Guys like Bernake and Miller (out in 1979) have to be thrown out to stop their easing tendencies. They'll have to bring in a Volker clone, just like last time they had to dump Miller to save the dollar. Just hope its not too late when they pull the plug on the counterfei-, er, Treasury source, of new bills this time.
Why Fed Will Pull The Rug Today
- Thread starter shortie
- Start date
Quote from Scataphagos:
The Fed is in "maniuplation of sentiment via stock market" mode....
Not only will they not "take the punch bowl away now"... they probably won't do so even when inflation gets roaring...
Exactly. The Fed's/Treasury's campaign of confidence restoration via juiced markets has kept the feeble patient alive. There is no chance, zero, zilch that the Fed would enact any type of restrictive monetary policy here. It's the only thing that's keeping the US citizens from eating eachother.
A US dollar devaluation is in the cards if we are not to go the liquidation route - the 'in between area' is here. Otoh, a dollar devaluation will be enormously stimulative. With that said, M2 is no longer rising despite quant easing efforts. And with that said, imagine M2 if the Fed weren't buying treasuries or MBS. I'm obsessed with these points lately. I expect the Fed bumps treasury buying up to 1T today and we see a golden day for goldbond medicated power.
BTW - quant easing will more obviously work when they do the right amount of it.
Quote from Scataphagos:
The Fed is in "maniuplation of sentiment via stock market" mode....
Not only will they not "take the punch bowl away now"... they probably won't do so even when inflation gets roaring...
They are going to do all in their power to keep it propped up.
Until they are unable to do so anymore.
actually, maybe i misunderstood you atticus. did you mean to say that it was a proper thing to do to be short Volatility into Fed?
i thought you we suggesting to cover short strangles before the Fed given today's volatility drop and to re-establish short strangles soon after the announcement because there is gonna be a volatilty spike.
what i was trying to say was that i am reasonably comfortable with my positions going into the Fed announcement and that i did not think it was worthwhile to try to close/open the position before/after Fed.
now i have a tiny short bias going into the announcement http://www.elitetrader.com/vb/showthread.php?s=&postid=2479121#post2479121
hey shortie,
If i were you, I would cover before the fed, and then re-establish with main gain made as follows: I would sell calls on jump up, and sell puts on a selloff after fed annoucement. Therefore you would gain in possible volty spike, but also and most imporantly on the effects of delta on legs.
In doubt I would try it on half the size.
If i were you, I would cover before the fed, and then re-establish with main gain made as follows: I would sell calls on jump up, and sell puts on a selloff after fed annoucement. Therefore you would gain in possible volty spike, but also and most imporantly on the effects of delta on legs.
In doubt I would try it on half the size.
fed just accused of fraud...reputable source....
Quote from shortie:
what i was trying to say was that i am reasonably comfortable with my positions going into the Fed announcement and that i did not think it was worthwhile to try to close/open the position before/after Fed.
now i have a tiny short bias going into the announcement http://www.elitetrader.com/vb/showthread.php?s=&postid=2479121#post2479121
This guy is a real trader!