Okay - we knew this was coming but one day after the big FOMC announcement! Please, give me a break! What I am referring to is the new "call" from Goldman Sachs that Tapering will now start in December of this year. Yes, you read that right.
Remember, it was Goldman who just a short time ago came out with a prediction of a $10 billion "dovish" tapering (their words) in September and thus advised clients based on that to buy all dips in the US equity markets and the conditions for rising stocks would still remain in place in that sort of easy money environment.
Well, lo and behold this morning news greeted me that Goldman was predicting a Fed Tapering beginning with the December 18 meeting of the FOMC. They commented that there would be insufficient data at the October meeting to change the Fed's newly announced NON-TAPER but by December this year the Fed will move. They also are predicting a complete end of the program by September 2014.
This should be interesting to watch unfold to say the least. Goldman, as well as a lot of other large firms, received a major black eye as they completely misread the Fed. I guess watching stocks soar to new all time highs however is some pretty damned good consolation for them all!
By the way, give credit to those guys who did call for a non-action on the part of the Fed over at King World News, especially Egon for going out on a limb like he did.
I can tell you one thing as a trader - I simply get out of markets before major announcements like that. I can suggest possibilities but that is just what they are, possibilities. Trading on a guess is a quick way to the poor house. If you get it right - you are a hero. If you get it wrong, your account becomes a zero. That is not trading; it is gambling and there is a world of difference between the two things.
well said! swb
ReplyDeleteNot only will there be no taper in December, I think they will increase the size of QE. Maybe I'm just delusional but the $85B per month just ain't enough to keep the game going.
ReplyDeleteHi Dan,
ReplyDeletethis was the biggest disinfo campaign since Saddam's "Weapons of Mass Destruction".
Egon von Greyerz gave a very interesting interview at KWN the day before the "tapering". He mentioned some stunning numbers of the G7:
These economies sit on 140 trillion dollars of debt.
So a interest rate rise of every 1% means 1400 bn dollars ADDITIONAL weight on economic activity.
Now tell me, where in the REAL economy of highly saturated and overindebted markets, this can be generated ADDITIONALLY.
It's absolutely ridiculous. Everyone who is capable to count 1+1 together sees, that this debt supercycle has reached it's limit.
And everyone who claims that things could be "reformed" by some ridiculous political actors, is a complete idiot or a criminal liar.
The western monetary system is a legalized ponzi system and there is no way out of a pyramid system. Sooner or later is HAS TO collapse.
endzeit;
DeleteYes indeed - that is a key point that Egon raised. It is also my view that while the Fed is continuing this madness known as QE in order to keep the equity markets propped up and thus attempt to keep sentiment or consumer confidence boosted as a result, their MAIN REASON for forcing long term interest rates lower is the gargantuan, humungous, stupendously grotesque ( I am running out of adjectives here) national debt and that staggering $70 billion + in unfunded liabilities.
The US government simply cannot afford higher rates, not when it is effectively borrowing billions and billions each month to fund itself.
I remember reading somewhere a while back that a study by the Concord Coalition suggested that within a couple of years from now, the INTEREST PAYMENT ALONE on the national debt will exceed the entire defense department budget. Now, that is mind-boggling!
In short, our children's future is being destroyed by this idiocy and that is what angers me more than anything. They will be forced to pay for something that they contributed NOTHING whatsoever to. As Jefferson said, that is immoral and in my words, downright reprehensible.
you meant $70 trillion
DeleteSilver is King - yes, I sure did... thanks for noting that and correctly it!
DeleteSay, when are they going to make that movie about the Silver Surfer. The last time I saw him he was floating around in space after destroying Galactus but his board was still alive! That means sequel if you ask me!
They will surely make another film if they believe there's money to be made.
DeleteI work in a similar industry to the film business so I am aware of how these decisions are made although that logic does really apply to all business.
They don't do it for the art...LOL
Here's an IMDB URL for the film. Looks like it may get done.
http://www.imdb.com/title/tt1051916/
Try this on for size. The current debt is a fact. The unfunded liabilities are facts. The current interest rate is a fact. The amount needed to pay the interest on the debt is a fact and as pointed out, if rates were highers would explode the debt even more. No amount of growth can change that. In fact, there is no growth anyways. So, if the US has the gold that it says it has, and even that is questionable given the fact that Germany cant even gets its gold back, then how about this for a solution. Gold at 50,000 and ounce. So what would be in the best interests of the US is a much higher gold price, not a lower price.That could balance things out at least somewhat. I dont see any other way out of this mess. Whether that would represent a major inflationary trend or just a resetting of a financial reality is not important. It could help fix a major problem.
ReplyDeleteYou guys are too funny.
ReplyDeleteLook at Japan JGB yields. The market over there is laughing at debt/GDP which is twice as high as ours.
0.67% on the 10-year and 1.74% on the 30-year over there, despite over a Quadrillion in Yen debt.
Proof positive that "Paper Rules" and we now live in a world of "Infinite Fiat" where:
1) Debt and Deficits simply do not matter.
2) Borrowing and spending is a sure fire way to prosperity, just look at the equity markets in Argentina, up 600% in one year.
3) Hard assets and commodities easily collared and choked by "Jawboning" threats, meaning that there is no inflation expected for the next 10 years as evidenced by the puny TIPS spread.
We definitely live in a world of "Green Shoots" and "Hope" of a v-shaped, 2nd half recovery which always seems to be around the corner.
And the sheep are content and happy as long as there is NCAA and NFL football, NASCAR, and Hollywood celebrities secrets revealed by TMZ.
While 401(k) accounts keep climbing higher and higher.
100 yrs ago Argentina was 9th richest country on earth and Haiti in 1850 was richest country in Latin America; rates in Japan go to 2%, then interest on debt will exceed tax revenues and it is game over; 1 day does not make a mkt but action today in Yen says once again that they may indeed be the canary in the coal mine, as they have hollowed themselves out at much as we have; swb and that is all
DeleteWhat a giveback on the HUI today! If one were prone to speculation, one would think that a lot of the big players were on the wrong side of the trade yesterday and had to make it up today by issuing via JPM lower price targets for virtually all the major precious metal miners.
ReplyDeleteThe system is designed to collapse, while we are in the building. The contrived upcoming global thermonuclear war will be the force majeure the globalists will use to wipe the slate clean. This should take place around the end of the decade. The globalists will keep it going until then, or until they want it to collapse. They control it all. There is plenty of gold to surpress the prices until then. Plenty of gold to bring prices to 1,000. The miners are helping to drive prices down. The miners mgmt. are as stupid as their shareholders, who insisted on going unhedged. They actually believed their lies.
ReplyDeleteIf the globalists run short of physical, they can pass some more retarded capital control laws like India and Vietnam have promulgated.
The reason why gold's price points are easy to see are because the people who think they know gold are stupid. Just scalped another 4k today while I ran errands and went to the gym. Just like my trader mentor, Al Martin, always says, "same old, same old, no surprises...." today was a scalpers dream, and i should have made more.
Al calls the regular folk "CLIPS," colored light people. They trade the charts, but can't figure out the price action and feel. That you can only get by trading 24 hours a day. Futures only, no GLD, or GDX. That's garbage designed to collect mgmt fees....
By the time the bombs take out DC and the coast lines here in the US, most will be bankrupt, which is the plan all along.
That's a great story. You should write fiction novels. You could sell a few and really make $4k.
DeleteNow thats an optimistic sound for a change. Lol.
ReplyDeleteWell guys, a very good friend of mine stopped by last night to tell me he has stage 4 bladder cancer, his chances of making another year are slim at best.
ReplyDeleteIt sure puts things in perspective...today I could care less what the markets are doing.
Dean;
DeleteI am indeed very sorry to hear that about your good friend. that does indeed put things into perspective. Indeed did not Jesus say " for what will it profit a man if he gains the world and forfeits his own soul"?
Things such as these such cause us to stop and take a look at our lives and weigh them in the light of eternity.
Thank you Dan.
DeleteIt is true, all the money in the world does not matter if you do not have health and happiness.
It is so very easy to forget what is really important.
I will be praying real hard for my friend.
Hi Dean,
DeleteI wanted to put a comment on Dan's post (simply approve), but I just fell on your mail head on and don't have the motivation.
I hope your friend will find comfort in his family, his friends, and you of course, through this tragedy, and that he believes in something, be it Jesus or buddhist afterlife, to find the strength and the hope of a better world beyond.
I personnally had two strange expériences in my life.
First indirectly, when the daughter of my neighbour who just died, aged 2 year old, managed to dream about her father's death while she was on holidays 1000 km South, and told her grandmother that she saw her father going to the sky and back and to the sky and back...what was even more stunning is that the father didn't die right away. He got electrified, and they took him to the hospital, the heart was ok (after a stop) but the brains were damaged, and doctors didn't know, so he was in "stasis" for a day or two before he actually died.
Second was more personnal, let's just say that during one day I opened myself completely to "god" and joked with him because I really kind of needed a sign, I'll just say that he answered me many times in this very single day which went completely unnatural and unexpected. Since then, I came to believe that in some circumstances, it seems that, as they say, if you make one step towards God, he'll come down the rest of the way towards you.
I pray very much that he will find and assist your friend through this.
For the rest of us, I guess it is a reminder that we should try to appreaciate every little joy given in the present, open ourselves to others, and try to give a meaning to our lives beyond trading or trying to accumulate wealth. In the end, only love remains and is not forgotten.
Thank you for the kind words and sharing your experiences Hubert.
DeleteMy friend would gladly give away all of his possessions and savings to be healthy again.
He was my motorcycle riding buddy. We have ridden many thousands of miles together.
Although it looks grim right now, none of us are giving up hope, you never know.
Thank you for your prayers, I know God will be there for him.
Way to go Dan. I'll add that these markets are on a cloud, so lofty they're virtually invisible. So many variables have to be micromanaged. One of them like a giant pinata- the interest rate swap 'market', illiquid and almost as opaque as mortgage backed securities. And the credit default swaps memories haven't been wiped from hard drives. Collateralized debt obligations too, in deep storage. Classified literature. Weapons of mass financial distinction.
ReplyDelete