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"The wolf thought to himself: 'What a tender young creature! what a nice plump mouthful.-- she will be better to eat than the old woman. I must act craftily, so as to catch both."
The Brothers Grimm, Little Red Cap
The Wall Street wiseguys are shoving the Groupon IPO out the door tonight I hear.
It *could* do well, but it strikes a kind of a chord for a high water mark in the post 2008 equity echo bubble. But I have found it useful not to underestimate the reckless disregard of the US financial system and the Fed for the overall economy. So we may see this bubble higher to a crescendo. The real prize is Facebook.
I consider this a dangerous market, highly event driven and thin of substance. Kind of like Obama and the rest of the Republican hopefuls.
I have heard from a number of people, including some fund operators, of the heartache this MF Global situation is giving to them in the form of bounced checks and busted positions. It is disgraceful. But that is getting to be a tired, overused word in these times of general breakdown of equal protection under the law and regulations.
The metals had a nice rally today after the post-option expiration gut check.
Benny cooed some reassuring words but did nothing. The equity markets rose for lack of anything better to do.
Gold and silver have not yet broken out and set the 'W Pattern' with a strong close above resistance around 1780.
If they can stick a strong close the year end target of 1950 is activated. Right now I cannot judge the probability, so I am running a more balanced hedge. Europe weighs heavily on most markets.
Benny reassured the markets without really saying anything.
"Everybody was expecting Tim Geithner and Bob Rubin, who's pulling the strings behind the scenes in the Obama Administration, to roll out some kind of IMF funded bailout for Greece in a global reflation. Your audience would love that.
It hasn't manifested itself yet. Supposedly at the G20 meeting next month, Obama was going to declare the jubilee and have the IMF just print money to bail out Greece, because they do not want to see restructuring here in the US, especially the top four banks.
Isn't it amazing that we have this supposed liberal Democrat as President, and he has never gone after the Big Banks? That's because they own him."
Chris Whalen, in an interview with King World News
The G20 meeting that Chris Whalen mentions begins on Thursday. There is little doubt in my mind that Mr. Papandreou announced his referendum to place the problem of Greek debt high on the G20 agenda.
Bernanke has a press conference at 2:15 EDT which may be interesting.
Non-Farm Payrolls for October will be reported on Friday morning. Expectations are in the 85,000 - 100,000 range.
The Fed is clearly laying the groundwork for some variation of QE3, but perhaps not just yet. They seem to be playing the game of looking for a rationale for a decision that may be controversial.
But the Fed is facing some time constraints for QE3 with the Presidential elections next year. The Fed is normally loathe to engage in unusual stimulus in conjunction with important elections for fear of being perceived as 'politically motivated.' Which it is of course. It just depends on what politics you care to use as a ruler. The Fed's preoccupation is the banking system first and foremost-- and size matters.
As for the greater public, let them eat food stamps, and whatever else may trickle down from the top 1%.
I suspect that the great exogenous variable remains European financial stability and its possible impacts on the upper crust of the US banking system.
Federal Reserve Board
Press Release
November 2, 2011
Information received since the Federal Open Market Committee met in September indicates that economic growth strengthened somewhat in the third quarter, reflecting in part a reversal of the temporary factors that had weighed on growth earlier in the year. Nonetheless, recent indicators point to continuing weakness in overall labor market conditions, and the unemployment rate remains elevated. Household spending has increased at a somewhat faster pace in recent months. Business investment in equipment and software has continued to expand, but investment in nonresidential structures is still weak, and the housing sector remains depressed. Inflation appears to have moderated since earlier in the year as prices of energy and some commodities have declined from their peaks. Longer-term inflation expectations have remained stable.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee continues to expect a moderate pace of economic growth over coming quarters and consequently anticipates that the unemployment rate will decline only gradually toward levels that the Committee judges to be consistent with its dual mandate. Moreover, there are significant downside risks to the economic outlook, including strains in global financial markets. The Committee also anticipates that inflation will settle, over coming quarters, at levels at or below those consistent with the Committee's dual mandate as the effects of past energy and other commodity price increases dissipate further. However, the Committee will continue to pay close attention to the evolution of inflation and inflation expectations.
To support a stronger economic recovery and to help ensure that inflation, over time, is at levels consistent with the dual mandate, the Committee decided today to continue its program to extend the average maturity of its holdings of securities as announced in September. The Committee is maintaining its existing policies of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate.
The Committee also decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013.
The Committee will continue to assess the economic outlook in light of incoming information and is prepared to employ its tools to promote a stronger economic recovery in a context of price stability.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Richard W. Fisher; Narayana Kocherlakota; Charles I. Plosser; Sarah Bloom Raskin; Daniel K. Tarullo; and Janet L. Yellen. Voting against the action was Charles L. Evans, who supported additional policy accommodation at this time.
