What do we do now...

[Lukey]

The Fed has lost control of the markets. Despite not raising rates in an attempt to get the dollar down and our stock market up - the exact opposite of what they intended has occurred:

http://www.zerohedge.com/news/2015-09-24/currency-carnage-global-fx-heatmap-bloodbath

http://quotes.wsj.com/index/DJIA

And, in fact, as I posted before - it doesn't matter what they do as the decay of the "Eurodollar" shadow banking credit bubble is acting as a "quantitative tightening." So now what do we do?

 

[bdtex]

So now what do we do?

We buy low.

 

[Deleted member 21794]

We buy low.

I think there's still plenty of room to short as well. Nasdaq futures are tanking, down about 50 points since last night. I'm a little late to today's party, but there's always tomorrow.

 

[Deleted member 21794]

The Fed has lost control of the markets. Despite not raising rates in an attempt to get the dollar down and our stock market up - the exact opposite of what they intended has occurred:

http://www.zerohedge.com/news/2015-09-24/currency-carnage-global-fx-heatmap-bloodbath

http://quotes.wsj.com/index/DJIA

And, in fact, as I posted before - it doesn't matter what they do as the decay of the "Eurodollar" shadow banking credit bubble is acting as a "quantitative tightening." So now what do we do?

I am generally pretty bearish so figured this would happen. I saw right through the Fed rate non-move for what it was: a big government liberal Fed chair trying to distract attention from how weak our economy really is. The excuse of other countries for not raising rates clearly rang hollow to Wall Street. People don't feel this awesome economy Arkady and other partisan hacks keep telling us about. Frankly, it's as though they're talking about some other United States on another planet.

As for the dollar, that's out of my realm of knowledge. I have been watching some Forex pairs and did notice a distinct drop. I need to read up on why that is. I've been interested in Forex for a while, but it seems to be a much more wild ride than I am accustomed to playing.

Oh and I can't help but wonder how a few rounds of QE has diminished the fed's credibility.

 

[Lukey]

I am generally pretty bearish so figured this would happen. I saw right through the Fed rate non-move for what it was: a big government liberal Fed chair trying to distract attention from how weak our economy really is. The excuse of other countries for not raising rates clearly rang hollow to Wall Street. People don't feel this awesome economy Arkady and other partisan hacks keep telling us about. Frankly, it's as though they're talking about some other United States on another planet.

As for the dollar, that's out of my realm of knowledge. I have been watching some Forex pairs and did notice a distinct drop. I need to read up on why that is. I've been interested in Forex for a while, but it seems to be a much more wild ride than I am accustomed to playing.

Oh and I can't help but wonder how a few rounds of QE has diminished the fed's credibility.

Here's a good place to understand the dynamic between forex and stocks:

http://www.alhambrapartners.com/2015/06/08/the-global-downside-to-eurodollar-decay/

http://www.alhambrapartners.com/2015/07/31/the-very-real-high-and-ongoing-costs-of-eurodollar-decay/

And here he explains why all the CB efforts have failed miserably over such a long timeframe with the "experts" still so "convinced" they are on the right track (spoiler alert: they're deluded). It will give you some insight into Arkady's mis-informed posting on the subject as well.

 

[Lukey]

I think there's still plenty of room to short as well. Nasdaq futures are tanking, down about 50 points since last night. I'm a little late to today's party, but there's always tomorrow.

There's a lot more downside risk than upside at this juncture. I've been 90% cash for over a year. There'll be another round of QE coming (probably soon if this market mayhem continues). That may or may not work. If it does work, it probably won't work for long. As Snider clearly shows, there is a huge amount of Quantitative Tightening (reverse QE) going on right now and we're probably looking at "QE for the people" (helicopter drops of money) and negative interest rates (NIRP) eventually. That isn't going to solve our problems...

 

[Deleted member 21794]

There's a lot more downside risk than upside at this juncture. I've been 90% cash for over a year. There'll be another round of QE coming (probably soon if this market mayhem continues). That may or may not work. If it does work, it probably won't work for long. As Snider clearly shows, there is a huge amount of Quantitative Tightening (reverse QE) going on right now and we're probably looking at "QE for the people" (helicopter drops of money) and negative interest rates (NIRP) eventually. That isn't going to solve our problems...

First off, thanks for posting the links on currency. I bookmarked it for further review, hopefully in the next day or two.

I have been trying to make a transition from making plays on on the S&P and Nasdaq minis on a cyclical basis. I've had especially good fortune shorting, as the tops have been a little more reliable and identifiable than the bottoms. That said, things have been a bit tougher this year, but still doable. Day trading the minis is proving to be pretty challenging. Fortunately, I've kept the day side virtual for now. The times I've looked at Forex pairs, usually with European currencies, it's even tougher. Anyway, thanks again for the links.

 

[Lukey]

First off, thanks for posting the links on currency. I bookmarked it for further review, hopefully in the next day or two.

I have been trying to make a transition from making plays on on the S&P and Nasdaq minis on a cyclical basis. I've had especially good fortune shorting, as the tops have been a little more reliable and identifiable than the bottoms. That said, things have been a bit tougher this year, but still doable. Day trading the minis is proving to be pretty challenging. Fortunately, I've kept the day side virtual for now. The times I've looked at Forex pairs, usually with European currencies, it's even tougher. Anyway, thanks again for the links.

Good luck with that. Day trading is very difficult. At least there's more volatility now which should help some. But the problem is that with all the manipulation going on in the markets, whatever trend you are trying to exploit is subject to change (as the risk parity blow up showed):

http://www.ft.com/intl/cms/s/0/d210373e-5142-11e5-8642-453585f2cfcd.html#axzz3mg1h6sJg

 

[as seen on tv]

to be fair, any presumption that the fed ever actually had "control of the markets" might be mistaken.

their stated aim was never to set a floor for stock prices.

rather, their "easy money plan" was intended to jump start bank lending on mortgages and business loans, after a skittish financial industry suffered record losses obeying government directives to offer risky mortgages on a widespread basis.

of course, making money irresistibly cheap only makes lending/borrowing attractive to customers whose business plans or cash flow is so weak that "real" (market based) interest rates would put their finances under water - that is, any incremental loan volume will be at the risky end of the scale, not "normal"

a side effect (for the Obama administration) of keeping interest rates near zero thoughout his term: the cost of our ballooning federal debt has been kept near zero too. As soon as interest rates are allowed to rise, whoever is in the white house will have an even GREATER problem with the national debt, as interest payments will add hundreds of billions in costs which aren't budgeted for.

republicans may yet regret taking the white house, if and when this happens.

 

[georgephillip]

The Fed has lost control of the markets. Despite not raising rates in an attempt to get the dollar down and our stock market up - the exact opposite of what they intended has occurred:

http://www.zerohedge.com/news/2015-09-24/currency-carnage-global-fx-heatmap-bloodbath

http://quotes.wsj.com/index/DJIA

And, in fact, as I posted before - it doesn't matter what they do as the decay of the "Eurodollar" shadow banking credit bubble is acting as a "quantitative tightening." So now what do we do?

"These capitalists generally act harmoniously, and in concert, to fleece the people, and now, that they have got into a quarrel with themselves, we are called upon to appropriate the people's money to settle the quarrel.

Abraham Lincoln"


Read more at http://www.brainyquote.com/quotes/quotes/a/abrahamlin151227.html#3vwsVEMUXjteEwek.99

Just kidding.

I was look for Lincoln's quote about the public creation of money turning it from a master to a servant? Is the solution to our current dilemma as simple as nationalizing the Fed?

 

[Lukey]

"These capitalists generally act harmoniously, and in concert, to fleece the people, and now, that they have got into a quarrel with themselves, we are called upon to appropriate the people's money to settle the quarrel.

Abraham Lincoln"


Read more at http://www.brainyquote.com/quotes/quotes/a/abrahamlin151227.html#3vwsVEMUXjteEwek.99

Just kidding.

I was look for Lincoln's quote about the public creation of money turning it from a master to a servant? Is the solution to our current dilemma as simple as nationalizing the Fed?

I would prefer we abolish it.

 

[Lukey]

to be fair, any presumption that the fed ever actually had "control of the markets" might be mistaken.

their stated aim was never to set a floor for stock prices.

rather, their "easy money plan" was intended to jump start bank lending on mortgages and business loans, after a skittish financial industry suffered record losses obeying government directives to offer risky mortgages on a widespread basis.

of course, making money irresistibly cheap only makes lending/borrowing attractive to customers whose business plans or cash flow is so weak that "real" (market based) interest rates would put their finances under water - that is, any incremental loan volume will be at the risky end of the scale, not "normal"

a side effect (for the Obama administration) of keeping interest rates near zero thoughout his term: the cost of our ballooning federal debt has been kept near zero too. As soon as interest rates are allowed to rise, whoever is in the white house will have an even GREATER problem with the national debt, as interest payments will add hundreds of billions in costs which aren't budgeted for.

republicans may yet regret taking the white house, if and when this happens.

I tend to agree with most of that. But they did at some point start targeting asset prices (including stocks). Ben Bernanke admitted as much. And now they are targeting foreign economies as Yellen cited China in her reasoning for keeping rates at zero.

But most certainly, below market interest rates punish savers and reward mal-investment. And it's the biggest reason for the financialization of our economy. You are also correct that as soon as rates normalize our government debt becomes unsustainable without major increases in taxation. As I keep saying Spending = Taxes (current + deferred)

And those Keynesian fools all want us to spend even MORE MORE MORE! It is absurd.

 

[Lukey]

We buy low.

Buy the effing dip was the meme when we were in Quantitative Easing. Things have changed and all that credit it engendered for speculation is being unwound. Now it's more like "catch a falling knife."

 

[georgephillip]

I would prefer we abolish it.

Would you replace it?
If so, with another lender of last resort or a gold standard?

 

[Max R.]

The Fed has lost control of the markets. Despite not raising rates in an attempt to get the dollar down and our stock market up - the exact opposite of what they intended has occurred:

http://www.zerohedge.com/news/2015-09-24/currency-carnage-global-fx-heatmap-bloodbath

http://quotes.wsj.com/index/DJIA

And, in fact, as I posted before - it doesn't matter what they do as the decay of the "Eurodollar" shadow banking credit bubble is acting as a "quantitative tightening." So now what do we do?

1) The Fed never did control the markets. They simply influenced it.

2) They can't control what stocks people buy and sell.

3) The stock market is legalized gambling; people place their bets anticipating a certain outcome. If that outcome does or doesn't happen, either more people will join the game or they'll leave the game....for a short time, but they'll be back.

 

[Lukey]

1) The Fed never did control the markets. They simply influenced it.

2) They can't control what stocks people buy and sell.

3) The stock market is legalized gambling; people place their bets anticipating a certain outcome. If that outcome does or doesn't happen, either more people will join the game or they'll leave the game....for a short time, but they'll be back.

Riiiight!

 

[Lukey]

Would you replace it?
If so, with another lender of last resort or a gold standard?

I knew I was going to get that question and to be perfectly honest I don't know. I just know that the Fed has been a disaster so I think we'd be better off without it than with it. Letting the government control currency directly would be worse. So whatever we do it has to be market based. Maybe something along the lines of bitcoin and let the market set interest rates?

 

[Max R.]

Riiiight!

View attachment 28163

Are you saying there is causation? Then why doesn't the Fed wave it's wand and make our economy whole again? Is it a conspiracy?

 

[Lukey]

Are you saying there is causation? Then why doesn't the Fed wave it's wand and make our economy whole again? Is it a conspiracy?

They don't control the economy (and in many ways are impeding it right now by fostering mal-investment). And they don't actually "control" the stock market either. But there is no doubt that they have intentionally attempted to increase stock prices. Ben Bernanke admitted as much.

 

[Max R.]

They don't control the economy (and in many ways are impeding it right now by fostering mal-investment). And they don't actually "control" the stock market either. But there is no doubt that they have intentionally attempted to increase stock prices. Ben Bernanke admitted as much.

So why the shock when that's what I said in the first place?