it seems like a good move to me. in the sense if i made loans to others via treasury bills and know I had to pay interest on them... buying them back would save money over the long term and stop me from having to pay interest on them.
true the money is created out of thin air.. but at least some of it is being used to buy back loans via t-bills. isn't it just a wash???
yes, i know, a simplistic though. just throwing it out there.
The Kitchen Sink BOTTOM LINE: The Fed moved very aggressively, committing to purchase up to $300bn of longer-term Treasuries increasing their purchases of MBS by another $750bn for a total of $1.25 trillion and purchases of agency coupon debt by $100bn for a total of $200bn. Treasury purchases will be concentrated in nominal securities in the 2-10 year range. As expected, the FOMC left rates in the range or 0-25bp, though they strengthened the language about how long they expect it to remain low to an "extended period" from "some time." Together, these comprise significantly more aggressive action by the Fed, which we view as a net positive.
KEY POINTS: 1. The Federal Reserve moved aggressively to expand their balance sheet committing to purchase longer-term Treasuries and significantly expanding their purchases of MBS and agency paper. Compared to our expectations, this is significantly more aggressive Fed action. We had thought they might purchase more MBS/agencies. Though we had thought they would eventually move to purchase longer-term Treasuries, we had been on the fence whether they would do it at this meeting, before coming down on the side that they would not. In our view the more aggressive action than we expected is a clear positive.
2. The FOMC will purchase up to $300bn of longer-term Treasuries within the next six months. An accompanying statement on the NY Fed web site notes that the purchases will occur primarily in the 2-10 year range in nominal securities. Smaller purchases will occur across the entire nominal Treasury and TIPS curve. Of course, as the FOMC has previously noted, what really matters is the transmission of lower rates on government securities to lower rates for private sector borrowing. The extent of such moves remains to be seen.
3. The FOMC will also increase the amount they are purchasing of agency debt and agency backed MBS. The increase in MBS is large, an additional $750bn which will bring the total to $1.25tr. Likewise the increase in agency debt is also large relative to its size, an additional $100bn to $200bn. These purchases have generally helped to reduce mortgage rates and the likely effect is a further reduction.
4. The target for the fed funds rate was unchanged at a range of 0-25bp. However, they did strengthen their commitment to keep policy rates low. Previously, the FOMC talked about keeping rates low for "some time." This statement altered that to keep "exceptionally low levels of the federal funds rate for an extended period. " This is consistent with our view that the funds rate is unlikely to rise before 2011.
5. In contrast to recent meetings, the actions were unanimously agreed to by the FOMC.
6. One can draw a rough parallel to the theory of currency intervention-that the central bank wants to push a ball down a hill rather than fighting against it. Financial conditions have been loosening on balance over the past week and a half, driven by a strong equity market rally. These actions by the FOMC push in the direction of a further loosening in financial conditions.
I manage money. I earn money. I save money . I give away money. I collect money. I don’t love money . I do love the Lord God.
<< <i>Can someone point me to the "deflation" in this news?
thank you.
roadrunner >>
1. Just today I have read two posts from forum members who have had to take pay cuts along with the rest of their company. So even labor costs are finally being trimmed.
2. The housing market has dropped a good 10-20% nationwide in the majority of areas.
3. Most commodities are down, down, and down. Copper is a fine example.
how about wheat?
maybe milk?
oil?
you get the picture when it comes to commodities. steel is just a third of the price since last august.
4. producer price index finally came in a bit above the forecast but pay attention to the last few months.
5. how about the baltic dry index to move freight around the world?
6. Have you gone shopping lately for furniture? Asking for 10% off an already low price gets an instant yes for me! Mattress 50% off. Free delivery. Free extended warranty. How about buying a car? They will basically roll over and play dead for you at Toyota right now. I had my oil change, expressed interest that my girl friend needs a car soon, and woof woof was the word from the salesman I dealt with just last May. Instantly told me there was room to play with the price.
i could go on and on. how you cannot see this happening is beyond me!
FC Their taking out their inventory after that your on your own it's called just in time we make it after you buy it period thing's and times are a changing
<< <i>FC Their taking out their inventory after that your on your own it's called just in time we make it after you buy it period thing's and times are a changing >>
i guess it depends if you buy from a fly by night retailer or buy from a reputable company that has existed in the new england area for years and years who will back up whatever they sell.
my company is a 1.4 billion dollar company with 30 subs around the world we are going from 13 million inventory to less then 5 million locally i move your mail your heating your food on the highway your skie lift's your coal your french fies your fish i could go on but we are doing what is called just in time by toyoda by the way and we will make what you need only after you pay cash by the way when you need it you will pay and you will wait this is how everyone is going see if you get a deal then
<< <i>my company is a 1.4 billion dollar company with 30 subs around the world we are going from 13 million inventory to less then 5 million locally i move your mail your heating your food on the highway your skie lift's your coal your french fies your fish i could go on but we are doing what is called just in time by toyoda by the way and we will make what you need only after you pay cash by the way when you need it you will pay and you will wait this is how everyone is going see if you get a deal then >>
well based on my experience as of last month until today i have to say it did not make a lick of a difference. but once again, i do follow you.
but as a company.. would you rather not sell a thing all month or make some deals and take a little bit less profit? pretty easy choice in my mind.
your point of just in time only goes so far.
but getting back to the topic of deflation... just in time is not really a factor. you either sell your weekly amount to stay afloat or you die.
FC all respect to you and my thinking i'm stating the fact we can talk this to death but this is what is going on in the real world i live with it every day and people i used to work with are at home layed off because of it so you'll see this shortly and thinking about this if everyone or company does this what are your choices yes or no if you need it so i guess yes HUH!
<< <i>FC all respect to you and my thinking i'm stating the fact we can talk this to death but this is what is going on in the real world i live with it every day and people i used to work with are at home layed off because of it so you'll see this shortly and thinking about this if everyone or company does this what are your choices yes or no if you need it so i guess yes HUH! >>
i was being polite before saying i understood you but now you have completely lost me. do you agree there are signs of deflation right now or not?
otherwise... lets stop communicating on this topic.
one thing i should add they think they can make it the next day like the dell ad but i'm telling you it wouldn't or can't happen but the just in time says they can but never going to happen never ever going to happen and if it's a special part never ever their all looking to save a buck and spend millions to do it and we will pay done deal
let me put this out real slow stay with it fc you are in control they have to much in stock at some point in the near future they won't have stock and charge you anything they want they'lll bleed your suppliers to death they will pass it on to you get my point they''ll steal cents not dollars but we'll all pay for it
<< <i>let me put this out real slow stay with it fc you are in control they have to much in stock at some point in the near future they won't have stock and charge you anything they want they'lll bleed your suppliers to death they will pass it on to you get my point they''ll steal cents not dollars but we'll all pay for it >>
i disagree. it is like you are not putting yourself in the shoes of a manager of a furniture store. sales are slow. the parking lot is empty. your employees work on commission. everyone in that store wants to sell something.. anything.
so you ask for 10% off a couch. the sales person readily agrees with the plan and calls their manager. the manager looks up what they pay and decides, yes, they can live with 10% less profits. they need to sell some stuff to keep the lights on in the store and employees from leaving due to lack of pay.
this power to be able to bargain does not get dimished when the economy is rocky, people are not spending, and even if the darn crap is made just in time!
the reason i'm just in time is no over head no over head no cost i can wait or they can no inventory i can charge in real time the cost you pay but yes for now great deal but that time will end soon you watch
1. Just today I have read two posts from forum members who have had to take pay cuts along with the rest of their company. So even labor costs are finally being trimmed.
2. The housing market has dropped a good 10-20% nationwide in the majority of areas.
3. Most commodities are down, down, and down. Copper is a fine example.
fc, you need to read posts more carefully. My comments on deflation were posted right below the FED talking points. What in those several points is deflationary for the future? I don't see any of them as deflationary.
Since you tossed in some new items I will respond. You must be sleeping but copper has been on a tear as of late, so with oil, and other key commodities. Copper is needed to build economies, not destroy them. It's usually one of the 1st things to lead a market recovery upwards. Your own chart of copper shows the uptrend quite clearly. Copper prices rising is anything but a sign of deflation. Your thinking is still stuck back in November. Time to adjust to March 2009. Copper is recovering with major copper producer Freeport McMoran seeing its stock double in the past month or so. I also consider gold and silver as key commodities since they can mirror currency movements. Both of those up quite sharply since November.
Effective pay of the average American worker has been dropping since the early 1970's...right through the "benign" inflationary periods of 1982-2000 and 2003-2007 as well. This is why we need 2 working family members today, more hours at work, less vacation, etc. to do the same thing our single parent families did in the 1950's, 1960's and 1970's.
Housing prices and other assets like stocks falling in price is asset deflation and not monetary deflation. What did you call housing and stock prices rising like gangbusters in the 1990's? Were you up in arms over the massive inflation? Of course not. That was good "inflation" and besides, the CPI even "proved" inflation was negligible. Inflation doesn't apply to home prices because those are good investments. But when they fall, well that's deflation. I get it now. So why the horror over the correction of those insane price run-ups of the 1990's on the backs of false credit, leverage, and fiat currency creation? While it hurts most people right in the pocket book, falling asset prices are just that, falling asset prices and nothing more. Asset prices rise and fall all the time over long market cycles. The fact that one's home was "worth" $150K in 1996, then $300K in 2007, and now $230K in 2009 is a paper exercise. Prior to gold's unleashing in 1971, homes were never really investments. One didn't retire on them. Stocks weren't "retirement investments" either and one didn't retire on those prior to 1913. Retirement for 150+ years came from saving one's money and earning steady income on that which was saved. Such was the beauty of a non-inflationary environment prior to 1913. It didn't change a whole lot until the post 1930's and then big time in the later 1970's. Now most have to count on home and stock appreciation to retire since there is little else put away. Using one's home "appreciation" as an ATM machine only added to the problem.
fc, you need to read posts more carefully. My comments on deflation were posted right below the FED talking points. What in those several points is deflationary for the future? I don't see any of them as deflationary. >>
I did misread. I thought you said where is deflation in the news... when you said this news. oops!
<< <i>
Since you tossed in some new items I will respond. You must be sleeping but copper has been on a tear as of late, so with oil, and other key commodities. Copper is needed to build economies, not destroy them. It's usually one of the 1st things to lead a market recovery upwards. Your own chart of copper shows the uptrend quite clearly. Copper prices rising is anything but a sign of deflation. Your thinking is still stuck back in November. Time to adjust to March 2009. Copper is recovering with major copper producer Freeport McMoran seeing its stock double in the past month or so. I also consider gold and silver as key commodities since they can mirror currency movements. Both of those up quite sharply since November. >>
I am not sure what you are seeing that makes for such a bullish outlook on copper. It bottomed out and now is sliding back up some which is to be expected. I would not call it a tear.
<< <i>Effective pay of the average American worker has been dropping since the early 1970's...right through the "benign" inflationary periods of 1982-2000 and 2003-2007 as well. This is why we need 2 working family members today, more hours at work, less vacation, etc. to do the same thing our single parent families did in the 1950's, 1960's and 1970's. >>
Once again i have to disagree. The families of the 50-70s did not rack up the bills we see families having today. Get rid of cable tv, internet, cell phones, car payments past a single car, insurance payments past a single car, electric bills for all these electric gadgets that we leave on constantly, the lack of cooking from scratch, the vacations that have reach insane proportions (disney land!) compared to camping or going to the beach, the amount of clothes we have today compared to back then, the 2.00 dollar coffees, the 8-10 dollar lunches at work, the silliness of buying town houses with monthly fees, not having your kids mow the lawn and paying someone else to do it, the over indulgence of buying things that break and replace constantly due to trying to save a buck because you do not want to spring for quality, lack of saving for a rainy day, over spending on credit cards, kids need braces, families popping pills and medicine like candy which costs money, etc.. etc...
people have changed. do not blame the dollar. one can have the lifestyle of the 70s pretty easily if you wish to live like that and not keep up with the neighbors.
<< <i> Housing prices and other assets like stocks falling in price is asset deflation and not monetary deflation. What did you call housing and stock prices rising like gangbusters in the 1990's? Were you up in arms over the massive inflation? Of course not. That was good "inflation" and besides, the CPI even "proved" inflation was negligible. Inflation doesn't apply to home prices because those are good investments. But when they fall, well that's deflation. I get it now. So why the horror over the correction of those insane price run-ups of the 1990's on the backs of false credit, leverage, and fiat currency creation? While it hurts most people right in the pocket book, falling asset prices are just that, falling asset prices and nothing more. Asset prices rise and fall all the time over long market cycles. >>
you got me there. i am lumping it all as deflation instead of categorizing them. To me, when homes are all of a sudden cheaper i consider that to be prices going down and call it deflation.
"In economics, deflation is a persistent decrease in the general price level of goods and services."
I lump housing under goods. They have seen a persistent decrease.
<< <i> The fact that one's home was "worth" $150K in 1996, then $300K in 2007, and now $230K in 2009 is a paper exercise. Prior to gold's unleashing in 1971, homes were never really investments. One didn't retire on them. Stocks weren't "retirement investments" either and one didn't retire on those prior to 1913. Retirement for 150+ years came from saving one's money and earning steady income on that which was saved. Such was the beauty of a non-inflationary environment prior to 1913. It didn't change a whole lot until the post 1930's and then big time in the later 1970's. Now most have to count on home and stock appreciation to retire since there is little else put away. Using one's home "appreciation" as an ATM machine only added to the problem.
roadrunner >>
I agree with the last part. One saved and retired. Often leaning on their kids for help and maybe even living with them. The extended family thing all under one roof with the bolder ones setting off on their own.
I don't know about the rest of you but most of my income goes toward NEEDS like federal taxes, state taxes, property taxes, sales tax, mortgage, insurance, food, utilities, gasoline, vehicle maintenance. Any of those going down in price for the rest of you? Now if I WANT things like flat screens, computers, new cars, furniture, jewelry(not gold of course), or any number of trinkets from China there is definitely price deflation (not to be confused with monetary inflation/deflation).
<< <i>I don't know about the rest of you but most of my income goes toward NEEDS like federal taxes, state taxes, property taxes, sales tax, mortgage, insurance, food, utilities, gasoline, vehicle maintenance. Any of those going down in price for the rest of you? Now if I WANT things like flat screens, computers, new cars, furniture, jewelry(not gold of course), or any number of trinkets from China there is definitely price deflation (not to be confused with monetary inflation/deflation). >>
well if your house has fallen in value did you get it appraised and ask to get your property taxes lowered via visiting city hall?
did you combine your auto insurance with your home insurance? have you really tried to shop around lately?
i choose to live in NH. there is no sales tax or state income tax. can you make such a large decision and move if you are fed up with it?
i bought a house that was smaller and energy efficient. i bought a car that gets 40+ mile per gallon. have you made such choices or can change to them soon?
are you cooking from scratch or buying premade foods that cost more? i know so many people who have not bought a bag of potatoes or a 10 pound bag of rice in years!
interest rates are low. can you refinance it at 5% if it makes sense?
are you paying off debt as quick as you can like your auto loan?
<< <i>Now if I WANT things like flat screens, computers, new cars, furniture, jewelry(not gold of course), or any number of trinkets from China there is definitely price deflation (not to be confused with monetary inflation/deflation). >>
I would ammend that to say a temporary price deflation while an inventory glut is cleared. Once the supply/demand equation is back to equilibrium, I don't see prices being much if at all lower than they were (long term).
ok FC rather offensive and insulting response but here is point by point
well if your house has fallen in value did you get it appraised and ask to get your property taxes lowered via visiting city hall? Yes but due to school bonds and other assessments property taxes continue to rise
did you combine your auto insurance with your home insurance? have you really tried to shop around lately? Yes i combine multiple vehicles and home and, no, Geicko and others could not beat p.s. already have very high deductibles
i choose to live in NH. there is no sales tax or state income tax. can you make such a large decision and move if you are fed up with it? Love your motto Live Free or Die but love Arizona more
i bought a house that was smaller and energy efficient. i bought a car that gets 40+ mile per gallon. have you made such choices or can change to them soon? Been in the same integra block house for 19 years and it's almost paid off with low interest rate p.s I drive a lot and hope your fuel efficiency car doesn't ever run into my much more SAFE, paid in full, Nissan Armada p.s. green is a scam and is being foisted upon us by wayward liberals at great expense to productive scientific endevours
are you paying off debt as quick as you can like your auto loan? Other than house no debt
So to reiterate: fed taxes 38% and going up, state taxes and property taxes going up, insurance including medical for a family going up, tuition for two college students going up, gasoline going up, freeze dried food, rice and beans going up, gold and silver going up, guns and ammo going up.
Don't look now fc but you might notice that oil and copper continue to be on a tear from yesterday. Copper gained 5% overnight...now over $1.80. Copper has been on fire and has broken ranks from the bottom. The Chinese are big on nailing down copper/oil and key commodity contracts for future use. Lock them in now before you pay much more down the road.
Silver caught back up from yesterday's $12.80 close to this morning's open at $13.20. Dollar tanked even more into the 83's. Oil now busting 51's. Looks like 50 will soon be history for a while. If this is deflationary stuff I'd like to see what inflationary means. Gas prices headed up as well....in time for Memorial Day weekend.
Looks like oil and gold are in a mood to continue up over the next several weeks. The dollar has dropped so quickly it almost has to turnaround for a small recovery. But maybe a 0.83 estimate was too conservative. We could head right to .80 or even into the .7X's.
.....so much for the open today. Gold headed right at $960 and silver now over $13.50. Euro and Yen continue on a tear as well. Copper steady at $1.81. Boy, did all the sick financial companies and banks take a big jump yesterday....esp. Fannie, Freddie, AIG, etc. I guess it pays to be broke. And the broker the better.
<< <i>Don't look now fc but you might notice that oil and copper continue to be on a tear from yesterday. Copper gained 5% overnight...now over $1.80. Copper has been on fire and has broken ranks from the bottom. The Chinese are big on nailing down copper/oil and key commodity contracts for future use. Lock them in now before you pay much more down the road.
Silver caught back up from yesterday's $12.80 close to this morning's open at $13.20. Dollar tanked even more into the 83's. Oil now busting 51's. Looks like 50 will soon be history for a while. If this is deflationary stuff I'd like to see what inflationary means. Gas prices headed up as well....in time for Memorial Day weekend.
Looks like oil and gold are in a mood to continue up over the next several weeks. The dollar has dropped so quickly it almost has to turnaround for a small recovery. But maybe a 0.83 estimate was too conservative. We could head right to .80 or even into the .7X's.
.....so much for the open today. Gold headed right at $960 and silver now over $13.50. Euro and Yen continue on a tear as well. Copper steady at $1.81. Boy, did all the sick financial companies and banks take a big jump yesterday....esp. Fannie, Freddie, AIG, etc. I guess it pays to be broke. And the broker the better.
roadrunner >>
time will tell and it is only natural for commodities to spring back up from their bottoms made months ago.
<< <i>I don't know about the rest of you but most of my income goes toward NEEDS like federal taxes, state taxes, property taxes, sales tax, mortgage, insurance, food, utilities, gasoline, vehicle maintenance. Any of those going down in price for the rest of you? Now if I WANT things like flat screens, computers, new cars, furniture, jewelry(not gold of course), or any number of trinkets from China there is definitely price deflation (not to be confused with monetary inflation/deflation). >>
Actually my electric bill is lower than 1 year ago. Not because I am using less electricity, but because the charge per KWH has decreased from 5.2 to 4.6. Food costs are declining and would be much lower if farmers decided to plant on the same scale they did a year ago. Last year they planted to make ethanol, not food. Now the bottom has fallen out of ethanol--it is dead--and farmers are now planting just enough to maintain prices and keep bread in the stores.
I will be looking to go short copper in the near future. We had a major collapse from over $4 to 1.25. Now we have a 50c rally. Even a 1/3rd retracement of the downmove--very typical behavior--would put copper just north of $2. Thats where I will be looking to go short. It will probably prove a dead commodity in coming years with a range between 1 and 2.50.
fc=the perfect definition of a classic 'THE KNOW IT ALL'
The 'know it all' exists in every town but only one can be active because two cannot live with the other in town, they cancel each other out,just basic physics. The 'know it all' cannot help himself he/she HAS to BUTIN on everyone else's ideas and opinions. They show up at all town meetings and argue with everything that comes up. See them at a construction sites and they tell anyone in shouting distance whats wrong. You get the picture. Do you know who your town 'know it all' is? Sorry for the rant I could not help myself
<< <i>fc=the perfect definition of a classic 'THE KNOW IT ALL'
The 'know it all' exists in every town but only one can be active because two cannot live with the other in town, they cancel each other out,just basic physics. The 'know it all' cannot help himself he/she HAS to BUTIN on everyone else's ideas and opinions. They show up at all town meetings and argue with everything that comes up. See them at a construction sites and they tell anyone in shouting distance whats wrong. You get the picture. Do you know who your town 'know it all' is? Sorry for the rant I could not help myself >>
gimli89. hey, i have an idea.. why do you not express some of your views and allow others to poke at them?
oh yea.. you appear to have none. i am not sorry for the rant above. i think i attract fleas like you because you cannot stand to read my posts which were sane, logical, and reasonable. Matter of fact it probably bothers you because you fail to follow through on the ideas and got upset at me.
by Clive Maunde - here's the summary you've been looking for, fc. >>
Clive states that the dollar has made a double top. This isnt true....yet. A double top is only confirmed when the neck is broken. This would require a drop to 78. As the chart below shows the dollar is still well within the uptrend and has pretty strong support at 82 which is the 200 dma and uptrend line. Momentum is rolling over so expect some consolidation. It is way too early to call the end to the rally in the dollar. Remember currencies are relative. If they all devalue equally, then the dollar will still be the strongest. I think people are paying way too much attention to the dollar in respect to golds movement. Gold has already shown that it can move higher with a strong dollar.
I need a little help with that chart of USD 3-19. Does it say that shortly support for the dollar will happen and we will likely be looking at a rally?
One has to wonder exactly who owns the T-Bills that are being purchased by the Fed, and what the sellers are going to do with the money. Frankly, I don't think the transactions will result in anything more than a trading opportunity.
On the other hand, the answers are vastly different when you ask the same questions about the Fed's planned purchase of $750 billion in mortgage backed securities.
Andy Lustig
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
I need a little help with that chart of USD 3-19. Does it say that shortly support for the dollar will happen and we will likely be looking at a rally? >>
Possibly. We wont know until we break the uptrend or bounce. So many people fail at chart reading because they try to jump the gun. Sometimes you are correct, but most times not. So it is better to let the chart play itself out then act.
The early bird might get the worm, but the second mouse gets the cheese.
David Petch had a pretty detailed analysis of the USD today on financialsense.com (see link to site in sig line).
Petch was looking for a final USD index corrective wave down to .80 to .82 and then another rebound back to ????. Didn't say what but could be a triple top, something just short of the last top, or continue going above .90. He felt the current move down would be done in 2-3 weeks. At that point he felt the stock rally would take a breather as the USD recovered for a while...and the Euro/Cando/Aus D. and competing currencies all fell back. This would sort of lineup with Martin Armstrong's financial peak date of 4/19/09 (2009.3 using 8.6 month cycles). The general view of that seems to fit what many are thinking. While they are also figuring on gold doing something positive over the next few weeks as well, I'm starting to have 2nd thoughts....and today's drop to $938 didn't help though it's just about at the 38% retrace. If that holds, then all is well for the next leg up.
COINB0Y
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https://www.pcgs.com/setregistry/gold/liberty-head-2-1-gold-major-sets/liberty-head-2-1-gold-basic-set-circulation-strikes-1840-1907-cac/alltimeset/268163
I have a very strict gun control policy: if there's a gun around, I want to be in control of it - Clint Eastwood
Give Me Liberty or Give Me Debt
Not to mention a chart where the price hit all 3 supports and resistances.
https://www.pcgs.com/setregistry/gold/liberty-head-2-1-gold-major-sets/liberty-head-2-1-gold-basic-set-circulation-strikes-1840-1907-cac/alltimeset/268163
others via treasury bills and know I had to pay interest on them...
buying them back would save money over the long term and stop
me from having to pay interest on them.
true the money is created out of thin air.. but at least some of it is
being used to buy back loans via t-bills. isn't it just a wash???
yes, i know, a simplistic though. just throwing it out there.
Loves me some shiny!
BOTTOM LINE: The Fed moved very aggressively, committing to purchase up to $300bn of longer-term Treasuries increasing their purchases of MBS by another $750bn for a total of $1.25 trillion and purchases of agency coupon debt by $100bn for a total of $200bn. Treasury purchases will be concentrated in nominal securities in the 2-10 year range. As expected, the FOMC left rates in the range or 0-25bp, though they strengthened the language about how long they expect it to remain low to an "extended period" from "some time." Together, these comprise significantly more aggressive action by the Fed, which we view as a net positive.
KEY POINTS:
1. The Federal Reserve moved aggressively to expand their balance sheet committing to purchase longer-term Treasuries and significantly expanding their purchases of MBS and agency paper. Compared to our expectations, this is significantly more aggressive Fed action. We had thought they might purchase more MBS/agencies. Though we had thought they would eventually move to purchase longer-term Treasuries, we had been on the fence whether they would do it at this meeting, before coming down on the side that they would not. In our view the more aggressive action than we expected is a clear positive.
2. The FOMC will purchase up to $300bn of longer-term Treasuries within the next six months. An accompanying statement on the NY Fed web site notes that the purchases will occur primarily in the 2-10 year range in nominal securities. Smaller purchases will occur across the entire nominal Treasury and TIPS curve. Of course, as the FOMC has previously noted, what really matters is the transmission of lower rates on government securities to lower rates for private sector borrowing. The extent of such moves remains to be seen.
3. The FOMC will also increase the amount they are purchasing of agency debt and agency backed MBS. The increase in MBS is large, an additional $750bn which will bring the total to $1.25tr. Likewise the increase in agency debt is also large relative to its size, an additional $100bn to $200bn. These purchases have generally helped to reduce mortgage rates and the likely effect is a further reduction.
4. The target for the fed funds rate was unchanged at a range of 0-25bp. However, they did strengthen their commitment to keep policy rates low. Previously, the FOMC talked about keeping rates low for "some time." This statement altered that to keep "exceptionally low levels of the federal funds rate for an extended period. " This is consistent with our view that the funds rate is unlikely to rise before 2011.
5. In contrast to recent meetings, the actions were unanimously agreed to by the FOMC.
6. One can draw a rough parallel to the theory of currency intervention-that the central bank wants to push a ball down a hill rather than fighting against it. Financial conditions have been loosening on balance over the past week and a half, driven by a strong equity market rally. These actions by the FOMC push in the direction of a further loosening in financial conditions.
I give away money. I collect money.
I don’t love money . I do love the Lord God.
thank you.
roadrunner
<< <i>Can someone point me to the "deflation" in this news?
thank you.
roadrunner >>
1. Just today I have read two posts from forum members who have
had to take pay cuts along with the rest of their company. So even
labor costs are finally being trimmed.
2. The housing market has dropped a good 10-20% nationwide in
the majority of areas.
3. Most commodities are down, down, and down. Copper is a fine
example.
how about wheat?
maybe milk?
oil?
you get the picture when it comes to commodities. steel is just a third
of the price since last august.
4. producer price index finally came in a bit above the forecast but pay
attention to the last few months.
5. how about the baltic dry index to move freight around the world?
6. Have you gone shopping lately for furniture? Asking for 10%
off an already low price gets an instant yes for me! Mattress 50%
off. Free delivery. Free extended warranty. How about buying a car?
They will basically roll over and play dead for you at Toyota right now.
I had my oil change, expressed interest that my girl friend needs a car
soon, and woof woof was the word from the salesman I dealt with
just last May. Instantly told me there was room to play with the price.
i could go on and on. how you cannot see this happening is beyond
me!
Their taking out their inventory after that your on your own
it's called just in time
we make it after you buy it period
thing's and times are a changing
<< <i>FC
Their taking out their inventory after that your on your own
it's called just in time
we make it after you buy it period
thing's and times are a changing >>
i guess it depends if you buy from a fly by night retailer or buy from
a reputable company that has existed in the new england area for
years and years who will back up whatever they sell.
oh, and i said toyota.. lol not GM.
but i follow you and understand what you mean.
we are doing what is called just in time by toyoda by the way
and we will make what you need only after you pay cash by the way when you need it
you will pay and you will wait
this is how everyone is going see if you get a deal then
<< <i>my company is a 1.4 billion dollar company with 30 subs around the world we are going from 13 million inventory to less then 5 million locally i move your mail your heating your food on the highway your skie lift's your coal your french fies your fish i could go on but
we are doing what is called just in time by toyoda by the way
and we will make what you need only after you pay cash by the way when you need it
you will pay and you will wait
this is how everyone is going see if you get a deal then >>
well based on my experience as of last month until today i have to
say it did not make a lick of a difference. but once again, i do follow you.
but as a company.. would you rather not sell a thing all month or
make some deals and take a little bit less profit? pretty easy choice
in my mind.
your point of just in time only goes so far.
but getting back to the topic of deflation... just in time is not really
a factor. you either sell your weekly amount to stay afloat or you die.
all respect to you and my thinking
i'm stating the fact we can talk this to death
but this is what is going on in the real world i live with it every day and people
i used to work with are at home layed off because of it
so
you'll see this shortly
and thinking about this if everyone or company does this what are your choices
yes or no
if you need it so i guess yes
HUH!
Camelot
<< <i>FC
all respect to you and my thinking
i'm stating the fact we can talk this to death
but this is what is going on in the real world i live with it every day and people
i used to work with are at home layed off because of it
so
you'll see this shortly
and thinking about this if everyone or company does this what are your choices
yes or no
if you need it so i guess yes
HUH! >>
i was being polite before saying i understood you but now you have
completely lost me. do you agree there are signs of deflation right
now or not?
otherwise... lets stop communicating on this topic.
but the just in time says they can
but never going to happen never ever going to happen
and if it's a special part never ever
their all looking to save a buck and spend millions to do it
and we will pay done deal
you will pay thur the nose on everything
fc we good now
you are in control they have to much in stock at some point in the near future they won't have stock
and charge you anything they want
they'lll bleed your suppliers to death they will pass it on to you
get my point they''ll steal cents not dollars but we'll all pay for it
<< <i>let me put this out real slow stay with it fc
you are in control they have to much in stock at some point in the near future they won't have stock
and charge you anything they want
they'lll bleed your suppliers to death they will pass it on to you
get my point they''ll steal cents not dollars but we'll all pay for it >>
i disagree. it is like you are not putting yourself in the shoes of a
manager of a furniture store. sales are slow. the parking lot is empty.
your employees work on commission. everyone in that store wants
to sell something.. anything.
so you ask for 10% off a couch. the sales person readily agrees with
the plan and calls their manager. the manager looks up what they pay
and decides, yes, they can live with 10% less profits. they need to
sell some stuff to keep the lights on in the store and employees from
leaving due to lack of pay.
this power to be able to bargain does not get dimished when the
economy is rocky, people are not spending, and even if the darn crap
is made just in time!
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
no over head no cost
i can wait or they can
no inventory i can charge in real time the cost you pay
but yes for now great deal but that time will end soon you watch
<< <i>Now which of us was lucky enough to buy on the dip on gold this morning?
Jeez. I had a notion and then didn't pull the trigger.
had to take pay cuts along with the rest of their company. So even
labor costs are finally being trimmed.
2. The housing market has dropped a good 10-20% nationwide in
the majority of areas.
3. Most commodities are down, down, and down. Copper is a fine
example.
fc, you need to read posts more carefully. My comments on deflation were posted right below the FED talking points. What in those several points is deflationary for the future? I don't see any of them as deflationary.
Since you tossed in some new items I will respond. You must be sleeping but copper has been on a tear as of late, so with oil, and other key commodities. Copper is needed to build economies, not destroy them. It's usually one of the 1st things to lead a market recovery upwards. Your own chart of copper shows the uptrend quite clearly. Copper prices rising is anything but a sign of deflation. Your thinking is still stuck back in November. Time to adjust to March 2009. Copper is recovering with major copper producer Freeport McMoran seeing its stock double in the past month or so. I also consider gold and silver as key commodities since they can mirror currency movements. Both of those up quite sharply since November.
Effective pay of the average American worker has been dropping since the early 1970's...right through the "benign" inflationary periods of 1982-2000 and 2003-2007 as well. This is why we need 2 working family members today, more hours at work, less vacation, etc. to do the same thing our single parent families did in the 1950's, 1960's and 1970's.
Housing prices and other assets like stocks falling in price is asset deflation and not monetary deflation. What did you call housing and stock prices rising like gangbusters in the 1990's? Were you up in arms over the massive inflation? Of course not. That was good "inflation" and besides, the CPI even "proved" inflation was negligible. Inflation doesn't apply to home prices because those are good investments. But when they fall, well that's deflation. I get it now. So why the horror over the correction of those insane price run-ups of the 1990's on the backs of false credit, leverage, and fiat currency creation? While it hurts most people right in the pocket book, falling asset prices are just that, falling asset prices and nothing more. Asset prices rise and fall all the time over long market cycles. The fact that one's home was "worth" $150K in 1996, then $300K in 2007, and now $230K in 2009 is a paper exercise. Prior to gold's unleashing in 1971, homes were never really investments. One didn't retire on them. Stocks weren't "retirement investments" either and one didn't retire on those prior to 1913. Retirement for 150+ years came from saving one's money and earning steady income on that which was saved. Such was the beauty of a non-inflationary environment prior to 1913. It didn't change a whole lot until the post 1930's and then big time in the later 1970's. Now most have to count on home and stock appreciation to retire since there is little else put away. Using one's home "appreciation" as an ATM machine only added to the problem.
roadrunner
<< <i>
fc, you need to read posts more carefully. My comments on deflation were posted right below the FED talking points. What in those several points is deflationary for the future? I don't see any of them as deflationary.
>>
I did misread. I thought you said where is deflation in the news... when
you said this news. oops!
<< <i>
Since you tossed in some new items I will respond. You must be sleeping but copper has been on a tear as of late, so with oil, and other key commodities. Copper is needed to build economies, not destroy them. It's usually one of the 1st things to lead a market recovery upwards. Your own chart of copper shows the uptrend quite clearly. Copper prices rising is anything but a sign of deflation. Your thinking is still stuck back in November. Time to adjust to March 2009. Copper is recovering with major copper producer Freeport McMoran seeing its stock double in the past month or so. I also consider gold and silver as key commodities since they can mirror currency movements. Both of those up quite sharply since November. >>
I am not sure what you are seeing that makes for such a bullish outlook on copper.
It bottomed out and now is sliding back up some which is to be expected. I would not call it a tear.
<< <i>Effective pay of the average American worker has been dropping since the early 1970's...right through the "benign" inflationary periods of 1982-2000 and 2003-2007 as well. This is why we need 2 working family members today, more hours at work, less vacation, etc. to do the same thing our single parent families did in the 1950's, 1960's and 1970's. >>
Once again i have to disagree. The families of the 50-70s did not rack up the
bills we see families having today. Get rid of cable tv, internet, cell phones, car payments past a single car, insurance payments past
a single car, electric bills for all these electric gadgets that we leave
on constantly, the lack of cooking from scratch, the vacations that have
reach insane proportions (disney land!) compared to camping or
going to the beach, the amount of clothes we have today compared
to back then, the 2.00 dollar coffees, the 8-10 dollar lunches at work,
the silliness of buying town houses with monthly fees, not having your
kids mow the lawn and paying someone else to do it, the over indulgence
of buying things that break and replace constantly due to trying to
save a buck because you do not want to spring for quality, lack of saving
for a rainy day, over spending on credit cards, kids need braces, families
popping pills and medicine like candy which costs money, etc.. etc...
people have changed. do not blame the dollar. one can have the lifestyle
of the 70s pretty easily if you wish to live like that and not keep up
with the neighbors.
<< <i>
Housing prices and other assets like stocks falling in price is asset deflation and not monetary deflation. What did you call housing and stock prices rising like gangbusters in the 1990's? Were you up in arms over the massive inflation? Of course not. That was good "inflation" and besides, the CPI even "proved" inflation was negligible. Inflation doesn't apply to home prices because those are good investments. But when they fall, well that's deflation. I get it now. So why the horror over the correction of those insane price run-ups of the 1990's on the backs of false credit, leverage, and fiat currency creation? While it hurts most people right in the pocket book, falling asset prices are just that, falling asset prices and nothing more. Asset prices rise and fall all the time over long market cycles. >>
you got me there. i am lumping it all as deflation instead of categorizing
them. To me, when homes are all of a sudden cheaper i consider
that to be prices going down and call it deflation.
"In economics, deflation is a persistent decrease in the general price level of goods and services."
I lump housing under goods. They have seen a persistent decrease.
<< <i>
The fact that one's home was "worth" $150K in 1996, then $300K in 2007, and now $230K in 2009 is a paper exercise. Prior to gold's unleashing in 1971, homes were never really investments. One didn't retire on them. Stocks weren't "retirement investments" either and one didn't retire on those prior to 1913. Retirement for 150+ years came from saving one's money and earning steady income on that which was saved. Such was the beauty of a non-inflationary environment prior to 1913. It didn't change a whole lot until the post 1930's and then big time in the later 1970's. Now most have to count on home and stock appreciation to retire since there is little else put away. Using one's home "appreciation" as an ATM machine only added to the problem.
roadrunner >>
I agree with the last part. One saved and retired. Often leaning on their
kids for help and maybe even living with them. The extended family
thing all under one roof with the bolder ones setting off on their own.
<< <i>I don't know about the rest of you but most of my income goes toward NEEDS like federal taxes, state taxes, property taxes, sales tax, mortgage, insurance, food, utilities, gasoline, vehicle maintenance. Any of those going down in price for the rest of you? Now if I WANT things like flat screens, computers, new cars, furniture, jewelry(not gold of course), or any number of trinkets from China there is definitely price deflation (not to be confused with monetary inflation/deflation). >>
well if your house has fallen in value did you get it appraised and ask
to get your property taxes lowered via visiting city hall?
did you combine your auto insurance with your home insurance? have
you really tried to shop around lately?
i choose to live in NH. there is no sales tax or state income tax. can
you make such a large decision and move if you are fed up with it?
i bought a house that was smaller and energy efficient. i bought a car
that gets 40+ mile per gallon. have you made such choices or can
change to them soon?
are you cooking from scratch or buying premade foods that cost more? i know so many people who have not bought a bag of potatoes or a 10 pound bag of rice in years!
interest rates are low. can you refinance it at 5% if it makes sense?
are you paying off debt as quick as you can like your auto loan?
so to answer your question. yes, yes they are.
<< <i>Now if I WANT things like flat screens, computers, new cars, furniture, jewelry(not gold of course), or any number of trinkets from China there is definitely price deflation (not to be confused with monetary inflation/deflation). >>
I would ammend that to say a temporary price deflation while an inventory glut is cleared. Once the supply/demand equation is back to equilibrium, I don't see prices being much if at all lower than they were (long term).
well if your house has fallen in value did you get it appraised and ask
to get your property taxes lowered via visiting city hall?
Yes but due to school bonds and other assessments property taxes continue to rise
did you combine your auto insurance with your home insurance? have
you really tried to shop around lately?
Yes i combine multiple vehicles and home and, no, Geicko and others could not beat p.s. already have very high deductibles
i choose to live in NH. there is no sales tax or state income tax. can
you make such a large decision and move if you are fed up with it?
Love your motto Live Free or Die but love Arizona more
i bought a house that was smaller and energy efficient. i bought a car
that gets 40+ mile per gallon. have you made such choices or can
change to them soon?
Been in the same integra block house for 19 years and it's almost paid off with low interest rate p.s I drive a lot and hope your fuel efficiency car doesn't ever run into my much more SAFE, paid in full, Nissan Armada p.s. green is a scam and is being foisted upon us by wayward liberals at great expense to productive scientific endevours
are you paying off debt as quick as you can like your auto loan?
Other than house no debt
So to reiterate: fed taxes 38% and going up, state taxes and property taxes going up, insurance including medical for a family going up, tuition for two college students going up, gasoline going up, freeze dried food, rice and beans going up, gold and silver going up, guns and ammo going up.
<< <i>By the way FC is your avatar a silver jockstrap or what? >>
Looks like a harp from an Irish coin.
Worry is the interest you pay on a debt you may not owe.
Silver caught back up from yesterday's $12.80 close to this morning's open at $13.20. Dollar tanked even more into the 83's. Oil now busting 51's. Looks like 50 will soon be history for a while. If this is deflationary stuff I'd like to see what inflationary means. Gas prices headed up as well....in time for Memorial Day weekend.
Looks like oil and gold are in a mood to continue up over the next several weeks. The dollar has dropped so quickly it almost has to turnaround for a small recovery. But maybe a 0.83 estimate was too conservative. We could head right to .80 or even into the .7X's.
.....so much for the open today. Gold headed right at $960 and silver now over $13.50. Euro and Yen continue on a tear as well. Copper steady at $1.81. Boy, did all the sick financial companies and banks take a big jump yesterday....esp. Fannie, Freddie, AIG, etc. I guess it pays to be broke. And the broker the better.
roadrunner
<< <i>Don't look now fc but you might notice that oil and copper continue to be on a tear from yesterday. Copper gained 5% overnight...now over $1.80. Copper has been on fire and has broken ranks from the bottom. The Chinese are big on nailing down copper/oil and key commodity contracts for future use. Lock them in now before you pay much more down the road.
Silver caught back up from yesterday's $12.80 close to this morning's open at $13.20. Dollar tanked even more into the 83's. Oil now busting 51's. Looks like 50 will soon be history for a while. If this is deflationary stuff I'd like to see what inflationary means. Gas prices headed up as well....in time for Memorial Day weekend.
Looks like oil and gold are in a mood to continue up over the next several weeks. The dollar has dropped so quickly it almost has to turnaround for a small recovery. But maybe a 0.83 estimate was too conservative. We could head right to .80 or even into the .7X's.
.....so much for the open today. Gold headed right at $960 and silver now over $13.50. Euro and Yen continue on a tear as well. Copper steady at $1.81. Boy, did all the sick financial companies and banks take a big jump yesterday....esp. Fannie, Freddie, AIG, etc. I guess it pays to be broke. And the broker the better.
roadrunner >>
time will tell and it is only natural for commodities to spring back up from their bottoms
made months ago.
<< <i>I don't know about the rest of you but most of my income goes toward NEEDS like federal taxes, state taxes, property taxes, sales tax, mortgage, insurance, food, utilities, gasoline, vehicle maintenance. Any of those going down in price for the rest of you? Now if I WANT things like flat screens, computers, new cars, furniture, jewelry(not gold of course), or any number of trinkets from China there is definitely price deflation (not to be confused with monetary inflation/deflation). >>
Actually my electric bill is lower than 1 year ago. Not because I am using less electricity, but because the charge per KWH has decreased from 5.2 to 4.6. Food costs are declining and would be much lower if farmers decided to plant on the same scale they did a year ago. Last year they planted to make ethanol, not food. Now the bottom has fallen out of ethanol--it is dead--and farmers are now planting just enough to maintain prices and keep bread in the stores.
Knowledge is the enemy of fear
Knowledge is the enemy of fear
The 'know it all' exists in every town but only one can be active because two cannot live with the other in town, they cancel each other out,just basic physics.
The 'know it all' cannot help himself he/she HAS to BUTIN on everyone else's ideas and opinions.
They show up at all town meetings and argue with everything that comes up.
See them at a construction sites and they tell anyone in shouting distance whats wrong.
You get the picture.
Do you know who your town 'know it all' is?
Sorry for the rant I could not help myself
<< <i>fc=the perfect definition of a classic 'THE KNOW IT ALL'
The 'know it all' exists in every town but only one can be active because two cannot live with the other in town, they cancel each other out,just basic physics.
The 'know it all' cannot help himself he/she HAS to BUTIN on everyone else's ideas and opinions.
They show up at all town meetings and argue with everything that comes up.
See them at a construction sites and they tell anyone in shouting distance whats wrong.
You get the picture.
Do you know who your town 'know it all' is?
Sorry for the rant I could not help myself
gimli89. hey, i have an idea.. why do you not express some of your
views and allow others to poke at them?
oh yea.. you appear to have none.
i am not sorry for the rant above. i think i attract fleas like you because
you cannot stand to read my posts which were sane, logical, and
reasonable. Matter of fact it probably bothers you because you fail
to follow through on the ideas and got upset at me.
pfft.
by Clive Maunde - here's the summary you've been looking for, fc.
I knew it would happen.
<< <i>Gold to Soar
by Clive Maunde - here's the summary you've been looking for, fc. >>
Clive states that the dollar has made a double top. This isnt true....yet. A double top is only confirmed when the neck is broken. This would require a drop to 78. As the chart below shows the dollar is still well within the uptrend and has pretty strong support at 82 which is the 200 dma and uptrend line. Momentum is rolling over so expect some consolidation. It is way too early to call the end to the rally in the dollar. Remember currencies are relative. If they all devalue equally, then the dollar will still be the strongest. I think people are paying way too much attention to the dollar in respect to golds movement. Gold has already shown that it can move higher with a strong dollar.
Knowledge is the enemy of fear
I knew it would happen.
to happened with gold (even a triple top).
ok then.
i agree with cohodk. the world economy goes down the toilet.. whose currency
would you rather own? i know the answer to that one....
I need a little help with that chart of USD 3-19. Does it say that shortly support for the dollar will happen and we will likely be looking at a rally?
On the other hand, the answers are vastly different when you ask the same questions about the Fed's planned purchase of $750 billion in mortgage backed securities.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
<< <i>COHODK,
I need a little help with that chart of USD 3-19. Does it say that shortly support for the dollar will happen and we will likely be looking at a rally? >>
Possibly. We wont know until we break the uptrend or bounce. So many people fail at chart reading because they try to jump the gun. Sometimes you are correct, but most times not. So it is better to let the chart play itself out then act.
The early bird might get the worm, but the second mouse gets the cheese.
Knowledge is the enemy of fear
Petch was looking for a final USD index corrective wave down to .80 to .82 and then another rebound back to ????. Didn't say what but could be a triple top, something just short of the last top, or continue going above .90. He felt the current move down would be done in 2-3 weeks. At that point he felt the stock rally would take a breather as the USD recovered for a while...and the Euro/Cando/Aus D. and competing currencies all fell back. This would sort of lineup with Martin Armstrong's financial peak date of 4/19/09 (2009.3 using 8.6 month cycles). The general view of that seems to fit what many are thinking. While they are also figuring on gold doing something positive over the next few weeks as well, I'm starting to have 2nd thoughts....and today's drop to $938 didn't help though it's just about at the 38% retrace. If that holds, then all is well for the next leg up.
roadrunner