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Joseph Stuber

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  • The Fed's Reverse Repo Actions In 2014 Means QE Effectively Ended In December But They Forgot To Tell Us [View article]
    Carlos

    Not exactly a wash. The Fed balance sheet grew by roughly $136 billion through asset purchases and there is no day on the list above where the Fed doesn't do a reverse repo so depending on the day you are looking at at the very least a significant portion of QE was sterilized. There is no day that is not true.

    The logic I used to approximate the impact of the reverse repos suggests that on the average over the time frame involved the Fed fully sterilized all QE and actually withdrew liquidity. That said, the only way to calculate precisely is to do an in/out for both QE and reverse repos.

    In any event it is certainly not a wash.

    JS
    Mar 14 07:25 PM | 5 Likes Like |Link to Comment
  • The Fed's Reverse Repo Actions In 2014 Means QE Effectively Ended In December But They Forgot To Tell Us [View article]
    satt

    I clearly didn't say that the Fed sterilized $4 trillion. This is what I did say though:


    "The Fed is effectively withdrawing on average $80.577 billion a month at the same time they are conducting asset purchases under QE. According to the Fed website their balance sheet assets totaled $4.02360 trillion on January 1, 2014 and $4.159972 on February 26. The difference between the two numbers is $136.322 billion. Using the average value of the reverse repos of $80.577 for two months the total value of the withdrawals from the system equal $161.114. In other words, the Fed has essentially reduced liquidity in the system from January 1st through the end of February by approximately $24.782 billion during that two month period."

    In other words I said they did sterilize roughly $136 billion. You criticize me for misstating or embellishing the facts yet it is you that misstated what I said.

    JS
    Mar 14 06:21 PM | 5 Likes Like |Link to Comment
  • The Fed's Reverse Repo Actions In 2014 Means QE Effectively Ended In December But They Forgot To Tell Us [View article]

    Right.
    Mar 14 04:49 PM | Likes Like |Link to Comment
  • The Fed's Reverse Repo Actions In 2014 Means QE Effectively Ended In December But They Forgot To Tell Us [View article]
    Lawrence

    I did find it but what is the likelihood the average investor would find it or even know what he found if he did stumble onto it?

    The average investor is likely to buy the spin that all is well and the economy is now able to withstand QE withdraw. I don't care what the Fed tells us or fails to tell us and quite honestly I would prefer to go back to the silent system where they just did what they did without fanfare.

    What I don't like is for them to be open on those FOMC actions that investors see as positive while being silent in their rhetoric on those matters that suggest they see a lot of problems. Again, there is a reason they are tapering and it is not the one we hear about. There is also a reason they are doing unprecedented levels of reverse repos and yet no comment as to why. That bothers me a lot.

    JS
    Mar 14 04:42 PM | 7 Likes Like |Link to Comment
  • The Fed's Reverse Repo Actions In 2014 Means QE Effectively Ended In December But They Forgot To Tell Us [View article]
    Carlos

    Actually from the Fed's point of view they are on the sell side and therefore withdrawing cash from the system and they then buy it back at maturity putting cash back into the system.


    JS
    Mar 14 04:31 PM | Likes Like |Link to Comment
  • The Fed's Reverse Repo Actions In 2014 Means QE Effectively Ended In December But They Forgot To Tell Us [View article]
    Lawrence

    You have got to be kidding. It should take your breath away and I should have capitalized those words. There is literally no precedent for what the Fed has done with QE nor is there any precedent for the deception they are perpetrating on investors today.

    I think I know your mindset so I understand your comments but I certainly don't agree with them. If I recall, and correct me if I am wrong, it is your view that we should simply accept the idea that an ever higher percent of the population will not be able to provide for themselves and the government should assume that role.

    Again, I don't subscribe to that view and don't think the Fed has done anything but assure that we will end up in recession and without the needed tools to spend our way out of it this time.

    Accept my apology in advance if I am wrong on your view but I do recall we've had this debate before.

    JS
    Mar 14 03:59 PM | 4 Likes Like |Link to Comment
  • The Fed's Reverse Repo Actions In 2014 Means QE Effectively Ended In December But They Forgot To Tell Us [View article]
    Flash

    The ruble is obviously under pressure due to Russia's actions in Crimea and the threat of sanctions. I have said both China and Russia must certainly be aware of the short term consequences of their actions and willing to endure the pain to achieve their end.

    China's situation is also troublesome in the short term. For instance their balance of payments estimate missed by a lot. The estimate was for a 7.5% positive print and it came in at something like 18% negative print I think.

    As far as Japan is concerned they are in the same mode as we are only more so with ZIRP and massive QE. The BOJ has managed to do a pretty good job to date and maybe they can continue - I don't know.

    I do know if they lose control of rates and yen the unwind will be severe and it seems to me they are in fact losing control.

    JS
    Mar 14 03:45 PM | Likes Like |Link to Comment
  • The Fed's Reverse Repo Actions In 2014 Means QE Effectively Ended In December But They Forgot To Tell Us [View article]
    Lawrence

    It's more accounting than math. Each reverse repo withdraws cash from the system. The fact that the Fed has engaged in daily reverse repos means that as they redeem the prior days repo they are injecting cash back into the system while simulatneously withdrawing cash from the system.

    I suppose one could go through all the ins and outs and arrive at an exact number on a daily basis. Seems a lot of work to me and unnecessary to arrive at a general conclusion that the Fed is doing all they can to combat the drift lower of the dollar.

    The real point is you just don't do $4 trillion in reverse repos in a little over two months without a purpose and that purpose seems clear to me. Why do you think they are doing it?

    By the way - the Fed's balance sheet hasn't expanded by $225 billion in the time frame referenced.

    JS
    Mar 14 03:36 PM | 3 Likes Like |Link to Comment
  • Things You Probably Don't Understand About Russia's Agenda And Why You Need To Understand Them [View article]
    Herepog

    Finally someone with an informed response. Thanks for your insights. Many good points in your comments.

    JS
    Mar 12 05:07 AM | Likes Like |Link to Comment
  • Things You Probably Don't Understand About Russia's Agenda And Why You Need To Understand Them [View article]
    invest

    Nonsense. I have not given up my deflation thesis at all and gold can go down at the same time the dollar goes down. We've seen that happen over the last 12 months.

    I still see deflation as the major problem. Where I diverge from the traditional thinking on how we can see deflation and still see higher gold has to do with the fact that China's actions are producing a glut of dollars and creating dollar weakness and it will get weaker still.

    Accompanying that will be a sharp sell off and a risk off, cash hoarding mindset that produces deflation at the same time we see a glut of dollars moving into the system as fewer and fewer hold these dollar as reserve assets.

    Even my closest associates seem to have problems with my logic on this point but the facts remain - so far I have been right in that the dollar has been very weak, disinflation is a serious problem and gold is moving higher at a pretty good clip - about $100 higher since I wrote my article earlier this month suggesting now was the time to go long gold.

    And I will repeat I am not a gold bug but I do understand gold and it is going a lot higher in my opinion and for the reasons I have cited.

    JS
    Mar 11 11:16 PM | Likes Like |Link to Comment
  • Things You Probably Don't Understand About Russia's Agenda And Why You Need To Understand Them [View article]
    Flash

    Because I think the market is going to crash. I do have heavy long positions in GLD and leveraged positions in high PE puts as well as being long volatility.

    JS
    Mar 11 10:59 PM | 1 Like Like |Link to Comment
  • Things You Probably Don't Understand About Russia's Agenda And Why You Need To Understand Them [View article]
    James

    One more point - I did quote Rickards but as far as I am concerned Rickards could do just as well quoting me. My calls on gold have been better than any gold authority I know including the sell off, the reason for the sell off and my most recent long call.

    I published an article on Feb 11 that I wrote over the weekend preceding. Since I made that call gold has moved up about $100. Gold futures are up about $11 tonight.

    I doubt that you are interested in why I made that call but if you are the article is listed at the bottom of this article and just above the comments section.

    Make no mistake - I am not a gold bug but I do understand the gold market.

    JS
    Mar 11 10:46 PM | Likes Like |Link to Comment
  • Things You Probably Don't Understand About Russia's Agenda And Why You Need To Understand Them [View article]
    James

    You are right that China would feel the impact and they are feeling it now. Your assumption is that they would not be willing to do that and I think that is extremely naive. They have moved to abandon the dollar and to sell treasuries and make no mistake - it has impacted their economy. After all they printed a trade deficit that missed the call by 25%. They did that to themselves and it is absurd to think they didn't know that would happen.

    And how about Russia. Do you really think they were so naive that they didn't anticipate the short term impact to the ruble and their own stock market when they moved into Crimea. Please.

    And do you really think the Fed believed their actions with QE would bring economic growth? Hell no they didn't as they had Japan to look to as an example if nothing else. These policies have been very deflationary but they have transferred tremendous wealth to the banks and the international companies who have no sovereign allegiance anymore.

    As I said your thinking seems a little suspect here. There is an agenda being played out with each iteration of the boom/bust cycle and the agenda is to make international corporations and international banks bigger and bigger and to crush the competition. And the agenda has been incredibly successful.

    JS
    Mar 11 10:26 PM | 2 Likes Like |Link to Comment
  • Things You Probably Don't Understand About Russia's Agenda And Why You Need To Understand Them [View article]
    James

    I need to expand on the point of the proposed system and the euro system. The euro system is terribly flawed for one reason. Sovereigns can indebt themselves but they have no mechanism to expand their money supply and in so doing monetize that debt through devaluation. No such limitation exists under the system explained by Ocampo.

    There are both net export countries and net import countries in the eurozone and have diametrically opposed needs relating to their domestic currencies. The eurozone concept means that the ECB necessarily must hurt one group and benefit the other with policy that either strengthens or weakens the euro.

    If is a complete fiasco and necessarily must be reinvented at some point. The system proposed has no such limitations as each sovereign would be able to expand or contract their domestic money supply without the beggar thy neighbor impacts that exist under the current system.

    What the proposed system does is eliminate the Triffin dilemma and additionally deals with the reserve currency imbalance in the same manner the Fed deals with that issue with its member banks.

    JS
    Mar 11 10:16 PM | 2 Likes Like |Link to Comment
  • Things You Probably Don't Understand About Russia's Agenda And Why You Need To Understand Them [View article]
    James

    "the reason they will never agree to this is that it implies renouncing monetary sovereignty and submitting to a fixed-exchange rate regime, with many of the known disadvantages that the Euro has."

    Who do you mean by they - China and Russia? If so, I strongly disagree. I really do think you would be well served to read Ocampo's white papers on this subject. Or Triffin or even Keynes. And what you say regarding monetary sovereignty is absolutely not true.

    Triffin is right as was Keynes and now Ocampo. A sovereign reserve currency is a recipe for disaster but a very complex matter to explain. I did my best to do so by sighting Ocampo's work but apparently you don't understand his points.

    As to the matter of China having great leverage over the US it seems there can be no question on that. They have managed to push the dollar index from 85 and change to below 80 in less than a year.

    Do you really think the Fed is tapering because they believe the economy is improving? They are tapering in direct response to the fall in the dollar and that is because of China and numerous bilateral trade agreements that bypass the dollar meaning dollars are no longer being hoarded as reserve assets.

    And make no mistake - if China decided to dump their treasury holdings all at once it would crush the bond market and the dollar. I know you can't think otherwise.

    And for what it's worth gold is going up and rather rapidly and because of the weak dollar. And believe me I understand how global bond and currency markets work.

    What myth are you talking about as it relates to my fundamental misunderstanding of global bond and currency markets? Maybe you can enlighten me and my readers on the specifics of our misunderstanding on this matter.

    JS
    Mar 11 10:08 PM | 3 Likes Like |Link to Comment
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