying to imply by shouting over them.
    It’s now gone from amusing to watch, to down right pitiful. Many times I’m left watching these hosts channeling that old quote, ‘Do you have no shame?’

    This post was published at Zero Hedge on 10/29/2014.


  • Gold Daily and Silver Weekly Charts – FOMC and the Usual Shenanigans

    The Fed announced the end of QE III today as had been expected by almost everyone. And after a pause on the news, the dollar soared, precious metals and oil dumped, and stocks slumped, although stocks came back to nearly unchanged by the end of day.
    See the commentary on stocks below for more about what the Fed said today.
    Nothing has changed. Not one thing. And that is about nine-tenths of the problem that is causing this six year non-recovery for Main Street.
    We still have a rotten financial system acting like an unproductive tax and a drag on the real global economy, sowing malinvestment and distortions in whatever it touches and then some.

    This post was published at Jesses Crossroads Cafe on 29 OCTOBER 2014.


  • CAN THE WALL STREET SHARKS KEEP SWIMMING WITHOUT QE?

    Grandma Yellen is supposed to announce the end of QE this afternoon. We all know that sharks have to keep swimming, or they die. We also know that insolvent Too Big To Trust Wall Street mega-banks need QE, or they die. The entire false recovery since 2009 has been built upon a $4.5 trillion mountain of debt sitting on the Federal Reserve balance sheet. They are leveraged 75 to 1. Lehman and Bear Stearns were leveraged 30 to 1 when they failed and brought down the financial house of cards.
    Our entire economic system is dependent upon an ever increasing level of debt. How long before the Wall Street sharks throw a hissy fit and threaten to bring down the financial system again unless they get some QE4?
    And how many minutes before Grandma Yellen obeys her bosses and complies?

    This post was published at The Burning Platform on 29th October 2014.


  • Santelli Slams The Fed As “Weak-Data”-Dependent; Lacy Hunt Warns “We’re Not On The Right Path”

    Confirming Rick Santelli’s perspective on the unending ‘easiness’ of the Fed, Hoisington Investment Management’s Lacy Hunt states unequivocally that “The Fed will not raise rates in 2015,” and warns that the US economy and monetary policy “are not on the right path,” in this excellent brief interview.

    This post was published at Zero Hedge on 10/29/2014.


  • From This Day Forward, We Will Watch How The Stock Market Performs Without The Fed’s Monetary Heroin

    Mark this day on your calendars. The Dow is at 16974, the S&P 500 is at 1982 and the NASDAQ is at 4549. From this day forward, we will be looking to see how the stock market performs without the monetary heroin that the Federal Reserve has been providing to it. Since November 2008, the Fed has created about 3.5 trillion dollars and pumped it into the financial system. An excellent chart illustrating this in graphic format can be found right here. Pretty much everyone agrees that this has been a tremendous boon for the financial markets. As you will see below, even former Fed chairman Alan Greenspan says that quantitative easing was “a terrific success” as far as boosting stock prices. But he also says that QE has not been very helpful to the real economy at all. In essence, the entire quantitative easing program was a massive 3.5 trillion dollar gift to Wall Street. If that sounds unfair to you, that is because it is unfair.
    So why is the Federal Reserve finally ending quantitative easing?
    Well, officially the Fed says that it is because there has been so much improvement in the labor market…
    The Fed’s language, however, did suggest that they were getting more comfortable with the economy’s improvement. It cited “solid job gains,” citing a “substantial improvement in the outlook for the labor market,” as well as pointing out that “underutilization” of labor resources is “gradually diminishing.”

    This post was published at The Economic Collapse Blog on October 29th, 2014.


  • The Fed’s “Other” Taper: Printing Of New $100 Bills Tumbles By 85% In 2014

    When we last looked at the amount of $100 bills printed by the Treasury’s Bureau of Engraving and Printing, we were a little concerned because it appeared that the Fed’s infatuation with growing bank reserves had finally spilled over into the physical money printing arena, after a record 4.4 billion $100 bills were printed just a year after the Treasury had, at the Fed’s request, printed another 3 billion of the new banknotes. In retrospect this wasn’t a case of the Fed wishing to unleash Weimar upon the US – at least not yet – but merely part of the ongoing process of replacing old $100 bills with the new “plastic” ones. This amounted to over $750 billion in new $100 bills alone being unleashed on the market, well over half of the entire amount of US paper currency in circulation.
    Whatever the reason for the surge, it now appears that the Fed’s wanton money printing hit a brick wall in 2014, and together with the transitory end of QE earlier today, the Treasury’s literal printing of money also tumbled, with just 650 million of the brand new banknotes issued, an 85% plunge from the year before. In fact, the number of $100 bills printed in 2014 was the lowest amount of this higher denomination unleashed into broad circulation since 2004!

    This post was published at Zero Hedge on 10/29/2014.


  • Every Bond Bear’s Worst Nightmare In 1 Simple Chart

    “Everyone” knows that yields have to rise when the Fed tightens, right? With yields so low, “everyone” knows that bonds are the worst investment if The Fed begins to hike rates, right? Wrong! As the following chart from Goldman Sachs shows – over the last 32 rate-hike cycles, 10Y bond yields have compressed after the rate-hike cycle begins… So be careful what you wish for on Fed tightening!
    Post-hike, 10Y yields have dropped notably in the next few years of the cycle…

    This post was published at Zero Hedge on 10/29/2014.


  • CHINESE GOLD DEMAND: Twice As Much As Official Reported Figures

    For some strange reason, the Western official gold demand figures for China are WAY OFF. According to a recent article by Koos Jansen at Bullionstar.com, the Chinese Gold Association reported much higher gold demand than the figures published by the World Gold Council.
    In the article, China Gold Association: 2013 Gold Demand Was 2,199t, wholesale gold demand in China was 2,199 metric tons (mt) in 2013 compared to the 1,066 mt reported by the World Gold Council.

    This is not a small disparity in reported gold demand by these two organizations, but a huge 1,133 mt difference. Surprisingly, the difference between the two is actually greater than total Chinese gold demand stated by the World Gold Council.
    Koos Jansen explains this in the article by writing the following:

    This post was published at SRSrocco Report on October 29, 2014.


  • Why? Because it’s Always been that way?

    There is a very tired mantra out there that gold and silver are the anti-dollar trade. This is reinforced as seen below by whatever machines are controlling the price. Yes, they are machines. These are algorithms devoid of emotion and clearly on auto-pilot as the same rinse and repeat of commercials versus funds shows every week.
    What you see below is a one minute line chart of gold and the $/yen. The inverse correlation is perfect. I have chosen this chart because it illustrates how the two reacted in the perfect inverse to US financial reports, durable goods which was negative and consumer confidence which was allegedly positive.

    This post was published at GoldSeek on 29 October 2014.


  • Goldman Cuts 2015, 2016 EPS Forecasts On “Diminished Global GDP Growth” Just As Fed Surprises With Hawkish Outlook

    It is perhaps the definition of irony that just two hours after the Fed issued a surprising statement that was so bullish on US growth it is as if the past month never happened, as if Williams and Bullard never threatened with QE4 just because the market almost entered a correction, and that made Goldman’s chief economist Jan Hatzius to a express “modest hawkish surprise” that the very same bank, Goldman, whose alum is in charge of the NY Fed (leading to hours of secret tapes exposing the white glove treatment Goldman gets at the Fed), just announced it was cutting its 2015 and 2016 EPS forecasts “diminished global GDP growth and lower crude prices.”
    Here is how Goldman’s David Kostin puts it:

    This post was published at Zero Hedge on 10/29/2014.


  • Meet “OSHbot” Lowes New Store Helper; Goodbye Retail Associates, Hello Robots

    Goodbye Retail Associates, Hello Robots
    The future of shopping has arrived, and it’s not human.
    Not only do robots cost less than humans, they don’t complain, they speak multiple languages, and most importantly, by scanning aisles they know where every item is in the store and can take you straight to it.
    Meet “OSHbot”


    This post was published at Global Economic Analysis on October 29, 2014.


  • Historical figures’ salaries in gold: Leonardo da Vinci

    Region VII, Chile
    Among the masterpieces of the Italian Renaissance, Leonardo da Vinci’s ‘La Scapigliata’ stands out distinctly from the rest.
    The unfinished painting is of a common woman with disheveled hair. It’s remarkable particularly for depicting not the exceptional, but the real.
    Part of da Vinci’s genius was the way he was able to capture life – genuine, unaffected reality, often intense detail. His notebooks reflect the same.
    Leonardo, in fact, passed on to posterity great details of his finances. We know, for example, that around the time he painted La Scapigliata in the early 1500s, the great master was living in Milan and earning a salary directly from the king.
    Leonardo’s journals state that in a ten-month period, he was paid a total of 240 scudi and 200 florins from the king.
    The Italian gold scodo at the time was 3.42 grams of gold, and the florin was 3.54 grams. As of today’s gold price, that adds up to an annualized salary of $72,153.24.
    Bear in mind, this was Leonardo’s ‘take home pay’ as there was no income tax, meaning his gross salary in today’s world would be just over $100,000 to account for income tax and FICA.
    If we were to extend this analogy even further, given that Leonardo was on the government payroll back then as an artist/engineer, we can look up the US government employee pay scale today…

    This post was published at Sovereign Man on October 29, 2014.


  • FOMC Ends The QE Dream, Keeps “Considerable” Period Hopes Alive – Full Statement Redline

    “Steady as she goes” was expected… having kept the “considerable time” dream alive last month, theFOMC ended QE3 on schedule but remained ‘data-dependent’ on reviving it…
    *FED ENDS THIRD ROUND OF QUANTITATIVE EASING AS PLANNED *FED SEES `SOLID JOB GAINS’ WITH LOWER UNEMPLOYMENT *FED: UNDERUTILIZATION OF LABOR RESOURCES GRADUALLY DIMINISHING *FED REPEATS RATES TO STAY LOW FOR `CONSIDERABLE TIME’ *FED REPEATS RISK OF BELOW-TARGET INFLATION DIMINISHED SOMEWHAT *FED SAYS LOWER ENERGY PRICES TO HOLD DOWN INFLATION NEAR TERM *KOCHERLAKOTA DISSENTS AT FOMC, SEEKING QE CONTINUATION And so now the “flow” has stopped; given that “bond buying” did not work, we are reminded of Alan Greenspan’s warning that “I don’t think it’s possible” for the Fed to end its easy-money policies in a trouble-free manner.
    Here is how the Fed pretends it has rarely been more optimistic about the economy:
    READ MORE

    This post was published at Zero Hedge on 10/29/2014.


  • SP 500 and NDX Futures Daily Charts – The Downward Spiral of Dumbness

    “The Committee anticipates, based on its current assessment, that it likely will be appropriate to maintain the 0 to 1/4 percent target range for the federal funds rate for a considerable time following the end of its asset purchase program this month, especially if projected inflation continues to run below the Committee’s 2 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored.
    However, if incoming information indicates faster progress toward the Committee’s employment and inflation objectives than the Committee now expects, then increases in the target range for the federal funds rate are likely to occur sooner than currently anticipated.
    Conversely, if progress proves slower than expected, then increases in the target range are likely to occur later than currently anticipated.”
    FOMC Statement, Oct 29, 2014
    I think Bob Pisani literally squeaked when he read ‘sooner’ in the underlined portion of that FOMC statement, asserting that this was a ‘hawkish’ statement indeed. He did not bother to reference the next sentences that begins, ‘conversely.’
    And I think the wiseguys knew that the Fed was basically saying nothing new, but throwing a farewell bone to the hawk Plosser on the committee, who won’t be around after the first of the year, and the complexion of the FOMC turns decidedly more dovish in nature.
    The US dollar spiked, but forex has a notorious carney game intraday, but that moved key commodities like gold and oil in the ‘right direction’ which is down.
    And the hosts and guests on bubblevision continued to burble on about ‘rate increases’ and ‘amazing corporate profits’ for the rest of the afternoon.

    This post was published at Jesses Crossroads Cafe on 29 OCTOBER 2014.


  • Buyers Focus On Dollars, 30 Year After Fed, Stocks Shrug

    Stocks slid slowly lower into the FOMC statement, then tumbled as no matter how hard talking heads tried they could not find a silver lining in the hawkish tone reflected across near universal sell-side confirmation. Stocks tumbled, commodities tumbled, and the USDollar surged but the Treasury curve flattened dramatially as 30Y was well bid and the rest of the curve offered (2Y surged higher in yield). The last few minutes saw the ubiquitous levitation to VWAP which lifted Small Caps briefly into the green briefly and stocks all ended higheer from the FOMC statement. By the close, the USDollar was up notably, stocks lower, gold down 1.5%, oil up over $82, and the Treasury curve flattened dramatically (5Y 8bps, 30Y -2bps).

    This post was published at Zero Hedge on 10/29/2014.


  • Bond Buyers Spooked By Imminent FOMC, Lead To Tailing 5 Year Auction, Lowest Bid To Cover Since July 2009

    A Treasury auction an hour before the Fed is set to announce the end of the latest (if not last) iteration of QE may not have seemed like the best idea, and sure enough moments ago the Treasury sold $35 billion in 5 Year paper in what can be described as a miserable auction, when the 1.567% high yield tailed by 1.5 bps to the 1.552% When Issued. Not only that but the Bid to Cover tumbled from 2.56 to just 2.36: this was the lowest BTC since July 2009 when it actually had a 1-handle. Finally, the less exciting internals showed that Directs were largely in line with recent auctions, taking down 10.5% of the auction, above the TTM average of 13.5%, as Indirects bought just less than half or 47.8%, leaving Dealers with 41.7% of the final allotment, slightly above the 39.3% 12 month average.

    This post was published at Zero Hedge on 10/29/2014.


  • And The Biggest Beneficiary Of QE3 Is…

    Aside from the S&P 500 of course, which made billionaires out of millionaires (even if it failed to make billionaires into trillionaires this time around – we will have to wait for QE4 or QE5 for that), some may wonder: who was the biggest beneficiary of QE3? It certainly wasn’t the US middle class, which has seen its real wages decline in 6 of the past 7 months, and its disposable income is back at levels not seen since the mid-1990s. No, the biggest winner of QE3 is the same entity that we noted benefited the most from QE over the past 6 years, and which even the WSJ realized was the primary beneficiary of the trillions in cash created out of thin air by the Fed, when in late September Hilsenrath wrote “Fed Rate Policies Aid Foreign Banks“… something we first said back in 2011 with “Exclusive: The Fed’s $600 Billion Stealth Bailout Of Foreign Banks Continues At The Expense Of The Domestic Economy, Or Explaining Where All The QE2 Money Went.”
    So when it comes to the Fed’s QE3 generosity to foreign banks, what was the real number?
    Here is the answer.

    This post was published at Zero Hedge on 10/29/2014.


  • No Plans for Normalization: Fed Ends QE, Will Hold Rates Low for “Considerable Time”, Will Reinvest Proceeds

    Inquiring minds may wish to slog through today’s FOMC Press Release on Monetary Policy but it’s really not worth the time it takes to read it.
    Here are a few details, generally expected
    The Committee judges that there has been a substantial improvement in the outlook for the labor market since the inception of its current asset purchase program. The Committee today reaffirmed its view that the current 0 to 1/4 percent target range for the federal funds rate remains appropriate. The Committee anticipates, based on its current assessment, that it likely will be appropriate to maintain the 0 to 1/4 percent target range for the federal funds rate for a considerable time following the end of its asset purchase program this month, especially if projected inflation continues to run below the Committee’s 2 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored. If incoming information indicates faster progress toward the Committee’s employment and inflation objectives than the Committee now expects, then increases in the target range for the federal funds rate are likely to occur sooner than currently anticipated. Conversely, if progress proves slower than expected, then increases in the target range are likely to occur later than currently anticipated. The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run. Reinvesting Principal Payments
    The Fed also released a Statement Regarding Purchases of Treasury Securities and Agency Mortgage-Backed Securities.

    This post was published at Global Economic Analysis on October 29, 2014.