- My Forums
- Tiger Rant
- LSU Recruiting
- SEC Rant
- Saints Talk
- Pelicans Talk
- More Sports Board
- Fantasy Sports
- Golf Board
- Soccer Board
- O-T Lounge
- Tech Board
- Home/Garden Board
- Outdoor Board
- Health/Fitness Board
- Movie/TV Board
- Book Board
- Music Board
- Political Talk
- Money Talk
- Fark Board
- Gaming Board
- Travel Board
- Food/Drink Board
- Ticket Exchange
- TD Help Board
Customize My Forums- View All Forums
- Show Left Links
- Topic Sort Options
- Trending Topics
- Recent Topics
- Active Topics
Started By
Message
0
Posted on 6/29/13 at 11:57 pm to LSURussian
Let's equate $85 Billion to 85mph. Bernanke plans to reduce the speed he's driving. His "tapering" could mean that he goes from 85 mph to 80 mph. Not much change. That's what I think he will do based on his language.
He's not going to go from 85 mph to 0 mph.
I think the market will go up the day he confirms he went from 85 to 80. This will show the market that all is well and good with QE.
He's not going to go from 85 mph to 0 mph.
I think the market will go up the day he confirms he went from 85 to 80. This will show the market that all is well and good with QE.
Posted on 6/30/13 at 7:52 am to Matrixman
When it comes to figuring out what Benny said and is going to do, read the FOMC statements and minutes. Also listen to Benny's news conference. Don't read news articles. 9 times out of 10 they are written by people who aren't that bright or have an agenda.
Benny has a history of saying what he is going to do and then doing it. Get your info straight from the source.
Benny has a history of saying what he is going to do and then doing it. Get your info straight from the source.
Posted on 6/30/13 at 9:46 am to LSU0358
quote:
read the FOMC statements and minutes. Also listen to Benny's news conference. Don't read news articles. 9 times out of 10 they are written by people who aren't that bright or have an agenda.
Excellent advice.
Posted on 7/1/13 at 7:25 pm to LSURussian
Be careful everyone....josh is in the house. Or, at least he's lurking online at the moment.
ETA: he probably just wanted to see if anyone has noticed btc has dropped to $86. Seeing him online made me check it out...
ETA: he probably just wanted to see if anyone has noticed btc has dropped to $86. Seeing him online made me check it out...
This post was edited on 7/1/13 at 7:28 pm
Posted on 7/1/13 at 9:50 pm to LSURussian
Don't want to reply to all of this thread but Bernanke did not say he was definitely tapering late 2013 an ending mid 2014. He said he may given continued and sustainable improvement in data. Last week we had four governors speak and basically all say the markets overreacted. Will they taper at the end of the year? More than likely but it won't matter at the end of the day from a flow side.
Say the Fed tapers back $10B in MBS and $15B in Treasuries, this will coincide with over a $10B drop in MBS origination we've seen recently as well as over a $15B cut in Treasury issuance due to a decreasing deficit. At the end of the day the duration the Fed takes out of the market is still massive. At the end of this year the Fed will own over 30% of all Treausires over 3 years in maturity. If they continue to buy at the current pace given shrinking supply they will essentially break the Treasury market. The Fed will NEVER admit this as it would spark up the tin foil hats into the whole "THE TREASURY AND THE FED ARE IN COHOOTS RABBLE RABBLE RABBLE!!1!1!1!1!!" Is it a factor? I absolutely think so and it's not from a conspiracy standpoint but rather just the Fed's knowledge of the markets.
Regardless, everything has already been priced in so there won't be another shock outside of a fund blowing up. Also to the poster that linked the article, please know that 1/3 to 1/2 of the media that tries to write about finance has no idea what actually goes on in finance.
Say the Fed tapers back $10B in MBS and $15B in Treasuries, this will coincide with over a $10B drop in MBS origination we've seen recently as well as over a $15B cut in Treasury issuance due to a decreasing deficit. At the end of the day the duration the Fed takes out of the market is still massive. At the end of this year the Fed will own over 30% of all Treausires over 3 years in maturity. If they continue to buy at the current pace given shrinking supply they will essentially break the Treasury market. The Fed will NEVER admit this as it would spark up the tin foil hats into the whole "THE TREASURY AND THE FED ARE IN COHOOTS RABBLE RABBLE RABBLE!!1!1!1!1!!" Is it a factor? I absolutely think so and it's not from a conspiracy standpoint but rather just the Fed's knowledge of the markets.
Regardless, everything has already been priced in so there won't be another shock outside of a fund blowing up. Also to the poster that linked the article, please know that 1/3 to 1/2 of the media that tries to write about finance has no idea what actually goes on in finance.
This post was edited on 7/1/13 at 9:55 pm
Posted on 7/1/13 at 10:14 pm to BennyAndTheInkJets
Post more; I enjoy your take on things and you're very informative.
Posted on 7/1/13 at 10:41 pm to BennyAndTheInkJets
All i know as Mortgage rates jumped damn fast near 5%.
Not good for the housing market that has become addicted to QE like crack.
Not good for the housing market that has become addicted to QE like crack.
Posted on 7/2/13 at 1:33 pm to MoreOrLes
Mortgage rates will generally rise in line with Treasury rates. It's not a bad thing that mortgage rates rose, a lot of banks could technically lend but its hard to justify to your CFO that you're lending 30-year mortgages at 3.5%-3.75%. That's a lot of duration to have on your balance sheet as a bank, plus when if rates go up you get squeezed on your deposits. Higher rates can help originators too as originators will be able to have more room for spread pickup between the mortgages they buy and the MBS they sell. The big techinical factor that made mortgages underperform Treasuries was REIT selling. One of the reasons you'll see REITS with these crazy 10% dividends is because they can lever up ~5x to buy MBS and pass through the interest. However when the positions go the opposite way and you get margin called you have to start selling in a hurry, as was the case with REITs and MBS in May/June.
Posted on 7/2/13 at 2:43 pm to BennyAndTheInkJets
quote:
One of the reasons you'll see REITS with these crazy 10% dividends is because they can lever up ~5x to buy MBS and pass through the interest. However when the positions go the opposite way and you get margin called you have to start selling in a hurry, as was the case with REITs and MBS in May/June.
This is the reason I don't like REIT's in the mortgage business. Buying REIT's that actually own property is the way to go IMO. Might not have the 10%+ dividends (though some might), but the reversals aren't near as volatile.
Posted on 7/2/13 at 4:38 pm to LSU0358
Speaking of this FT Alphaville just had a great article on this. The important illustration is below.
Posted on 7/2/13 at 11:42 pm to BennyAndTheInkJets
I read one piece today where the author felt we are headed for stagflation and I gotta say I like his thoughts, read this blurb of his
"Right now, there is $1.9T of Federal Reserve printed money lying dormant outside the system in excess bank reserves, more than ever in history. If you've been tracking the "why hasn't inflation happened yet despite QE" back and forth, the answer is that the vast, vast majority of this QE is still stuck dormant at the Fed. What is this $1.9T waiting for to come out? The banks figure that they can earn more at the Fed than they can loaning it out at current interest rates, given the Fed can always pay the interest, while loaning it out to the public at historically low interest rates is much more risky given the possibility of default. The banks are waiting for higher rates to compensate for that risk.
Since May, interest rates on the 10-year have jumped from 1.63% to a current rate of 2.5%. If they go any higher, that money could start to come out in force, and as banks can loan out new money at a factor of 10, there is a maximum of not $1.9T, but $19T of money lying dormant, liable to enter the US economy at any time at the whim of a handful of bank executives. Think of an earthquake hitting a mountain. The base of the mountain (commodities and capital goods) will grow as prices will spike. The summit (consumer goods and restaurants especially) will fall over in to a ditch. Any Californian will tell you that the top of a building is the worst place to be during an earthquake. With this kind of inflationary time bomb, it is not safe to be at the summit of the economic mountain in the US, especially in a stock skirting its all-time highs with no dividend."
"Right now, there is $1.9T of Federal Reserve printed money lying dormant outside the system in excess bank reserves, more than ever in history. If you've been tracking the "why hasn't inflation happened yet despite QE" back and forth, the answer is that the vast, vast majority of this QE is still stuck dormant at the Fed. What is this $1.9T waiting for to come out? The banks figure that they can earn more at the Fed than they can loaning it out at current interest rates, given the Fed can always pay the interest, while loaning it out to the public at historically low interest rates is much more risky given the possibility of default. The banks are waiting for higher rates to compensate for that risk.
Since May, interest rates on the 10-year have jumped from 1.63% to a current rate of 2.5%. If they go any higher, that money could start to come out in force, and as banks can loan out new money at a factor of 10, there is a maximum of not $1.9T, but $19T of money lying dormant, liable to enter the US economy at any time at the whim of a handful of bank executives. Think of an earthquake hitting a mountain. The base of the mountain (commodities and capital goods) will grow as prices will spike. The summit (consumer goods and restaurants especially) will fall over in to a ditch. Any Californian will tell you that the top of a building is the worst place to be during an earthquake. With this kind of inflationary time bomb, it is not safe to be at the summit of the economic mountain in the US, especially in a stock skirting its all-time highs with no dividend."
Posted on 7/3/13 at 5:30 am to BennyAndTheInkJets
quote:Thanks again Benny, keep them coming.
Speaking of this FT Alphaville just had a great article on this.
quote:
"[...] It’s quite possible that a tightening of lending markets generally, and worries about agency MBS prices specifically, would lead money market funds and other repo lenders to withdraw. But a systemically threatening run normally occurs when the reliability of the debt collateral avoiding default comes into doubt, not when the collateral experiences price fluctuations.
More legitimate worries are that doubts about the value of agency MBS will trigger a systemically damaging run on repo markets, and that declines in the value of agency MBS will further hurt the mortgage market as financing retreats and liquidations follow."
Lawd. Everything we read today takes us to the fact that leverage based on questionable credit is the underpinning of this market. It won't take 50% of market participants pulling their funds out to cause another major correction. All it will take is a few misreadings by money market credit analysts and we're there.
Page 2 of 2
Popular
Back to top
Follow TigerDroppings for LSU Football News