Update: $1700
Presented with little comment, Gold is now at $1693, about to take out $1700 and the best performing asset class of the year: YTD: Gold +8.2%, S&P +4.9%, 30Y TSY price -1.44%. Furthermore, since this FOMC statement implies more easing imminent, it simply delays full blown LSAP so its "effectiveness", read max Russell 2000, peaks with Obama's reelection campaign.
FOMC Statement Market Reaction
UPDATE: Stocks leaking back now, Financials lagging, Utes leading
TSYs are 5-10bps lower in yield (aside from 30Y), ES (and credit) rallying but underperforming on a beta basis to TSY/EUR, EUR stronger at 1.3050 now (USD weaker), and precious metals jumping (Gold back up to $1685).
No QE3; ZIRP Extended Thru 2014 As Jeffrey Lacker Objects - Full December-January Statement Comparison
Little of note in the statement: no QE3 explicitly in the form of LSAP, which an S&P over 1300 and crude at $100 made prohibitive. Instead the Fed is extending ZIRP through 2014, from 2013, which as commentarors, primarily Goldman had expected, and which means sub-3 year rates will never be above zero again. Our prediction for a €100 trillion 1 week MRO is not looking quite as insane anymore. Since this is incremental easing, the reaction in gold says it all.
Summary:
- FED EXPECTS TO MAINTAIN `HIGHLY ACCOMMODATIVE' MONETARY POLICY
- FED SEES `EXCEPTIONALLY LOW' RATES THROUGH AT LEAST LATE 2014
- FED TO KEEP REINVESTING HOUSING DEBT INTO MORTGAGE SECURITIES
- FED SAYS INFLATION `SUBDUED'
- FED SAYS HOUSING `REMAINS DEPRESSED'
- FED REITERATES `SIGNIFICANT DOWNSIDE RISKS'
Such a shame. He had been doing so well ever since he put that bottle of “Old Q.E.” back on the shelf last June… and got sober. But a few weeks back, he tripped up on his 12-step program and started nipping at the bottle again. Slowly at first… then to excess.
Yes, it’s true, dear reader, Federal Reserve Chairman The Ben Bernank, is printing money again. That’s bad enough. But this time, after he prints it, he sends it over to Europe. Crazy, but true. The chart below tells the tale. It shows the quantity of currency swaps on the Fed’s balance sheet.
Read More @ DailyReckoning.com
from Spiegel.de:
Euro-zone finance ministers meeting in Brussels on Monday night finalized the treaty governing the permanent euro bailout fund, the ESM. The deal paves the way for the ESM to take effect in July, a year earlier than planned. German Finance Minister Schäuble also said that final agreement had been reached on tighter euro-zone budgetary rules.
The
17 euro-zone countries have reached agreement on the contract for the
permanent euro bailout fund, the European Stability Mechanism (ESM),
clearing the way for the aid fund to be launched one year earlier than
planned. Luxembourg Prime Minister Jean-Claude Juncker, chairman of the
group of euro-zone finance ministers, announced the agreement following a
Monday night meeting in Brussels. The ESM is now set to replace the
temporary European Financial Stability Facility (EFSF) on July 1, a year
earlier than originally planned.
“I believe this is an important achievement,” said German Finance Minister Wolfgang Schäuble after the meeting. “It demonstrates that the euro group and the European Union as a whole is capable of taking the necessary steps.”
Read More @ Spiegel.de
Euro-zone finance ministers meeting in Brussels on Monday night finalized the treaty governing the permanent euro bailout fund, the ESM. The deal paves the way for the ESM to take effect in July, a year earlier than planned. German Finance Minister Schäuble also said that final agreement had been reached on tighter euro-zone budgetary rules.
The
17 euro-zone countries have reached agreement on the contract for the
permanent euro bailout fund, the European Stability Mechanism (ESM),
clearing the way for the aid fund to be launched one year earlier than
planned. Luxembourg Prime Minister Jean-Claude Juncker, chairman of the
group of euro-zone finance ministers, announced the agreement following a
Monday night meeting in Brussels. The ESM is now set to replace the
temporary European Financial Stability Facility (EFSF) on July 1, a year
earlier than originally planned.“I believe this is an important achievement,” said German Finance Minister Wolfgang Schäuble after the meeting. “It demonstrates that the euro group and the European Union as a whole is capable of taking the necessary steps.”
Read More @ Spiegel.de
Where Are The Emerging Market Risk Bombs?
As
European bank deleveraging continues, Middle East tensions rise, and
oil prices (Brent and Crude alike) oscillate from headline to headline,
we thought it intriguing that the entities with net notional
outstandings in CDS markets at or near their largest in history are China (and Chinese banks), LatAm Oil companies, Abu Dhabi, and Israel. Quite a crop of potential risk bombs that at least credit traders appear to demand protection on more than others.More Davos Fodder
Eric De Groot at Eric De Groot - 3 minutes ago
Does anyone remember the Davos foddered in which gold described as the
ultimate asset bubble in 2010? In comments delivered on the fringe of the
World Economic Forum, Mr Soros said: "When interest rates are low we have
conditions for asset bubbles to develop, and they are developing at the
moment. The ultimate asset bubble is gold." Perhaps his words were
misinterpreted, but I do recall many...
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content, and more! ]]
FOMC Statement - Highly Accommodative Monetary Policy Until 'Late 2014'
Just How Much Control Over Central Banks Do The People Have?
Formal
central bank independence is increasingly under pressure as societal
preferences for a lender of last resort savior grow ever stronger (and
more priced into nominal risk markets) as do demands for politicizing
the monetary authorities under the pretext that they should more
politically independent. Morgan Stanley takes on the question of constitutionality among the G3 Central Banks and rather unsurprisingly finds the mandates, targets, and prohibition treaties to be 'flexible' at best and 'practically meaningless' at worst. We-the-people appear to have little if any remit to constrain -
even if our collective call for more printing leads to 'be careful
what you wish for' reactions, as Michael Cembalest noted yesterday,
"first prize in the Central Bank balance sheet expansion race is not
necessarily one you want to win".Another $35 Billion In US Debt Added: 5 Year Bonds Price As Bid To Cover Jumps
Today's early (due to the FOMC statement and press conference) $35 billion in 5 year bonds auction was another uneventful issue of debt. Pricing at 0.899%, or well inside of the 0.915% When Issued, today's latest addition to the US $15.3 trillion in debt came at a 3.17 Bid To Cover, the highest since May 2011. The fact that BTCs continue to rise consistently even as yields decline makes lots of sense in some parallel universe, or in this one, when one considers that the bulk of the paper promptly makes its way to the repo market where it is quickly swapped for cash. The reason for the jump in implied demand was primarily the Direct Bid which took down 15.1% of the final allotment, the most since November 2010. The Indirect Bid was in line at 43.4%, compared to the TTM average of 43%, while Dealers saw a modest drop in their take down, coming below the average of 45.8% at 41.5%. This leave just tomorrow's $29 billion in 7 Year bonds in the weekly issuance docket, even without a formal debt ceiling raise. Net of all auctions that have taken place while the debt ceiling has not been increased, total US debt is now well in the $15.3 trillion bucket.
Watch the Financial Terrorists Live...Did You BTFD?
Live Webcast From Davos: Opening Of The Annual Meeting 2012 With Angela Merkel
The
Davos theater, where the only thing that matters is to see and be
seen, while wontonly spending someone else's money to hobnob with a
status quo elite which is rapidly becoming irrelevant and obsolete, is
opening. Watch the Annual Meeting 2012 opening webcast. Most
importantly, the guest of honor, Angela Merkel, is here.Guest Post: What Have We Learned In the Past 13 Years?
If we learn nothing, then we deserve to lose. This is not a popular concept in America at this point in its history, when monumental errors are denied, excused, rationalized or quickly absolved by those who committed them. As a small-fry investor, when I veer away from my discipline and system, I predictably lose money. As I sift the ashes of the trade, I always remind myself: if I learn nothing from my studies and experience, then I deserve to lose. What exactly has America learned since January 1, 1999, 13 years that included two stupendous financial/credit bubbles, two hot wars and an explosion in public and private debt? If we examine the policy changes and institutional changes since the 2008 global financial meltdown, then we have to conclude that we've learned a very few things...
Recently
some of the fears that investors had focused on in the 11th hour debt
negotiations in Greece have drifted southeastward towards the Strait of
Hormuz. An increasingly bellicose Iran threatens to throw the world
economy into confusion with the potential closure of one of the world’s
most important sources of energy. Catastrophic failure in Athens or the
Gulf could plunge the world into severe recession if not depression.
Having discussed the Eurozone at length, we focus this week on the
threats posed by Iran.Some twenty percent of the world’s oil supplies pass through the Strait of Hormuz, which lies between the Hormozgan province of Iran and Northern Oman. Some 230 miles of heavily fortified Iranian coastline, which includes the Iranian naval base of Bandar-e ‘Abbas, dominates the Strait. Although U.S. and allied naval ships are deployed in force around the area, a mass attack of small missile equipped marine craft would present a serious threat. Even the deployment of Russian made, remotely detonated sea mines could close the Strait for weeks if not months. In such a situation the price of oil could skyrocket, acting as an additional tax on a sputtering world economy.
Read More @ EuroPac.net
by Charles Hugh Smith, OfTwoMinds.com:
The
widening divide between the Upper Caste and everyone below is not just
of income and wealth–it is also cultural and values-based.
A recent Wall Street Journal article entitled The New American Divide by demographer Charles Murray described a widening cultural divide between the “haves” (the upper middle class, roughly the top 20% managerial/creative class) and the “have-nots,” what many would call the lower middle class and working class.
Murray chose to focus on Caucasian Americans to avoid all the issues and emotions of ethnicity, but I think we can apply many of his class-related observations to ethnic minority populations in the U.S. as well.
This article (based on a forthcoming book) is important not because it encapsulates this tangled subject, but because it offers a well-researched first step to a much broader spectrum of issues that the author touches upon in passing.
Read More @ OfTwoMinds.com
The
widening divide between the Upper Caste and everyone below is not just
of income and wealth–it is also cultural and values-based.A recent Wall Street Journal article entitled The New American Divide by demographer Charles Murray described a widening cultural divide between the “haves” (the upper middle class, roughly the top 20% managerial/creative class) and the “have-nots,” what many would call the lower middle class and working class.
Murray chose to focus on Caucasian Americans to avoid all the issues and emotions of ethnicity, but I think we can apply many of his class-related observations to ethnic minority populations in the U.S. as well.
This article (based on a forthcoming book) is important not because it encapsulates this tangled subject, but because it offers a well-researched first step to a much broader spectrum of issues that the author touches upon in passing.
Read More @ OfTwoMinds.com
by Simon Black, Sovereign Man:
I woke up this morning to a flurry of emails– “Did you watch the State of the Union address last night?” I did not. Rather, I was busy sharing a delightful meal at one of my favorite restaurants with some close friends; I didn’t even know that the speech was going on yesterday.
When you break away from the confines of a single geography, the political theater becomes completely irrelevant. And State of the Union addresses represent the absolute worst of this absurdity. All the applause, the silly introduction traditions, and of course, the Newspeak. A quick glance at the transcript from last night shows plenty of gems, such as:
Read More @ SovereignMan.com
I woke up this morning to a flurry of emails– “Did you watch the State of the Union address last night?” I did not. Rather, I was busy sharing a delightful meal at one of my favorite restaurants with some close friends; I didn’t even know that the speech was going on yesterday.
When you break away from the confines of a single geography, the political theater becomes completely irrelevant. And State of the Union addresses represent the absolute worst of this absurdity. All the applause, the silly introduction traditions, and of course, the Newspeak. A quick glance at the transcript from last night shows plenty of gems, such as:
Read More @ SovereignMan.com
from Global Economic Analysis:
Inquiring minds are reading the complete text of President Obama’s State of the Union Address to see what distortions, lies, and hypocrisy it contains.
I found a nice Orwellian set of paragraphs smack in the middle of his speech.
Inquiring minds are reading the complete text of President Obama’s State of the Union Address to see what distortions, lies, and hypocrisy it contains.I found a nice Orwellian set of paragraphs smack in the middle of his speech.
And while Government
can’t fix the problem on its own, responsible homeowners shouldn’t have
to sit and wait for the housing market to hit bottom to get some relief.
That’s why I’m sending
this Congress a plan that gives every responsible homeowner the chance
to save about $3,000 a year on their mortgage, by refinancing at
historically low interest rates. No more red tape. No more runaround
from the banks. A small fee on the largest financial institutions will
ensure that it won’t add to the deficit, and will give banks that were
rescued by taxpayers a chance to repay a deficit of trust.
Read More @ GlobalEconomicAnalysis.Blogspot.comObama’s Grim Fairytale: Peace & Prosperity for War-bent US?
Aviva Family Finances report 2012 says the typical UK family owes £7,944 in unsecured borrowing, as inflation takes its toll.
by Jill Papworth, Guardian.co.uk
The
typical debt owed by a UK family has soared by 48% since January 2011,
as rising inflation has taken its toll on household incomes, according
to the latest Aviva Family Finances report.
Research by the insurance company found that the typical UK family owes £7,944 in unsecured borrowing on credit cards, loans, overdrafts and other forms of credit, compared with £5,360 in January 2011. The figure represents 32% of a typical net annual income and suggests families are falling further into debt as financial pressures grow.
Credit card debt was the biggest source of unsecured debt, with those questioned owing an average of £2,314 on plastic, followed by £1,739 on personal debts. The survey includes couples without children in its definition of families, and those who were planning to start a family admitted to the highest levels of debt, owing an average of more than £15,000.
Read More @ Guardian.co.uk
by Jill Papworth, Guardian.co.uk
The
typical debt owed by a UK family has soared by 48% since January 2011,
as rising inflation has taken its toll on household incomes, according
to the latest Aviva Family Finances report.Research by the insurance company found that the typical UK family owes £7,944 in unsecured borrowing on credit cards, loans, overdrafts and other forms of credit, compared with £5,360 in January 2011. The figure represents 32% of a typical net annual income and suggests families are falling further into debt as financial pressures grow.
Credit card debt was the biggest source of unsecured debt, with those questioned owing an average of £2,314 on plastic, followed by £1,739 on personal debts. The survey includes couples without children in its definition of families, and those who were planning to start a family admitted to the highest levels of debt, owing an average of more than £15,000.
Read More @ Guardian.co.uk
Gerald Celente on ABC Australia Adelaide
from LewRockwell.com:
Lew Rockwell talks to Bob Wenzel about Ron Paul, the establishment, government insider-trading, and the scary economic future.
Click Here to Listen to the Interview
Lew Rockwell talks to Bob Wenzel about Ron Paul, the establishment, government insider-trading, and the scary economic future.
Click Here to Listen to the Interview
While
not something he wants to see happen, Sprott Asset Management’s John
Embry says, he can’t see the global financial situation improving, which
has bulilsh implications for gold.
by Geoff Candy, MineWeb.com:
GRONINGEN – The 12th year of gold’s bull cycle could well be the best to date for the yellow metal, if Sprott Asset Management’s John Embry is correct.
Speaking on Mineweb.com’s Gold Weekly podcast, Embry said, “If the economies are as damaged as I think they are, particularly in Europe, (I don’t think they are as good in China or the US as they are trying to crack them up to be)…. I think gold and silver prices could conceivably see the biggest percentage gains this year that they’ve had in the entire bull market”
He says, although he doesn’t want to be right, he can only see two realistic scenarios – both of which are bullish for gold. If the world stops supporting the debt in the system, the global financial system will face a hard deflation event, or he says, the continued creation of debt will result in mounting inflation down the road.
Read More @ MineWeb.com
by Geoff Candy, MineWeb.com:
GRONINGEN – The 12th year of gold’s bull cycle could well be the best to date for the yellow metal, if Sprott Asset Management’s John Embry is correct.
Speaking on Mineweb.com’s Gold Weekly podcast, Embry said, “If the economies are as damaged as I think they are, particularly in Europe, (I don’t think they are as good in China or the US as they are trying to crack them up to be)…. I think gold and silver prices could conceivably see the biggest percentage gains this year that they’ve had in the entire bull market”
He says, although he doesn’t want to be right, he can only see two realistic scenarios – both of which are bullish for gold. If the world stops supporting the debt in the system, the global financial system will face a hard deflation event, or he says, the continued creation of debt will result in mounting inflation down the road.
Read More @ MineWeb.com
It is less than two months until the Greek March 20 D-Day past
which there is no more can-kicking? Check. Creditor negotiations which
are going “so well” they may collapse at any given moment, have had
their deadline extended indefinitely just because, and in which hedge
funds now have every option to put the country into bankruptcy? Check.
You would think Europe is prepared for this contingency right? Wrong.
Per Ken Rogoff (who together with Simon Johnson are
two former IMF chief economists who have become some of the biggest
bears in the world – what is it about not being shackled to one’s
salary, that allows one to speak the truth), Europe is “clearly unprepared for a Greek default“, less than two months from the day when it very well may finally occur. He adds: “there’s going to be an endgame to this and it’s not going to be pretty….
Read More (and Watch the Video) @ ZeroHedge.com
Total Donations in 2011 $155.00 (6 Donors Thank You)
Total Donations in 2012 $0.00
Read More (and Watch the Video) @ ZeroHedge.com
Total Donations in 2011 $155.00 (6 Donors Thank You)
Total Donations in 2012 $0.00
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