... Or Even Worse - "Helicopter Money"?
09-30-15
Is "Helicopter Money" Coming?
Since the start of June, global equity markets have lost over $13 trillion.
This might be thought of as lost "collateral" for the mountains of pyramided
global debt. This is frightening the Central Bankers!
(The last time global market dropped this much - Bernanke unleashed QE2)
As Zero Hedge spells out:
"world market capitalization has fallen back below $60 trillion for the
first time since February 2014 as it appears the world's central planners' "print-or-die" policy
to create wealth (and in some magical thinking - economic growth) has failed
- and failed dramatically".
Despite a steady diet of global rate cuts and balance sheet expansion around
the world, the last 4 months have seen an 18% collapse - the largest since
Lehman.
The Fed Has Been Backed Into The Corner of Once Again Increasing Its Balance
Sheet
Historical Behavior Suggests This Should Soon To Be Expected
What Are The Central Bankers' Options?
Of course you never know for sure, but the general thinking is there are three
likely central bank initiatives in our future. They may be rolled out or unleashed
in a coordinated fashion to stem a potential economic crisis.
It Will Only Take The Perception Of A Crisis To Unleash A Torrent Larger Than
We Can Currently Imagine!
Let me be perfectly clear, non of this will work in the longer term! But when
you are trying to keep your job the longer term is the least of your concerns.
It Will Likely Result In An 9 Month Rally And Marginally New Highs (Our
Predicted"M" Top)
Goldman Supports Our 'M" Top - With Bogus Numbers
Potential Fed Trigger Levels
A - Bull Market Trend Channel Support
CHANNEL SUPPORT = 1860
B - Traditional Fibonacci Support Levels
FIBONACCI 38.2% = 1837
FIBONACCI 50.0% = 1743
C - Regreassions & Trade Weighted Dollars
Our longer term analysis on both the basis of linear regression and trade
weighted dollars for the S&P 500 suggest ~1800needs to be held or matters
could get quickly out of control for central bank policy initiatives.
| LONG TERM REGRESSION |
TRADED WEIGHTED $ spx |
 |
 |
D - Some See The Fed "Put" to be Much Lower
I find the views of Nomura's Bob Janjuah to very insightful and predictive.
He sees the Fed "PUT" to be much lower than we do.
He
writes:
"Where is the Fed "put", and what would such a "put" look like? It is very
early in the process and lots will depend on global policy responses and
data outcomes, but I am happy to declare my view: the next Fed "put" is not
likely until the S&P 500 is trading in the 1500s at least (so more
likely to be a Q1 2016 item rather than Q4 2015); and in terms of what
the Fed could do, clearly QE4 has to be in the Fed's toolkit. However, considering
the failure of global QE to generate sustainable global growth and inflation,
and considering the Fed's starting point, 2016 could be the year when we
see negative Fed Funds as a way of getting money velocity moving up
rather than down.
... while I think a US recession is merely possible rather than probable,
the evidence is growing in my view that a global recession is more probable
than possible. Certainly the global trade data are pointing to meaningful
global growth weakness, backed by weak data from EM and large parts of DM
too. And a quick look at credit markets, in particular the HY markets in
the US and Europe as well as the EM credit space support my view of a global
growth recession being probable and not just possible. So if a global growth
recession is more probable than possible, then it seems clear to me that
neither risk assets nor core rates markets are accurately reflecting this
at this time - instead, they reflect the "more possible" scenario rather
than "more probable". In other words, financial markets are NOT yet pricing
for a recession, rather they are merely flirting with the idea. I suspect
this largely reflects faith/hope in policymakers within market participants.
The events of the past few weeks, both going into and after the most recent
BOJ and FOMC meetings, should give those heavily invested in policymaker
faith/hope a lot of food for thought."
The Revenue Recession Is Moving Towards A Economic Recession Scare
The Fed catalyst may not be a market level but rather the potential worry
of an Economic Recession. A scare that may galvinize the Fed into action?
My research shows for the first time since 2009, all six major Fed regional
activity surveys are in contraction territory.
Charts: Bloomberg
What The Mainstream Media is Not Showing - But the fed is well aware of!
Expect The Fed To Hide Behind The Coming Market Realization Scare!
QE4, Helicopter Money (OMF) and Collateral Guarantees are coming soon!
