Posts Tagged ‘operation twist’

Notes From Underground: Will Big Ben Turn Back The Hands Of Time?

December 11, 2012

The FOMC will release the results of two days of policy deliberations at 11:30 a.m. CST Wednesday and the market is convinced that the Bernanke FED will vote to end Operation Twist but increase FED Treasury purchases. It may not be the full $45 billion but something above $25 billion, which would be in addition to the already promised purchases of $40 billion of mortgage-backed securities (MBS). It will be difficult to continue Operation Twist because the FED‘s System Open Market Account (SOMA) is nearly void of debt of less than three-year duration. Any new FED purchases will have to be with cash resulting in an increase in bank reserves. The result be not be a Maturity Extension Program but a new round of Quantitative Easing. It is doubtful that the FOMC statement will allude to fiscal policy but will just remain true to discussion of the dual mandate.

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Notes From Underground: SNB Fights the Battle of the Bulge and Thomas Jordan Says Nutz to a Sovereign Wealth Fund

November 28, 2012

The Chairman of the Swiss National Bank delivered a speech today in Bern, “SNB monetary and investment policy and the impact of the strong Swiss Franc.” The investing world knows that the Swiss have pegged the franc to the euro at 1.20 more than a year ago and have been successful in keeping the floor of the EUR/CHF in place. The result has been a massive growth in the Swiss foreign reserves as the SNB has had to diversify out of some of the euros and into other currencies. Mr. Jordan made it clear that the SNB was “prepared to buy foreign currency in unlimited quantities.” The Swiss will continue to keep the EUR/CHF floor in place as part of its mandate on monetary policy for an overly strong FRANC has a deflationary impact on the Swiss economy.

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Notes From Underground: The Significance of the WSJ OP-ED Piece … “Magnitude of the Mess We’re In”

September 23, 2012

A an op-ed piece in last weeks WSJ created a great deal of buzz in the financial media. Appearing a few days after the aggressive move by the FED, the opinion piece written by five eminent economists–George Schultz, Michael Boskin, John Cogan, Allan Meltzer and John B. Taylor–criticizes the Bernanke Fed’s QE policy from many different aspects. It is not the criticism that is significant but rather the stature of the economists that are calling the question of the FED’s continued one-dimensional response to the tepid growth following the deep recession of 2007-2008. The media would have the public believe that the only economists qualified to theorize on the problems at hand are those chosen by the FED and its research staff. The financial media bowed to the altar of Alan Greenspan– the Maestro, Oracle and whatever else–and thus the cult of personality was thrust upon the markets.

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Notes From Underground: It’s Raining Liquidity All Over the World

September 9, 2012

Friday’s unemployment report solidified the TRIFECTA of LIQUIDITY for the week. ECB President Draghi seeded the “liquidity clouds” at Thursday’s press conference by announcing the installation of the OTM (outright monetary transaction), which will allow the ECB/ESM to purchase unlimited amounts of sovereign debt of up to three-year duration–of course with conditions for those asking for help. Draghi is hoping to buy the whole EU project enough time so that a FISCAL UNION CAN BE FORMED WITH THE ABILITY FOR THE EU TO ISSUE A TRUE EUROBOND.

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Notes From Underground: SCHAUBLE Says Spain On The Road To Salvation (IS 25% UNEMPLOYME​NT REPENTANCE​?)

July 9, 2012

First, the U.S. unemployment report was soft although if the ADP stats had not caused the WALL STREET ECONOMISTS to revise their guesstimates upward, the NFP would not have been such a miss from the early consensus. The average hourly earnings were above projections and while MANUFACTURING JOBS were up only 11,000, it was not a negative number. Although it wasn’t a robust number, it certainly wasn’t a huge miss from projections.

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Notes From Underground: The FED Feeds the Liquidity Machine

June 20, 2012

In the very anticipated FOMC release, the FED announced that the Operation Twist would be extended from the June expiration until the end of the year. No surprise as Bernanke seemed to believe  that the FED had to do something about the lethargic growth in the economy. Listening to the press conference held after the FOMC release, it seems that Ben Bernanke is the most troubled man in America. All of the FED‘s actions during the last two years have failed to generate the robust growth that TEXTBOOK MODELS HAVE PREDICTED. Europe continues to be the main theme as to why the GLOBAL ECONOMY IS FAILING TO GAIN ANY REAL TRACTION. Europe continues to plague the world as capital investment languishes in fear of European debt problems causing a massive new round of deleveraging.

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Notes From Underground: We’re Back

June 20, 2012

Click on image to watch me talk about the markets pre-FOMC.

Notes From Underground: MAY 6 — A Flash Crash For the European Political Elite

May 6, 2012
Before politics, it is important to review the two big stories from Friday:
1. The U.S. unemployment data was certainly on the weak side of expectations as nonfarm payrolls came in at a tepid 115,000, very close to the ADP report. Average hourly earnings were soft, which will challenge the view of consumer demand ramping up any time soon. Yes, the unemployment rate dropped to 8.1%, but with so many people dropping out of the job market this indicator lends itself to so much POLITICAL SPIN THAT ITS USE IS BECOMING NEGLIGIBLE. Economists have twisted its meaning and therefore markets are disregarding its usefulness. The real positive in the data was the continue growth in MANUFACTURING as 16,000 factory jobs were created. Otherwise, the number was weak and will be a reason for the FED TO KEEP THE MUSIC OF OPERATION TWIST IN PLACE.
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Notes From Underground: April Showers Bring May Unemployment

May 3, 2012

As everybody reading and/or listening to financial news all week knows, tomorrow at 7:30 a.m. CST the Bureau of Labor Statistics will release the unemployment report, which has been deemed as the most important data since …….????? The consensus is now for a nonfarm payroll increase of 170,000, the RATE TO STAY AT 8.2% and average hourly earnings to increase 0.2%. After Wednesday’s ADP data, the market has lowered its NFP expectations and thus, a consensus number of 170,000 will be a positive for the EQUITY markets, positive for the DOLLAR and meaningless for the BONDS.

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Notes From Underground: S&P Downgrades Spanish Sovereign Debt to BBB+ (Another Example of Grade Inflation)

April 26, 2012

The rating agencies are in play again as a late afternoon press release stated that Spain’s DEBT IS NOT AS GOOD AS IT WAS YESTERDAY. Hard to believe it … S&P is really on top of their game. Again, you don’t have to be A WEATHERMAN TO KNOW WHICH WAY THE WIND IS BLOWING. This action, of course, will be the beginning of serial downgrades. As good collateral dwindles, it will put further pressure on the GERMAN BUNDS AND 2-YEAR SCHATZ as REPO TRADERS WILL GRAB THE BEST COLLATERAL. It explains why the SCHATZ TRADED TO A RECORD LOW YIELD OF 8 BASIS POINTS.

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