FED to taper QE?

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Re: FED to taper QE?

Postby Pixel8r » Thu Nov 21, 2013 1:09 pm » Safari 6.1 Safari 6.1  Mac OS X Mac OS X  Screen Resolution: 1920 x 1200 1920 x 1200

Stun Lee and Win » Thu Nov 21, 2013 12:59 pm wrote:They are doing it so that they keep credibility. If they just said straight up that they would never end the money printing then that would cause a panic. Saying that they are just about to taper means that market participants think that they are still serious about eventually ending and selling back the QE. It is all about management of perception. Gold prices going down is a key part of the management of perception for the hard of thinking market participants. Gold price going down equals "deflation" about! Can't start tapering quite yet! Crack-up boom averted for the short term. Bank of England does the same thing with interest rate rises always being six months away.

Thanks Stun Lee thats a clear explanation and seems completely correct to me. :thumbup:
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Re: FED to taper QE?

Postby triple-agent » Tue Nov 26, 2013 1:16 pm » Firefox 25.0 Firefox 25.0  Windows XP Windows XP  Screen Resolution: 1024 x 600 1024 x 600

http://www.321gold.com/editorials/thoms ... 12613.html

Gold investors may be overly-focused on the possibility of an American Fed taper. My professional opinion is that the Fed will taper in 2014, and by the end of the year, the American QE program will be ended.
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Re: FED to taper QE?

Postby Pixel8r » Tue Nov 26, 2013 3:24 pm » Safari 6.1 Safari 6.1  Mac OS X Mac OS X  Screen Resolution: 1920 x 1200 1920 x 1200

triple-agent » Tue Nov 26, 2013 1:16 pm wrote:http://www.321gold.com/editorials/thomson_s/thomson_s_112613.html

Gold investors may be overly-focused on the possibility of an American Fed taper. My professional opinion is that the Fed will taper in 2014, and by the end of the year, the American QE program will be ended.

Stewart Thomson has just gone down in my estimation.

If the fed does taper they will cause a massive stock market crash which would lead to more problems for the already insolvent banks.
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Re: FED to taper QE?

Postby Stun Lee and Win » Thu Nov 28, 2013 8:21 am » Google Chrome 31.0.165 Google Chrome 31.0.165  Windows Seven 64 bits Windows Seven 64 bits  Screen Resolution: 1920 x 1080 1920 x 1080

Been away for a few days but, prompted by this thread, spent a bit of time trying to work out for myself why market participants are acting as they are nowadays, and then wrote a long post about it. Here we go.

People shouldn't make the mistake of thinking in a logical manner. The financial markets do not reflect reality, they only reflect the general perception of reality: the best example of that being the Greek debt market at the beginning of the decade. Within a year, the country went from being very nearly as safe as Germany to being hopelessly bankrupt. But what actually changed in reality? Another example is precious metals. In reality, most of the West is closer to/more bankrupt now than two years ago and currencies have been inflated significantly so the metals should be higher than they were then in logical terms but they are not (and I think silver should be, at the very least 40 dollars as a fair price now). So the market cannot reflect reality.

We have gone through the looking glass now in terms of MOPE, management of perception.

The Bank of England has been going on for years about interest rate rises being just a few months away, and nearly everyone believes it to be true, despite the obvious impossibility of it. At some point, the market will realise the lies, but what is to cause that that hasn't happened in the past three years? As I write this morning, the pound is close to or at multi-year highs against nearly all other currencies, despite the absolutely wrecked economy in reality.

A similar issue is the naming of crises. Whenever these new crises spring up, they are always immediately given different names: Fiscal cliff, debt ceiling, sequestering are just three I can think of for the US bankruptcy in a couple of seconds and I am sure that there have been many more. This is very important because it then gives the financial markets the perception that these things are continually being solved. Any new crises are different events/issues that the central banks will be able to solve as well, whereas in reality, they are all referring to US bankruptcy. The key part is the centralised naming of events, and I would imagine that this is done deliberately in closed press conferences by central bank officials.

Now of course individual market participants are aware of the issues but the key part is that they are also aware of the other market participants (by far the biggest of which is the Fed). If they try to trade alone on the fundamental issues, then they will be crushed by the cretinous, dribbling and imbecilic elephant that is the market. This factor is vastly multiplied by the direct actions that the central banks take. They can appear to be tapering and keep rates low for years in advance.

Just thoughts from someone observing the lunacy that has been going on for years and trying to make sense of it.

In answer to the question of whether the FED is tapering?
Most other people believe that most other people believe that they will.
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Re: FED to taper QE?

Postby triple-agent » Thu Nov 28, 2013 8:38 am » Safari 5.0 Safari 5.0  Mac OS X Mac OS X  Screen Resolution: 800 x 1003 800 x 1003

Good post

most investors have a lot of difficulty appreciating the concept that when gold is going up in all currencies, the currencies are actually all depreciating en masse.

i like the tide analogy. we have had the tide come in and wash out all the weakness in fiat, the tide is currently out at the mo and will be returning soon . we are at a double bottom

silver scrap on ebay price has not gone down in months irrespective of paper price. i have many examples
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Re: FED to taper QE?

Postby Pixel8r » Thu Nov 28, 2013 9:44 am » Safari 6.1 Safari 6.1  Mac OS X Mac OS X  Screen Resolution: 1920 x 1200 1920 x 1200

Good post Stun Lee. :thumbup:

As most people have been led to believe that we are in a recovery and that QE is going to start being tapered soon, when the fed is forced to up the level of QE rather than reduce the monetization strategy of the fed should be easily seen.

Maybe the fed will be stupid enough to believe that they have actually made a recovery and will start to taper. But surely if they do the 'recovery' will rapidly fall apart and they will need to make QE permanent.

I actually credit the fed with a bit more intelligence than that and what we will actually see next is an increase in the level of QE. That should be enough to wake even the most comatose market participants up.

Stun Lee and Win » Thu Nov 28, 2013 8:21 am wrote:In answer to the question of whether the FED is tapering?
Most other people believe that most other people believe that they will.


Cryptic, do you mean that most people think they will or won't?
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Re: FED to taper QE?

Postby Stun Lee and Win » Thu Nov 28, 2013 10:39 am » Google Chrome 31.0.165 Google Chrome 31.0.165  Windows Seven 64 bits Windows Seven 64 bits  Screen Resolution: 1920 x 1080 1920 x 1080

Pixel8r » Thu Nov 28, 2013 10:44 am wrote:Cryptic, do you mean that most people think they will or won't?


It was my attempt to explain why people are willing to take completely illogical positions in the markets, and why the markets have been so wrong for a number of years now.
If we look at the UK (because I can see the actual inflation rates) 10 year government bonds for example, at 2.77 percent as I write. Now even if one were to believe the UK inflation figures (and in reality, prices seem to be going up by seven to ten percent a year), that would be a remarkably low rate for a country with a huge and ever-increasing debt pile with a good chance of bankruptcy in that ten year period. The reason that people are willing to take the trade is because they think that there are enough other people who are also willing to take the trade, and all participants know that the BoE can push the rates lower any time that they want to. And this is the reason that the BoE can hold bond rates at stupidly low levels for years, and probably for years in the future as well.

For UK bond rates to go up, it will not just take individual market participants to gradually wake up and trade the fundamentals, for if they do that individually they will be crushed. It will take all of the individual participants to realise at the same time. Market fundamentals are, for the moment, essentially irrelevant and the British bankruptcy will, I am sure, not be a gradual event.
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Re: FED to taper QE?

Postby Pixel8r » Thu Nov 28, 2013 11:12 am » Safari 6.1 Safari 6.1  Mac OS X Mac OS X  Screen Resolution: 1920 x 1200 1920 x 1200

At the end of the day the market will eventually wake up to the fact that what is actually going on is the monetization of the debt. When they do they will convert out of currency and into things of value. If you hold any government debt you are losing buying power, the rates they pay you are negative in relation to the real rate of inflation. When you also factor in the fact that the fiat currency you are bing paid that yield in is also losing buying power due to it rapid devaluation, it is a double loss.

Currently the western CB's are having to buy large amounts of their governments debt to keep rates low, but there is also still a load bought by institutions & countries. When I was talking about the market waking up I am more meaning these large institutional buyers and countries, which I agree will not be a gradual event.

Will the western CB's be able to keep rates at ridiculous levels for years into the future, I'm not so sure. I guess they could be buying all the bonds with freshly printed money and could keep rates at whatever price they wanted, but we would then be not in a capitalist economy more a totalitarian state. There would be the government rate that no one had anything to do with and the real rate that everyone had to live with. Are we going to see the capitalist west turn communist and the communist countries (Russia, China…) take over as the free market?
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Re: FED to taper QE?

Postby Stun Lee and Win » Thu Nov 28, 2013 12:15 pm » Google Chrome 31.0.165 Google Chrome 31.0.165  Windows Seven 64 bits Windows Seven 64 bits  Screen Resolution: 1920 x 1080 1920 x 1080

Pixel8r » Thu Nov 28, 2013 12:12 pm wrote:At the end of the day the market will eventually wake up to the fact that what is actually going on is the monetization of the debt. When they do they will convert out of currency and into things of value. If you hold any government debt you are losing buying power, the rates they pay you are negative in relation to the real rate of inflation. When you also factor in the fact that the fiat currency you are bing paid that yield in is also losing buying power due to it rapid devaluation, it is a double loss.


Yes, on a logical sense I agree. But the market hasn't realised in the past two years, what will cause them to realise in the next two, or indeed the next five years? I have attempted to square the logical circle with the theories explained on this thread.

Pixel8r » Thu Nov 28, 2013 12:12 pm wrote: Are we going to see the capitalist west turn communist


Already happened.
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Re: FED to taper QE?

Postby Pixel8r » Thu Nov 28, 2013 1:10 pm » Safari 6.1 Safari 6.1  Mac OS X Mac OS X  Screen Resolution: 1920 x 1200 1920 x 1200

Stun Lee and Win » Thu Nov 28, 2013 12:15 pm wrote:
Pixel8r » Thu Nov 28, 2013 12:12 pm wrote:At the end of the day the market will eventually wake up to the fact that what is actually going on is the monetization of the debt. When they do they will convert out of currency and into things of value. If you hold any government debt you are losing buying power, the rates they pay you are negative in relation to the real rate of inflation. When you also factor in the fact that the fiat currency you are bing paid that yield in is also losing buying power due to it rapid devaluation, it is a double loss.


Yes, on a logical sense I agree. But the market hasn't realised in the past two years, what will cause them to realise in the next two, or indeed the next five years? I have attempted to square the logical circle with the theories explained on this thread.

I don't think the market hasn't realised over the last two years it is just that things take time and nothing moves in straight lines. I think events will be the thing that brings us to the next level as I was talking about above. When the fed either does taper (and things go badly wrong), or they just get straight on with increasing the monetization of the debt. Currently time is being bought with this taper talk but that cannot carry on forever, the debt is still increasing exponentially, at some point soon they will need to step up a gear as the created currency loses power over time.

Stun Lee and Win » Thu Nov 28, 2013 12:15 pm wrote:
Pixel8r » Thu Nov 28, 2013 12:12 pm wrote: Are we going to see the capitalist west turn communist


Already happened.

Do you think that western companies are going to end up being nationalised?
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Re: FED to taper QE?

Postby Stun Lee and Win » Thu Nov 28, 2013 3:19 pm » Google Chrome 31.0.165 Google Chrome 31.0.165  Windows Seven 64 bits Windows Seven 64 bits  Screen Resolution: 1920 x 1080 1920 x 1080

We agree on the logic and the final result, just disagree on the time line.


I think that they have complete power to set prices at the moment (with the proviso that they cannot set even more truly ridiculous prices, like silver at 10 dollars, for any significant length of time) and that they can and will hold gold below 1435 for the medium term, push housing up at somewhere near 10 percent per year (for that is where the "economic growth" of credit creation comes from) and keep the long-term bond yields very low. Might be worthy of a thread in itself.

I think that it is deliberate policy to bankrupt and nationalise the gold miners (sorry).
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Re: FED to taper QE?

Postby Pixel8r » Thu Nov 28, 2013 3:48 pm » Safari 6.1 Safari 6.1  Mac OS X Mac OS X  Screen Resolution: 1920 x 1200 1920 x 1200

Stun Lee and Win » Thu Nov 28, 2013 3:19 pm wrote:We agree on the logic and the final result, just disagree on the time line.


I think that they have complete power to set prices at the moment (with the proviso that they cannot set even more truly ridiculous prices, like silver at 10 dollars, for any significant length of time) and that they can and will hold gold below 1435 for the medium term, push housing up at somewhere near 10 percent per year (for that is where the "economic growth" of credit creation comes from) and keep the long-term bond yields very low. Might be worthy of a thread in itself.

I think that it is deliberate policy to bankrupt and nationalise the gold miners (sorry).

I agree that is what they are trying to do but think they are trying to over manage the economy and that they won't succeed. You have a lot more confidence in their ability to control things than I do.

I agree that some miners will end up being nationalised, but don't see that happening for a while yet. I like royalty companies as they offer diversification and have contracts in place for production, I don't see confiscation of mines and nullification of all existing contracts.
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Re: FED to taper QE?

Postby Pixel8r » Sun Dec 15, 2013 10:07 am » Safari 7.0 Safari 7.0  Mac OS X Mac OS X  Screen Resolution: 1680 x 1050 1680 x 1050

So what are peoples thoughts on the FOMC next week, taper or not?

I think they won't do it but will just continue to threaten that it is coming. If they were to taper it would only be a token effort, but I believe any token effort would still cause the stock market to top and start down. When you add into that the fact that yields on the bonds would be increasing it would cause the hot air recovery to disappear.
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Re: FED to taper QE?

Postby triple-agent » Sun Dec 15, 2013 12:33 pm » Firefox 26.0 Firefox 26.0  Windows XP Windows XP  Screen Resolution: 1024 x 600 1024 x 600

gonna taper at some point to save face - but you were right before (+schiff & rickards) and i was wrong
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Re: FED to taper QE?

Postby Pixel8r » Sun Dec 15, 2013 2:35 pm » Safari 7.0 Safari 7.0  Mac OS X Mac OS X  Screen Resolution: 1680 x 1050 1680 x 1050

If they chose to taper this week or not it doesn't make any difference to the situation that they are in and gold's bull run. Saving face by tapering their monthly monetisation of debt by a few billion is nether here nor there, doesn't affect the outcome or the fact that they have brought the financial system to crisis.

Bernanke's big thing is that the reason that the great depression went on so long is the fact that stimulus was withdrawn to quickly, so I don't see them changing course and the monetisation will carry on and probably increase at some point. Tapering just quickens the end, there is no way out and I think they know that.
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Re: FED to taper QE?

Postby Pixel8r » Sun Jan 19, 2014 11:35 am » Safari 7.0.1 Safari 7.0.1  Mac OS X Mac OS X  Screen Resolution: 1680 x 1050 1680 x 1050

Ahead of the well announced fed taper on the 28/29th of Jan we have almost everyone bullish on stocks. :wtf:

The reason the stock market has been going up is due to low valuations, which was due to increased earnings per share. The reason we have been seeing increased earnings per share is because we have had historically low interest rates, not from increased revenue (which has been broadly stagnant). Corporations have been using the cheap rates to borrow cheaply do share buy backs. This has recently changed and they have now become net sellers of shares again.

So we have corporations increasing their leverage while we have had the cheapest rates ever, now the fed is due to set rates increasing via tapering their bonds purchases. What could possibly go wrong? :crazy:

Literally No One Believes the Stock Market Will Go Down

Via Short Side of Long, a new survey of investment fund managers—designed to measure how much variance there is among investment strategies they're currently pursuing—shows that no one thinks the stock market will be going down. Just look at this f**king chart...


Image
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Re: FED to taper QE?

Postby Pixel8r » Mon Jan 27, 2014 7:17 pm » Safari 7.0.1 Safari 7.0.1  Mac OS X Mac OS X  Screen Resolution: 1680 x 1050 1680 x 1050

I'm getting a bit confused, I'm sure we had the fed saying at the last meeting that they were going to taper by $10b per month starting after the next meeting in January (of course giving the usual caveat of it being data dependant). :?

Nothing will deter Fed from tapering this week

Market volatility will not persuade them to slow down reduction in asset purchases

WASHINGTON (MarketWatch) — Neither snow, freezing temperatures, market volatility nor a lousy jobs report will stay the Federal Reserve from taking another small step towards the exit this week.

Federal Reserve officials will likely agree on another $10 billion taper to its bond-purchase program after a two-day meeting that ends Wednesday. That’s the same pace as the first reduction announced in December and it will bring the monthly purchases down to $65 billion per month, consisting of $35 billion of Treasurys and $30 billion or mortgage backed securities...
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Re: FED to taper QE?

Postby Pixel8r » Mon Jan 27, 2014 8:02 pm » Safari 7.0.1 Safari 7.0.1  Mac OS X Mac OS X  Screen Resolution: 1680 x 1050 1680 x 1050

I guess I must have interpreted things wrong, It appears that they have already bought less treasuries than they have been doing previously. :doh:

Image

2013-12-25 2208829
2014-01-01 2208775
2014-01-08 2212924
2014-01-15 2220953
2014-01-22 2231430
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Re: FED to taper QE?

Postby Pixel8r » Wed Jan 29, 2014 7:32 pm » Safari 7.0.1 Safari 7.0.1  Mac OS X Mac OS X  Screen Resolution: 1680 x 1050 1680 x 1050

FOMC Press Release - Release Date: January 29, 2014

...Taking into account the extent of federal fiscal retrenchment since the inception of its current asset purchase program, the Committee continues to see the improvement in economic activity and labor market conditions over that period as consistent with growing underlying strength in the broader economy. In light of the cumulative progress toward maximum employment and the improvement in the outlook for labor market conditions, the Committee decided to make a further measured reduction in the pace of its asset purchases. Beginning in February, the Committee will add to its holdings of agency mortgage-backed securities at a pace of $30 billion per month rather than $35 billion per month, and will add to its holdings of longer-term Treasury securities at a pace of $35 billion per month rather than $40 billion per month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. The Committee's sizable and still-increasing holdings of longer-term securities should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative, which in turn should promote a stronger economic recovery and help to ensure that inflation, over time, is at the rate most consistent with the Committee's dual mandate...
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Re: FED to taper QE?

Postby Laura » Wed Jan 29, 2014 9:07 pm » Safari 4.0 Safari 4.0  Linux Linux  Screen Resolution: 800 x 506 800 x 506

The first two sentences demonstrate the utter contempt the controlling few have for the masses
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