http://www.zerohedge.com/news/2013-09-18/fomc-shocker-no-taper
( There are no markets , just manipulations... )
Submitted by Tyler Durden on 09/18/2013 14:01 -0400
Submitted by Tyler Durden on 09/18/2013 14:42 -0400
http://www.zerohedge.com/news/2013-09-18/goldman-flip-flops-sees-near-term-upside-gold
( Muppets get it from GS once again.... )
Submitted by Tyler Durden on 09/18/2013 17:56 -0400
Submitted by Tyler Durden on 09/18/2013 17:18 -0400
Submitted by Tyler Durden on 09/18/2013 16:08 -0400
Submitted by Tyler Durden on 09/18/2013 15:25 -0400
( There are no markets , just manipulations... )
FOMC Shocker: No Taper - Full FOMC Statement Redline Comparison
It seems the Fed is so scared about something(despite every long-only asset manager telling us day after day that the economy is recovering and the US doesn't need crisis support... oh and can withstand higher rates) that they have gone against consensus and decided that Tapering now is premature:
- *FED REFRAINS FROM QE TAPER, KEEPS MONTHLY BUYING AT $85 BLN
- *FED: RISE IN MORTGAGE RATES, FISCAL POLICY RESTRAIN GROWTH
- *FED: `TIGHTENING OF FINANCIAL CONDITIONS' COULD SLOW GROWTH
- *MOST FED OFFICIALS SEE FIRST INTEREST-RATE RISE IN 2015
Pre-FOMC: S&P Futs 1696, VIX , 10Y 2.865%, MTG Spread 72.5bps, USD 81.00, WTI $107.00, Gold $1310
Consensus was for a $6bn taper in TSYs and $3bn taper in MBS
Full redline comparison with the July statement:
http://www.zerohedge.com/news/2013-09-18/who-leaked-fomc-statement-gold-traders
Who Leaked The FOMC Statement To Gold Traders?
Beginning 3 minutes before the release of the FOMC Statement, gold spot and futures prices began to rise notably. We noted this accordingly.
Bonds did not. Stocks did not. FX did not. Around 4300 contracts changed hands in the Dec Futures - massively more than average volume - before the statement came out and drove prices further up. In those 3 minutes Gold prices jumped $11... so the question is - lucky guess... or which big bullion bank got the nod?
And courtesy of Nanex:
( Muppets get it from GS once again.... )
Goldman Flip-Flops: Sees Near-Term Upside In Gold
It was only Monday that Goldman's Damien Couravlin was pounding the table and gold right under it. A quick, and historic, $70 move higher in gold in one day following Bernanke's most recent confirmation he really has no clue what he is doing in terms of monetary policy (if knowing quite well what he is doing for the S&P and its 1950 year end price target), was all that it took for Goldman to flip flop and now suggest that there is "risk to gold prices as skewed to the upside in the near-term, in our view."
Frankly, we hope Goldman is wrong and gold plunges to triple, double or single digit territory, allowing those who are not blinded by the absolute and sheer idiocy of what is glaringly an attempt to reflate the largest asset bubble at all costs. If anything, today the Fed finally confirmed that the only way out is to inflate away the debt, which eventually will involve unanchoring inflation expectations, proceeding with "NGDP targeting" (a fancy way of saying printing a lot and then also paradropping some cash from the sky), and leading to the sequestering of all hard assets not nailed to the ground.
Via Goldman Sachs,
Near-term upside on delayed taper but still bearish into 2014The FOMC unexpectedly decided not to taper the rate of its asset purchases, preferring to wait for further confirmation of improvement in the US economic outlook. This announcement, as well as Bernanke’s press conference, was more dovish than most had expected, pushing gold prices to $1,365/toz. The decision, combined with the upcoming debt ceiling debate, leaves risks to gold prices as skewed to the upside in the near-term.
Of course, as we have pointed out perviously,the last time that Goldman told clients to be epically short the precious metal, they were - in fact - buying it in record amounts...which perhaps explains their cover-your-ass moment later in today's report that things will end badly...
Via Goldman Sachs,
However, with gold prices already back near their pre-June FOMC level, COMEX net speculative positioning already back at its April level as well as growing pressures on EM gold demand, we believe that this upside will ultimately prove limited. We believe this is well illustrated by today’s more muted rally in gold prices when compared to the significant rally in 10-year TIPS yields, helping close the significant valuation gap that had occurred between both assets over the past month.
As a result, we re-iterate our neutral stance on gold prices and continue to expect that gold prices will resume their decline heading into 2014 when we expect economic data to solidly confirm a reacceleration in US growth and warrant a less accommodative monetary policy stance.
http://www.zerohedge.com/news/2013-09-18/near-record-treasury-shorts-pummeled-bernanke-announcement
Near-Record Treasury Shorts Pummeled By Bernanke Announcement
Whether it was momentum traders doing what they do best, or just a market expecting Bernanke's "communication strategy" to pan out as expected, and follow through with more easing in demand for duration assets, is unclear and largely irrelevant, but as the following chart by JPM shows, net spec positions in UST futures are at their most short since May 2010 and are close to two standard deviations below their average since 2006. The chart shows a duration weighted composite of the net spec positions on the 10YR, 5YR, 2YR, the T-bond, the Ultra long bond and the Eurodollar futures - it is these specs that goes hurt the most by today's FOMC announcement. The question now is: will the scramble to cover shorts lead to a fresh push lower in yields (ending any talk of a rotation, great or otherwise), or following today's shock and awe move in the curve, will the move wider in rates continue.
Some more observations from JPM: "Positions peaked almost exactly a year ago and have been falling steadily since, turning negative at the end of May. The most recent US Treasury client survey also showed investors are net short USTs, although positions are not extreme and remain less short than during the May/June rate selloff. (Treasury Client Survey, Alex Roever et al., Sep 13)."
http://www.zerohedge.com/news/2013-09-18/summarizing-todays-epic-moves
Summarizing Today's Epic Moves
13th 'up' day of last 15 for the S&P... Quite a day (considering Bernanke said they "were avoiding sharp shocks"):
- Gold's best day since January 2009
- 5Y Treasury's biggest yield drop since March 2009
- USD's 3rd worst day in a year
- Homebuilders biggest rise since June 2012
- New all-time highs for Dow and S&P
Two things of note aside from this chaos - shorts were being pressed into the meeting (and were smashed higher on the news); andVIX, which had been bid going in, is diverging after the press conference from equity exuberance.
Things stabilized a little when Ben stopped speaking... apart from in gold which surge to its highs...
Homebuilders won...
but the broad indices were pretty much all in line systemically...
Gold's biggest day since Jan 09...
and Yields collapsed...
Shorts were hammered going in to the statement but by the close were in line so the squeeze was painful but not terrible...
and we note that VIX was well bid into the close... (apart form that spike lower right at the close)
The last hour of the day saw some give-back (in all but gold)...
Charts: Bloomberg
http://www.zerohedge.com/news/2013-09-18/goldman-analyzes-feds-unexpected-decision
Goldman Analyzes The Fed's "Unexpected" Decision
Fresh from Jan Hatzius' printing press:
BOTTOM LINE: The FOMC unexpectedly decided not to taper the rate of its asset purchases at today's meeting, preferring to wait for further confirmation of improvement in the outlook. There was no change to the forward guidance on the federal funds rate. The Summary of Economic Projections showed a decline in the central tendency expectation for the year-end 2015 fed funds rate, and the 2016 rate suggested a cautious pace of rate hikes once they begin.
MAIN POINTS:
1. The FOMC unexpectedly decided to leave its monthly rate of asset purchases unchanged for both Treasuries ($45bn) and MBS ($40bn) at today's meeting. The statement noted that "the Committee decided to await more evidence that progress [on improvement in economic activity and labor market conditions] will be sustained before adjusting the pace of its purchases." However, the Committee signaled that reductions in asset purchases are likely in the near term, noting that "in judging when to moderate the pace of asset purchases, the Committee will at its coming meetings assess whether incoming information continues to support the Committee's expectation of ongoing improvement in labor market conditions and inflation moving back toward its longer-run objective." Previously, this language noted that the Committee was prepared to "increase or reduce the pace of asset purchases" and did not refer to "coming meetings."
2. The FOMC did not change its forward guidance on the federal funds rate, retaining the language that the Committee expects to keep rates on hold at least as long as unemployment remains above 6.5% and projected inflation one to two years ahead is not greater than 2.5%.
3. The characterization of economic activity in the statement was slightly more tepid than in the July statement. The statement noted that "some indicators of labor market conditions" have shown further improvement in recent months, slightly more cautious language than used in the last statement. In addition mortgage rates "have risen further," although the Committee retained the language that "the housing sector has been strengthening," despite more mixed recent housing data. The statement explicitly noted that "the tightening of financial conditions observed in recent months, if sustained, could slow the pace of improvement in the economy and labor market."
4. With regard to participants’ economic projections, the mid-point of the central tendency of the unemployment rate was lowered a touch to 7.2% in 2013Q4 and 6.6% in 2014Q4, while real GDP growth was lowered by 0.3pp to 2.15% at end-2013 and 0.25pp to 3.0% at end-2014. In 2016—included for the first time—participants expected 2.85% real GDP growth, 1.95% core inflation, and 5.65% unemployment, only 0.15pp above the longer-run unemployment rate, which was lowered to 5.5%. Projections for real GDP growth in the longer term edged down slightly to 2.35% from 2.4% previously.
5. Participants’ forecasts for the funds rate (the “dots”) remained at 0.13% (average excluding the four highest projections) at end-2013 and end-2014 and fell 15bp to 0.81% at end-2015. Participants expected the funds rate to rise to 1.81% by end-2016, well below participants’ 3.25-4.25% range for the longer-run rate.
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