The Death Knell of Tapering

ksammut

Here is an interesting read in case you have not seen it.

The Death Knell of Tapering

sumrtym

I can't take anything seriously on that site. Here's another gem from them from January 6th, 2013 where they said, and I quote:


This is not a period to favor paper, as reflected by common stocks, over Gold. My trade of the year for 2013 is the same as my favored trade back in August: go long the "Gold to Dow" ratio (or short the "Dow to Gold" ratio).

2013 - The Year of the Gold Bull?

bronco2078

Over the last 4 weeks there have been 45 billion NET in MBS purchased . When is this taper supposed to start again?

cohodk

What an incredible use of "extreme" adjectives and aborted facts. Thanks for posting this humorous blog. It made my morning.

jmski52

They can taper or not - but the outcome is the same. If they taper, the stock market crashes and drags every other price (401K et al) along with it, which incidently will nail the bond market beyond anything we've seen in OUR lifetimes.

If they keep pumping, there is no upside because everyone knows that inflation (money creation) is already in the mix and it will only get much worse - with the drought in California, increased costs & regs due to obamacare, a shrinking supply of beef because of the past drought, tainted ocean catch, increased energy costs due to failure to ok Keystone PL, and a disappearing industrial tax base coupled with massive government spending. It's hard to conceive a scenario in which more things could be going the wrong direction all at once.

There's no way that they're going to let interest rates up because the debt bomb and interest rate swap bomb will destroy what's left of "the system". The ONLY way to keep rates down is - wait for it - that time-tested and proven method called <<<<<inflation>>>>>.

Understand it, or don't. Your choice.

cohodk

If they taper, the stock market crashes and drags every other price (401K et al) along with it, which incidently will nail the bond market beyond anything we've seen in OUR lifetimes.

Why do you say this? So far in my research I havent found evidence to support such a claim. I do understand the basis of your concerns, but I have not found anything to justify such extreme concern.

jmski52

Why do you say this? So far in my research I havent found evidence to support such a claim. I do understand the basis of your concerns, but I have not found anything to justify such extreme concern.

Take a peek at the stock market since the beginning of the $85 billion/month. Remember the "taper tantrum" when they first announced the taper? This is almost completely stock market manipulation for political purposes, and the purpose is to put a false image of prosperity on an economy that's being choked off by bad policy.

If you want to look at some charts, try these and let me know if you see any anomalies that might give you any pause. Yeah, I realize that everyone has a story and everyone is looking to stimulate "eyeballs" on the net, but after awhile you can't ignore stuff like this:

12 wtf charts from zerohedge

Baley

it will only get much worse - with the drought in California, increased costs & regs due to obamacare, a shrinking supply of beef because of the past drought, tainted ocean catch, increased energy costs due to failure to ok Keystone PL, and a disappearing industrial tax base coupled with massive government spending. It's hard to conceive a scenario in which more things could be going the wrong direction all at once.

and then there's that little matter of the sky falling, could be somewhat inconvenient for everyone!

Baley

<< <i>If you want to look at some charts, try these and let me know if you see any anomalies that might give you any pause. Yeah, I realize that everyone has a story and everyone is looking to stimulate "eyeballs" on the net, but after awhile you can't ignore stuff like this:

12 wtf charts from zerohedge >>



Dang, them is some scary short term charts (some are, like less than a month)

Let's look at the S&P 500 vs Gold, Japan index, bond index, and emerging market index for 10 years:

Where's the relative value?

edit: for some fun, click on the different timeframes along the bottom, see the charts change for YTD, 6 months, 2 years, since 1993, etc.

cohodk

<< <i>Why do you say this? So far in my research I havent found evidence to support such a claim. I do understand the basis of your concerns, but I have not found anything to justify such extreme concern.

Take a peek at the stock market since the beginning of the $85 billion/month. Remember the "taper tantrum" when they first announced the taper? This is almost completely stock market manipulation for political purposes, and the purpose is to put a false image of prosperity on an economy that's being choked off by bad policy.

If you want to look at some charts, try these and let me know if you see any anomalies that might give you any pause. Yeah, I realize that everyone has a story and everyone is looking to stimulate "eyeballs" on the net, but after awhile you can't ignore stuff like this:

12 wtf charts from zerohedge >>




Where to start?

First, the charts do show some divergences----over the last month!! What does that have to do with a program started 2 years ago? The time frames chosen appear to me an attempt to contrive fact to support a conclusion. Why not show these charts over the last 2 years? Some charts are years, some only a few months. What is the author trying to hide?

Second, what is the importance of the US stock market to the Chinese market and how does this relate to QE?

Third, the jobless claims chart MUST go sideways at some point---we will never reach zero as there is always a claim. This number will stabilize and reach a point of maximum employment. So there is no divergence in this chart.

Fourth, a crack in the housing pillar? Why, because lumber prices stabilized over the last few months? This is GREAT news for the economy--it will help to maintain housing affordability. Do we really want housing prices to increase at 10%/year?

Fifth and I could go on, but so what if the US equity market is outperforming emerging markets? What is the significance? The economy of Russia and Brazil is not doing as well relatively as the US---so?

If the author is going to make claims, then he at least owes his readers the decency of showing supporting documentation. Instead he, and everyone of his ilk over the past few years, continue to misinterpret data to support their ideas. If the facts dont support your conclusion, dont change the facts, change your conclusion. Fortunately though, eventually these guys will be proven correct as by definition the unsustainable is unsustainable. Their predicted outcome may vary widely however.

In the meantime, well intentioned people are being led astray and their emotions being preyed upon. And this is sad, but is all part of the market.

bronco2078

Moving ahead 2 weeks and the pace of MBS purchases is still 45 billion a month , when do we start with the taper again?

Agency MBS Transaction Archive

bluelobster

<< <i> If they taper, the stock market crashes and drags every other price (401K et al) along with it, which incidently will nail the bond market beyond anything we've seen in OUR lifetimes.

Understand it, or don't. Your choice. >>



I guess I don't understand?

Bizarre at it sounds, my experience has been, when the market has "crashed" in the past, the bond market didn't get "nailed", it rallied. and as of now tapering is apparently not causing yields to shoot higher.

Of course, we may be looking at different "markets" or possibly a parallel universe, I love Through the Wormhole

bronco2078

<< <i>

<< <i> If they taper, the stock market crashes and drags every other price (401K et al) along with it, which incidently will nail the bond market beyond anything we've seen in OUR lifetimes.

Understand it, or don't. Your choice. >>



I guess I don't understand?

Bizarre at it sounds, my experience has been, when the market has "crashed" in the past, the bond market didn't get "nailed", it rallied. and as of now tapering is apparently not causing yields to shoot higher.

Of course, we may be looking at different "markets" or possibly a parallel universe, I love Through the Wormhole >>




There hasn't been any actual tapering , just talk.