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Natural Gas futures prics are exploding higher… By now everyone is quite aware of the US climatic conditions so whatever squeeze just took place has nothing to do with fundamentals, and everything to do with someone being Amaranth’d. The only question is who, and who is their counterparty (especially if it is a public company).
March Futures
and Feb Futures
The last 3 days in NG is +9.6%, -6.5%, and today +10.4% – these are 5 sigma swings!!
via Zero Hedge http://ift.tt/1e8ra0P Tyler Durden
Emerging Market FX is tumbling post FOMC; IG and HY credit market spreads are knocking wider; Treasury bond yields are plunging (after a knee-jerk higher); and the USD is rising. However, JPY is outpacing the USD move and with its break below 102 critical support, US equities are plumbing new pre-December-Taper lows… S&P futures are now down over 35 points from the morning "EM is fixed; where are all the sellers" highs…
Dec Taper gains gone for Dow and S&P and almost for Russell…
JPY carry unwind collapsing stocks…
10Y kneejerked higher in yield and then tumbled…
EM FX is fading back…
Gold rose into the report…(oddly) then collapsed and rallied back…
via Zero Hedge http://ift.tt/1e8r75h Tyler Durden
It took Hilsenrath 2 minutes after the FOMC announcement to release the following 729 word analysis of what Bernanke just did. The punchline: “Overall, the Fed changed very little in its statement from the previous month. Neither a disappointing December jobs report nor recent turmoil in emerging markets was enough to diminish their positive outlook for the U.S. economy. The Fed reiterated their view that “risks to the outlook for the economy and the labor market as having become more balanced,” language they added to the statement for the first time in December…. The Fed repeated its message that they will likely keep rates at
that low level “well past” the unemployment rate reaching 6.5%.“
Fed to Further Cut Bond-Buying Program
The Federal Reserve said it would further pare its signature bond-buying program next month, a move that solidifies the central bank’s strategy for winding down the program in small steps at each of its meetings as long as the economy continues to improve.
The Fed’s policy-making committee said in a statement Wednesday that it would trim its bond purchases to $65 billion per month in February, from a monthly pace of $75 billion in January.
The decision to pull back on the bond program was unanimous, marking the first time there wasn’t a dissent at a policy meeting since June 2011.
…
The central bank announced it would start scaling back the program following its Dec. 17-18 meeting, and made the first $10 billion cut in January. At the time, Fed Chairman Ben Bernanke strongly suggested the Fed’s preference was to whittle down its bond buying by $10 billion at each of its policy meetings this year, wrapping up the program altogether near the end of the year.
…
Overall, the Fed changed very little in its statement from the previous month. Neither a disappointing December jobs report nor recent turmoil in emerging markets was enough to diminish their positive outlook for the U.S. economy. The Fed reiterated their view that “risks to the outlook for the economy and the labor market as having become more balanced,” language they added to the statement for the first time in December.
All ten members of the Fed’s policy-making committee supported the decision to continue scaling back the bond-buying program.
The Fed also voted to keep short-term interest rates pinned near zero, where they’ve been since late 2008. The Fed repeated its message that they will likely keep rates at that low level “well past” the unemployment rate reaching 6.5%. The Fed earlier set that as the threshold at which it will start considering raising rates, as long as inflation remains in check.
The Fed also extended an experimental program which it could someday use to manage short-term interest rates. Known as a “reverse repo” facility, the program uses the Fed’s portfolio of bonds as collateral for loans to market participants and uses the rate on those loans to influence market rates. The experiment was set to expire Wednesday, but the Fed extended it for a year until Jan. 2015. They increased caps on the size of trades the Fed can make to $5 billion per counterparty from $3 billion.
via Zero Hedge http://ift.tt/1fxCjoU Tyler Durden
It took Hilsenrath 2 minutes after the FOMC announcement to release the following 729 word analysis of what Bernanke just did. The punchline: “Overall, the Fed changed very little in its statement from the previous month. Neither a disappointing December jobs report nor recent turmoil in emerging markets was enough to diminish their positive outlook for the U.S. economy. The Fed reiterated their view that “risks to the outlook for the economy and the labor market as having become more balanced,” language they added to the statement for the first time in December…. The Fed repeated its message that they will likely keep rates at
that low level “well past” the unemployment rate reaching 6.5%.“
Fed to Further Cut Bond-Buying Program
The Federal Reserve said it would further pare its signature bond-buying program next month, a move that solidifies the central bank’s strategy for winding down the program in small steps at each of its meetings as long as the economy continues to improve.
The Fed’s policy-making committee said in a statement Wednesday that it would trim its bond purchases to $65 billion per month in February, from a monthly pace of $75 billion in January.
The decision to pull back on the bond program was unanimous, marking the first time there wasn’t a dissent at a policy meeting since June 2011.
…
The central bank announced it would start scaling back the program following its Dec. 17-18 meeting, and made the first $10 billion cut in January. At the time, Fed Chairman Ben Bernanke strongly suggested the Fed’s preference was to whittle down its bond buying by $10 billion at each of its policy meetings this year, wrapping up the program altogether near the end of the year.
…
Overall, the Fed changed very little in its statement from the previous month. Neither a disappointing December jobs report nor recent turmoil in emerging markets was enough to diminish their positive outlook for the U.S. economy. The Fed reiterated their view that “risks to the outlook for the economy and the labor market as having become more balanced,” language they added to the statement for the first time in December.
All ten members of the Fed’s policy-making committee supported the decision to continue scaling back the bond-buying program.
The Fed also voted to keep short-term interest rates pinned near zero, where they’ve been since late 2008. The Fed repeated its message that they will likely keep rates at that low level “well past” the unemployment rate reaching 6.5%. The Fed earlier set that as the threshold at which it will start considering raising rates, as long as inflation remains in check.
The Fed also extended an experimental program which it could someday use to manage short-term interest rates. Known as a “reverse repo” facility, the program uses the Fed’s portfolio of bonds as collateral for loans to market participants and uses the rate on those loans to influence market rates. The experiment was set to expire Wednesday, but the Fed extended it for a year until Jan. 2015. They increased caps on the size of trades the Fed can make to $5 billion per counterparty from $3 billion.
via Zero Hedge http://ift.tt/1fxCjoU Tyler Durden
This should be good – President Obama sets out to explain how his new "MyRA" plan is for your own good…
As we highlighted last night:
Presenting: the MyRA, and since it offers "guaranteed return and no risk" we now know where all the Fed's bond trades will go to work once QE ends.
From the president:
Let’s do more to help Americans save for retirement. Today, most workers don’t have a pension. A Social Security check often isn’t enough on its own. And while the stock market has doubled over the last five years, that doesn’t help folks who don’t have 401ks. That’s why, tomorrow, I will direct the Treasury to create a new way for working Americans to start their own retirement savings: MyRA. It’s a new savings bond that encourages folks to build a nest egg. MyRA guarantees a decent return with no risk of losing what you put in. And if this Congress wants to help, work with me to fix an upside-down tax code that gives big tax breaks to help the wealthy save, but does little to nothing for middle-class Americans. Offer every American access to an automatic IRA on the job, so they can save at work just like everyone in this chamber can…
Or put another way – if you like your retirement account you can keep your retirement account.
And just like that, the "automatic" continuity to the Fed's Quantitative Easing is ensured.
via Zero Hedge http://ift.tt/1e8r5KE Tyler Durden
Consensus that the Fed would extend its $10bn taper from December with a further $10 bn taper today (reducing the monthly flow to a ‘mere’ $65 billion per month – $30bn MBS, $35bn TSY) was spot on. We suspect the view, despite the clear interconnectedness of markets (and flows), of the FOMC is that “it’s not our problem, mate” when it comes to EM turmoil.
Of course, “communication” was heavy with forward guidance on lower for longer stressed. We’ll see if the market buys the dichotomy of hawkish real tapering and dovish promises…remember “tapering is not tightening.”
Pre-FOMC: S&P Futs 1775, Gold $1267, 10Y 2.71%, 2Y 35.5bps, USDJPY 102, EM FX 85.67, WTI $97.35, IG 72bps, HY $106.35
Perhaps this chart from Saxo Capital Markets ( @saxomarkets ) sums up the world best for now…
Full redline below…
via Zero Hedge http://ift.tt/1fxCikI Tyler Durden
The FOMC will probably reduce the pace of its asset purchase program by another $10 billion at its meeting today as it continues to move towards using forward guidance as the primary policy tool. However, as we noted in the case of the Bank of England's Mark Carney, New Fed vice-chair Stan Fischer's skepticism, and even Ben Bernanke, forward guidance is losing its luster (as it works in theory but not in practice). Bloomberg's Joseph Brusuelas warns that given the probable direction of the unemployment rate amid a structurally damaged labor market and disinflation, the Fed faces a dilemma in that the status quo is untenable and may soon be challenged by traders and investors eager to move back toward interest rate and policy normalization. Just as Carney lost his credibility, the Fed risks a lot by reversing its taper today.
Via Bloomberg's Joseph Brusuelas,
The FOMC will probably reduce the pace of its asset purchase program by another $10 billion at its meeting today as it continues to move towards using forward guidance as the primary policy tool. Investors should anticipate another statement that reflects the duality of contemporary monetary policy: the hawkish reduction in asset purchases, which reflects the Fed’s growing confidence in the ability of the economy to sustain growth near the longterm trend of 2.5 percent, coupled with dovish forward guidance designed to keep short-term rates near zero.
Hidden within the occasionally obtuse central banker language is the Fed’s need to protect price stability while acknowledging that the recent decline in the unemployment rate is threatening to prematurely upend the central bank’s forward guidance policy.
Inflation is currently running just below the Fed’s lower boundary of 2 percent. Meanwhile, the decline in the unemployment rate to 6.7 percent, mostly due to individuals leaving the workforce, is threatening to jeopardize the credibility of the new forward guidance policy.
Given the elevated level in the duration of unemployment, historic lows in the labor force participation rate and employment-to-population ratio, the Fed may be unable to deliver maximum sustainable employment anytime soon.
The poor quality of labor gains and stagnant wages are indicative of a mild case of hysteresis in the labor market, or a one-time shock that results in a temporary break.
Making matters worse is the 1.3 million people who had their extended unemployment benefits terminated on Dec. 31 last year. They join the 7 million who have already exited the workforce, placing further downward pressure on the unemployment rate.
Assuming the pre-December 2013 sixmonth average trend in employment holds near 171,000 and the January household estimate captures the exit of those 1.3 million from the workforce, then the unemployment rate may decline as low as 6.5 percent, matching the Fed’s stated unemployment threshold.
If that happens, incoming Fed Chair Janet Yellen will need to use upcoming congressional testimony and Fed speeches to convince investors that a breeching of the threshold will not mean accelerating the central bank’s timetable on raising interest rates.
Given the structural problems in the labor market, the Fed will probably use the next few policy meetings to begin to emphasize the other side of its mandate, price stability, in order to legitimize its preferred “lower for longer” policy stance.
While there will probably be no major policy shifts in the January statement, investors will scrutinize the minutes when they are released on Feb. 20 to see if potential policy changes such as reducing the employment threshold to 6.5 percent or imposing an explicit inflation floor around 1.5 percent were debated.
Given the probable direction of the unemployment rate amid a structurally damaged labor market and disinflation, the Fed faces a dilemma in that the status quo is untenable and may soon be challenged by traders and investors eager to move back toward interest rate and policy normalization.
via Zero Hedge http://ift.tt/1fxCeS1 Tyler Durden
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via Zero Hedge http://ift.tt/1fxCela williambanzai7
While the world may be reeling in the aftermath of a horrible week for markets, which following today’s largely expected $10 billion additional taper announcement, is only set to get worse (because, oops, the global economy turned out to not be in escape velocity mode as everyone simply confused the artificial level of the S&P 500 with economic output, as usual), one entity is delighted by the recent surge in volatility and market uncertainty: CNBC.
The financial station which most had left for dead after an abysmal 2013, and an end to the year in which the Comcast-owned network barely had 30K viewers in its prime 25-54 demographics (which might explain the male incontinence diaper advertisements), managed to stage a remarkable come back and saw both its broad and target demo audiences post increases (from 113K to 134K for P2+, from 34K to 45K in 25-54). Well, maybe not “remarkable” per se: we use the term loosely. Charting the Nielsen data, here is how CNBC looks as of right now.
Yeah, in retrospect, definitely not remarkable.
Then again, it is distinctly possible that the January pick up is simply seasonal following a sleepy end to the year in which absolutely nothing was allowed to go wrong. As a result, it goes without saying that the correct metric to look at is year over year change. It is here sadly, that not even CNBC is able to score any brownie points with its advertisers: the January 2014 P2+ audience dropped by 21% from 2013, while the 25-54 demo was off by 18%.
Of course: the best way to test a thesis that market volatility is actually good for the permabullish channel is to have vol continue soaring, and if possible send the VIX over 80 a la Lehman: after all who could withstand the sight of Bob Pisani explaining a 50% market drop whily crying.. If not even that manages to boost CNBC viewership to prior year levels, forget its 2007 heyday, then Comcast may as well pull the plug.
via Zero Hedge http://ift.tt/1e8r0Xg Tyler Durden
While the world may be reeling in the aftermath of a horrible week for markets, which following today’s largely expected $10 billion additional taper announcement, is only set to get worse (because, oops, the global economy turned out to not be in escape velocity mode as everyone simply confused the artificial level of the S&P 500 with economic output, as usual), one entity is delighted by the recent surge in volatility and market uncertainty: CNBC.
The financial station which most had left for dead after an abysmal 2013, and an end to the year in which the Comcast-owned network barely had 30K viewers in its prime 25-54 demographics (which might explain the male incontinence diaper advertisements), managed to stage a remarkable come back and saw both its broad and target demo audiences post increases (from 113K to 134K for P2+, from 34K to 45K in 25-54). Well, maybe not “remarkable” per se: we use the term loosely. Charting the Nielsen data, here is how CNBC looks as of right now.
Yeah, in retrospect, definitely not remarkable.
Then again, it is distinctly possible that the January pick up is simply seasonal following a sleepy end to the year in which absolutely nothing was allowed to go wrong. As a result, it goes without saying that the correct metric to look at is year over year change. It is here sadly, that not even CNBC is able to score any brownie points with its advertisers: the January 2014 P2+ audience dropped by 21% from 2013, while the 25-54 demo was off by 18%.
Of course: the best way to test a thesis that market volatility is actually good for the permabullish channel is to have vol continue soaring, and if possible send the VIX over 80 a la Lehman: after all who could withstand the sight of Bob Pisani explaining a 50% market drop whily crying.. If not even that manages to boost CNBC viewership to prior year levels, forget its 2007 heyday, then Comcast may as well pull the plug.
via Zero Hedge http://ift.tt/1e8r0Xg Tyler Durden