Wednesday, June 20, 2012

Looks Like I Was Right

CNBC's Steve Liesman's brains fell out of his head at the same time he lost his hair. - Dave in Denver

I hate to waive my own flag, but guys like Reggie Middleton and Tyler Durden pimp themselves so shamelessly and repetitively - and with brazen historical revisionism, especially Reggie - that I had to say something.  The other day I suggested that the Fed might extend Operation Twist and shift the Treasuries it sells out to 3 years and the Treasuries it buys out to 30 years.  The FOMC just announced the extension of Twist until the end of the year and it would sell Treasuries it holds out to 3 yrs and buy Treasuries from 6 to 30 years.

The Fed also said that it stands ready to use other methods to try and stimulate the economy if needed.  It will be needed and it's just a matter of time.

By the way, Operation Twist, especially now that the duration of the Fed balance sheet will be significantly increased, is a de facto form of QE.

Just for the record, in follow-up to my commentary on housing yesterday, today's mortgage purchase application index from the Mortgage Banker's Assoc. was down 9%.

16 comments:

  1. Well said.
    In your opinion how and when will these sterilized twists, faux QE lite and the like start pushing up hard asset $ prices? And how do you see this in relation to the QE 1 and 2 asset value increases either on a percentage basis or in real terms? Does this new QE float all boats? Thank you sir.

    ReplyDelete
  2. fredco, i think this Twist thing was already priced into the stock market/SPX. Once the buying season kicks in big-time in India (late August), gold potential starts a move that takes it over $2,000 by Christmas time. James Turk thinks we'll have a "surprise" rally in the metals this summer. I think that's a good possibility. The gold cartel has been working overtime to keep gold below $1630 and silver below $29. Right now there efforts are preventing the next big move rather than successfully pushing them lower. That's very bullish

    ReplyDelete
  3. Great call Dave. To what extent do you think the Fed will get involved in Europe?

    ReplyDelete
  4. I think they have alreay been heavily involved in Europe via the currency swap facililty. That's why the Fed won't disclose how it's being used despite being asked to do so by some Congressmen like Ron Paul

    ReplyDelete
  5. So does Operation Twist mean the Federal Reserve sells short term treaures and purchases long term treasures in an effort to push down long term rates? Did they add any new money in this recent round of purchases? Thanks for your blog Dave it's great learning for me.

    ReplyDelete
    Replies
    1. Initially, they do not add any money. HOWEVER, note that there is extraordinary safety/collateral demand for short term Treasuries. The Fed sells short term treasuries to the banks who shuffle it off money mkt funds and other sources of demand and the Fed BUYS the longer term Treasury holdings off the big banks, who THEN have additional balance sheet bidding capacity for new Treasuries at auction

      Delete
  6. Thank you for your response .. a quick follow up if I may.
    Do these twists and sterilized QE's act to only to pull back on the golden sling shot until some event or outright QE3 triggers the next wave up, or will these sterilized and stealth printings themselves be a catalyst for the next wave up? If so, how?
    Thank you in advance..

    ReplyDelete
    Replies
    1. The market is so heavily manipulated by the paper trading in NYC and London and enabled by the Fed that in the short term the market can go in any direction.

      At some point the manipulation will fail all the liquidity already printed will drive gold to unbelievable levels.

      Delete
  7. Blah blah. I am so sick of this manipulation talk crap from this cultish religion in this tinfoil hat group. The argument just never changes and everyone is just playing roulette that some time in the future Gold will be priceless because someone else is going to decide to do something.

    This QE debate is rediculous. Only Hathaway and Adams have progressed to the next level of the real money debate. QE is immaterial by now - yes they are going to do it no they not... blah blah. Egos are getting in the way, especially Jim Sinclair and his answers now. The argument is QE is immaterial - when there is none the world will go to shit, there is a whole lot of it and the world will go to shit but you guys are still on about QE to infinity. How pathetic. When is the debate going to change and you say fuck QE - what's done is done. But you idiots keep on playing into the hand of the poker game and the bluff. Yes I would love to play some poker not with Bernanke but with you.

    Progress the debate. The record is stuck with all you people - QE is nuts but yet you argue for QE. This will carry on and on until you wake the fuck up - not the other way around.

    what I have noticed too - and that is concerning - this ponzi, ie getting more and more sheeple to but physical is getting harder and harder and a bigger sell. And the more it doesn't work the more aggressive the tinfoil hats become.

    The change that has to happen isn't with the "manipulation" it's with your arguments. Wake the fuck up!!!!!

    ReplyDelete
  8. And another thing - it seems that QE is only relavent to the commodities market. How about the industry it is supposed to really help - that's doing fine....And because of the tinfoil hats continued idiotic QE debate it hits those areas harder.

    Pathetic bunch. Follow in Hathaways shoes

    ReplyDelete
  9. AUMN current market cap = $163 million

    I FEEL LIKE I AM TAKING CRAZY PILLS!!!

    ReplyDelete
    Replies
    1. Dude, the whole damn miner board was annihilated today - especially the juniors. This too shall pass.

      Delete
  10. I'm not sure what tinfoil hat is trying to say but I'm pretty sure he took a lot of pills!! I couldn't give a rat's ass who does or does not buy gold and silver-- it is their future.
    What industry is QE supposed to help? the banking industry? Cause they are most certainly not doing fine!!

    Justin from Canada

    ReplyDelete
    Replies
    1. LOL - I normally don't post that crap but I was in a punchy mood today and I figured someone would jump all over it!

      Delete
  11. Marty Armstrong is in the house. That's who mr. Blah, blah anonymous sounds like.

    ReplyDelete