‘Talk
of QE and rumors of coming Central Bank Intervention pushed stocks and Gold
higher on Monday. It’s odd to hear these rumors when every major Central Bank has in fact been
clearly stating NO new stimulus is coming any time soon
Indeed,
as the Fed has proved now for eight consecutive FOMC meetings, it is not going
to announce more QE unless another systemic Crisis erupts. Instead the Fed
continues to reiterate its talk of maintaining low interest rates, which is
largely a symbolic gesture as it changes nothing
From the April 27 FOMC minutes
To
support a stronger economic recovery and to help ensure that inflation, over
time, is at the rate most consistent with its dual mandate, the Committee
expects to maintain a highly accommodative stance for monetary policy. In particular, the Committee decided today 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
late 2014.
http://www.federalreserve.gov/newsevents/press/monetary/20120425a.htm
The
Bank of
BOJ eased to ensure recovery, won’t
act “automatically”
Bank
of
At
the April 27 meeting, the BOJ boosted asset purchases by 10 trillion yen ($126
billion), offering its second stimulus in just over two months in a show of its
determination to achieve its 1 percent inflation target set in February.
Central
bank policymakers agreed that
But
they decided to act to ensure that such positive momentum in the economy is
sustained given various uncertainties over the outlook, such as the chance of
tensions over
http://www.reuters.com/article/2012/05/28/us-japan-economy-boj-minutes-idUSBRE84R01020120528
So
has the ECB…
Nowotny Says ECB Not Discussing Reviving Bond Purchases
European Central Bank Governing
Council member Ewald Nowotny
said the bank isn’t considering restarting its bond-purchase program to stem
rising borrowing costs for governments in the euro area.
“This
for the time being is not a matter of discussion,” Nowotny
told reporters in
Stocks lose shine as ECB signals no new stimulus
Stocks
turned lower on Thursday after the European Central Bank indicated it would
not, for now, ease its monetary policies further to fight the debt crisis and a
Though
the ECB’s decision to keep its main interest rate
unchanged at 1 percent was expected, there was disappointment in the markets
that the bank’s president Mario Draghi gave no
indication it might offer more long-term super-cheap loans to banks or that
monetary policy could be made more accommodative.
http://www.businessweek.com/ap/2012-05/D9UHB7381.htm
Even
China
has no plan to introduce stimulus measures to support growth on the scale
unleashed during the depths of the global credit crisis in 2008, according to
the nation’s state-run Xinhua News Agency.
“The Chinese government’s intention is very clear: It
will not roll out another massive stimulus plan to seek high economic growth,”
Xinhua said yesterday in the seventh paragraph of an article on economic
policy, without attributing the information. “Current efforts for stabilizing growth will not repeat the old way of
three years ago.” In 2008, policy makers unveiled a fiscal
stimulus of 4 trillion yuan ($586 billion at the
time).
Thus
we have the world’s three most important Central banks as well as the global
economy’s “economic miracle” retreating from aggressive monetary intervention.
The
reality is that Central Banks are all realizing that:
1)
Their interventions thus far (QE in the
2)
The consequences of their interventions (namely inflation) are now outweighing
the benefits (heck Bernanke was admitting this as far back as May 2011… and now
even uber-dove New York Fed President Bill Dudley is
admitting it).
This
is an extremely dangerous environment: one in which the primary prop for the
markets (central bank intervention) is becoming both less effective and
politically toxic. Indeed, it’s clear at this point that the EU is beyond intervention since neither the ECB, IMF, nor the ESM have the firepower to hold
things together.
Indeed,
the one and only entity that might
possibly hold up the EU would be
And
it’s not even clear
In
plain terms, the EU is fast approaching its End Game. Germany and the other
political leaders will stall for time and engage in verbal intervention, but in
the end, there simply isn’t enough capital in the world to hold up the over
leveraged (26 to 1) toxic sewer that is the EU banking system.
With
that in mind, I’m already positioning subscribers of Private Wealth Advisory for the
upcoming EU collapse. Already we’ve seen gains of 6%, 9%, 10%, even 12% in less
than two weeks by placing well-targeted shorts on a number of European financials.And we’re just getting started. Indeed, we just
closed our 63rd straight winner last week: an 8% gain.So
if you’re looking for the means of profiting from what’s coming, I highly
suggest you consider a subscription to Private Wealth Advisory. We’ve
locked in 63 straight winning trades since late July (thanks to the timing of
our trades), and haven’t closed a single losing trade since that time.To learn more about Private Wealth Advisory and how it
can help you make money in any market…Click
Here Now!!!Best Regards, Graham
Summers, Chief Market Strategist,