Fed Balance sheet announced today Geithner QE is alive and well U.S. Treasury, supplementary financing account $129,956 -$34,989 week-week This seems to be impact the excess reserves in the system. Its now $918,434B up from $854,613B in sep 23 when Geithner decided he was a shadow FOMC voter
Big Ben talks about tightening in a speech tonight. E$'s selling off a bit. http://www.bloomberg.com/apps/news?pid=20601087&sid=aB7MNBaU3bxk
"Indicators apart from the unemployment rate underscore the weakness of labor markets. The percentage of working-age people with jobs has fallen to a point not seen in a quarter century", the so called employment to population ratio http://www.federalreserve.gov/newsevents/speech/tarullo20091008a.htm#f4 So besides bernanke, tarullo is also looking at that. Chances are the entire FOMC does. So the fed might not look at the UR in order to time a hike, the EP ratio is probably even more important as people drop out the labor market frustrated that they cant find work
He confirmed what I had argued. That a rise in the monetary base can became money supply not just when the banks lend but also if they buy assets. USTs, GSE mbs, etc Get the excess reserves to $10T and that should end whatever deflation that shows up even in a delevering world http://www.federalreserve.gov/newsevents/speech/bernanke20091008a.htm
"Reading the comments that have come out in the last few weeks, it looks like there is a divide building up in the Federal Open Market Committee about how soon to begin tightening. Fisher: I donât think thatâs correct. I donât think thereâs any division in the FOMC. We will act when we should act. The question is when is that? I can say in my opinion, it is not at this moment. But weâll have to decide as a committee. Do you expect to see any dissents grow out of meeting votes? Fisher: I donât see it at the table. Ben [Bernanke] is a very inclusive chairman. He does a very good job of listening carefully to everybody, including putting up with me!" http://blogs.wsj.com/economics/2009...-no-division-on-fomc-not-time-to-raise-rates/ Looks like the talk is divided but when it cames to voting its pretty much unanimous its too soon to start any kind of exit
Interesting system, apparently '"It turns out that a simple portfolio that invests in Buffett's top 10 stock holdings, equal-weighted and rebalanced quarterly, beat the market by 10% a year from 2000 through 2008."' This seems a much better idea than buying BRKA BRKB like the buffett fan's love, given that buffett himself said Berkshire wont be as great in the future
Current situation - equities up, gold up, dollar down, 10 year at 3.20% and Dec 10 E$ at 98.40 is unsustainable. Something(s) has to break in a big way.
Reflation stuff: I own calls on higher oil in the form of UTS Enegry and BBEP I own MOS I own NUE I bought some TBT yesterday Deflation stuff: I own the same Dec 2010 E$ calls as you I shorted COF yesterday (this was a MAJOR winner for me in 08/09 and I'm a bit wary about returning to the scene of my victory, but with all the upgrades coming this week, I couldn't help it). Other: I am short MCO. The point of my posts is that every one of these trades are working (forget the stuff I did yesterday). This can't happen for much longer.
Nice post from Gregor, and perhaps the explanation for why all of my trades are working ... http://gregor.us/crisis/the-alignment-of-asset-reflation-and-a-collapsed-economy/ The Alignment of Asset Reflation and a Collapsed Economy October 5, 2009 Abandoned Roller CoasterIf all the highly informed people whoâve been waging a war the past six months against rising stock prices would just step back for a moment, they would perhaps understand better that their macro views are supported, not negated, by asset reflation. For itâs this asset reflation that hints at the singular and doomed strategy of our monetary policy, and its overlay on our collapsed economy. Just so that Iâm clear: there is no macroeconomic recovery occurring in the United States. Whatâs unfolding currently is snap-back from last yearâs crash, which led us to the bottom of a spider-hole. The positive bits of macro data, dribbling out here and there, are really just about getting us back to zero. A kind of steady-state, expected to carry on for some time to come. And thatâs a best-case scenario. Amusement ParkYou can think of the US economy as a kind of defunct amusement park, over which the FED has poured trillions of dollars of syrupy goo. The caramel candy is there for tasting, but it doesnât turn the machines back on. The ferris wheel is silent. Since WW2, Washington has always been able to call upon Housing and Autos as the two areas to stimulate, to pull the country out of recessions. Of course, we just did that in super-sized fashion 6-7 years ago, to extract ourselves from the last recession. So, itâs kind of sad to see policy makers trying this again. Failed thinkers promote failed playbooks. Our societyâs hierarchy rests in part upon the following assumption: that the intellectual capacity of the chairman of the Federal Reserve, with his PhD and his white papers, is superior to that of a mortgage broker from Orange County, California. I think we need an adjustment to this type of assumption. Because the spread I see opening up everywhere in the US economy is what I call the Prestige-Performance gap, whereby the assertions of our elite no longer comport with observable reality. If the chairman of the Federal Reserve will not allow that the greatest credit bubble ever has now burst, or that it ever existed, then this partially explains why he would think stuffing the banking system with fresh capital would revive the economy. Asset reflation therefore, in equities and especially in gold, should be seen not as exuberance but merely as part of the same chaos in pricing unleashed by The Federal Reserve, starting earlier this decade. As so clearly outlined in the recent data on employment, credit demand, consumer spending, and our (in)ability to save there is little to no prospect for a sustained economic recovery for one simple reason: Americans are now trapped by their debt. For those who recognize a rising stock market as evidence of disarray, what we should anticipate now is the recognition phase where the wider public finally comes to understand the nature of our inflationary depression. My marker has been 100 dollar oil and 15% unemployment in California. That should finally get the message across. But other combinations will do: 1300 dollar gold, 1300 on the SPX, and more problems with Commercial Real Estate will also suffice. Like the prestige-performance gap, the divergence between the economy and asset prices apparently has to become even more grotesque before people will understand. -Gregor