The Market Has Spoken: The Fed Made A Policy Mistake And "Quantitative Failure" Looms - What Comes Next | Zero Hedge

The Market Has Spoken: The Fed Made A Policy Mistake And "Quantitative Failure" Looms - What Comes Next | Zero Hedge

Now that the Fed's rate hike is in the history books and Yellen is eager to demonstrate that the Fed is confident enough in the US economy by unleashing the first tightening cycle in nearly a decade, market participants are dramatically shifting their attention, from the rate hike as a bullish key catalyst in the "renormalization" timeline ("buy stocks" because the Fed wouldn't risk recession if it wasn't confident in the economy), to the actual consequences of the Fed's dramatically changed reaction function, which as we explained previously, was far more hawkish than the market initially expected. 

Most important however, as we have repeatedly discussed ever since August, is the market's obsession with whether the Fed just made a critical "policy mistake." As Bank of America's Michael Hartnett, one of the foremost skeptics that the Fed is doing the right thing, explained previosly, "the “tail risks” to “deflationary expansion” are high. Like a game of Jenga, a bull market built by central banks can collapse if further BoJ/ECB QE and Fed hikes engender US dollar spikes & US EPS & EM/commodity swoons, FX-wars & volatility rather than a fullblown recovery."

The threat, therefore, is that after "Quantitative Success" pushed up stocks from 666 to over 2,100 in 6 years, the opposite may be on deck now, hence the neo-narrative of Quantitative Failure and the dual risk that:

• Fresh attempts at QE in Japan & Europe are met with investor rebellion in the absence of clear signs of economic improvement.
• Fed tightening into a “deflationary expansion” proves a “policy mistake” by causing harmful US dollar appreciation.

For signs of the first look no further than the market's profound disappointment with the BOJ announcement on Friday morning, which sent the Japanese Yen plunging at first, only for the carry currency to soar once the market realized that the BOJ's ability to intervene in markets may be far more constrained than had been anticipated, as we showed yesterday...

... and of course, the ECB's historic disappointment on December 3 when Mario Draghi promised the sun, moon and stars and delivered... almost nothing, likewise sending the EUR soaring and crushing countless macro hedge funds.

But how to determine if the Fed made a mistake, and more importantly if the market thinks the Fed made a mistake? We presented Hartnett's answer to that key question as well, saying that upon a rate hike:

• Watch the long-end
• If the long-end concurs with the Fed’s view of economic recovery, then banks, cyclicals and value stocks will receive a bid. Asset allocation toward “strong
  dollar” & “Fed tightening plays” will harden, with the exception that value will likely outperform growth
• If the long-end rallies, signaling a policy mistake, then cash, volatility, gold & defensive growth will be the way to go.

So what happened since the Fed hike? Well, after a one-day kneejerk rebound in risk, coupled with a drop in vol, gold and virtually no reaction in the long-end, the result, as shown below, has been a very disturbing one for the Fed. 

As can be clearly seen, the market has responded not only by endorsing a deflationary outcome with the 30Y jumping, WTI sliding, but also stocks tumbling, with the Thursday and Friday drop in the S&P matching the worst plunge in the market since the ETFlash crash of August 24.

In short, the market has spoken: this is a "policy mistake", or as Bank of America - which also explained recently in 8 very charts why the Fed just launched the next Bear Market - called it "Quantitative Failure."

The question then becomes: what happens next when the "boxed in" Fed realizes it has erred, and scrambles to undo the damage, any last trace credibility be damned? Here is Hartnett's answer to that as well:

Since the risk of Quantitative Failure brings with it the risk of more extreme policies/politics in 2016, the natural hedges are gold & volatility. Gold in particular will be interesting to watch in coming months. The Fed’s determination to raise rates means gold prices should fall. If in contrast gold rises with Fed hikes that’s a clear sign of a “policy mistake” and investors anticipating the need for more inflationary policies next year.

In other words, as we have said for the past 2 years, since the Fed does not ever have the option of waving the white flag of surrender and admitting defeat (at least as long as there is fiat currency left for its to print and debase) it will have no choice but to unleash even more violent, "unorthodox", inflation-stimulating policies in the coming months (such as the monetary paradrops we discussed here in September and October). When that happens, the biggest winner will be the one asset class that as of this moment has never been more hated, the one whose hedge fund net short position has never been greater: Gold.

Gold rose 1.5% on Friday while risk was turmoiling, but is still below the FOMC announcement price. That means that while risk assets have started pricing in the Fed's misstep, gold and its record hedge funds shorts are still mostly unaware.

The Truth About The Crusades

As lawmakers clash over refugees, Syrian immigration quietly tops 100,000 since 2012 | Fox News

As lawmakers clash over refugees, Syrian immigration quietly tops 100,000 since 2012 | Fox News





A proposal to admit 10,000 Syrian refugees to the United States has ignited a bitter debate in Washington, but more than 10 times that number of people from the embattled country have quietly come to America since 2012, according to figures obtained by FoxNews.com.


Some 102,313 Syrians were granted admission to the U.S. as legal permanent residents or through programs including work, study and tourist visas from 2012 through August of this year, a period which roughly coincides with the devastating civil war that still engulfs the Middle Eastern country. Experts say any fears that terrorists might infiltrate the proposed wave of refugees from United Nations-run camps should be dwarfed by the potential danger already here.


“The sheer number of people arriving on all kinds of visas and with green cards, and possibly U.S. citizenship, makes it impossible for our counterterrorism authorities to keep track of them all, much less prevent them from carrying out attacks or belatedly try to deport them,” said Jessica Vaughan of the Center for Immigration Studies.


“I think it’s reasonable to assume that the U.S. Government ran the minimum intelligence traces required at the time of entry.”


– Fred Burton, Stratfor



Numbers obtained from the U.S. Customs and Border Protection show 60,010 Syrian visa holders have entered the U.S. since 2012, including 16,245 this year through August. Additional numbers provided by a Congressional source showed another 42,303 Syrians were granted citizenship or green cards during the same period.


“It is highly unlikely that the 102,313 Syrians who were admitted over the past three years were effectively vetted,” said spokesman Ira Mehlman, of the Federation for American Immigration Reform. “Even in countries where we have a strong diplomatic presence, the sheer volume of background checks being carried out precludes the kind of thorough vetting that is necessary.”


The Syrians being admitted are coming directly from their homeland, usually through the U.S. visa program, as opposed to the refugees President Obama is seeking to take in through U.N.-run refugee camps. Most have secured legal entry before they arrive.


“Refugees are part of the admitted category,” said Jaime Ruiz, spokesman for the U.S. Customs and Border Protection. “Their cases are approved prior to arriving into the U.S.”


Those who escaped Syria’s grinding civil war, which has killed an estimated 300,000, and made it to the U.S. are more likely to be those with the money and means to access the U.S. immigration bureaucracy, say experts. But even that system is susceptible to fraud.

Related Image


Expand / Contract


Syrian refugees wait for mattresses, blankets and other supplies, and to be assigned to tents at the Zaatari Syrian refugees camp in Mafraq, near the Syrian border with Jordan. (AP)


President Obama’s proposal raised immediate concerns that ISIS, which vowed to infiltrate refugee camps, could use forged documents to enter the U.S. White House assurances that refugees would be carefully screened met with renewed skepticism after it was revealed that terrorist Tashfeen Malik obtained a fiancée visa despite notable red flags. Malik, who together with her husband killed 14 and wounded 21 in a terror attack in San Bernardino, Calif., Dec. 2, listed a phony Pakistani address and reportedly had a history of posting jihadist messages on social media platforms – although FBI Director James Comey disputed that on Wednesday.


Malik’s entry into the U.S., combined with so many Syrians already here, is even more concerning than the proposed refugees, according to Fred Burton, of the global intelligence firm Stratfor.


“I’m more fearful of those currently inside the U.S. predisposed to strike locally as with the San Bernardino model,” Burton said. “I think it’s reasonable to assume that the U.S. government ran the minimum intelligence traces required at the time of entry.”


Mehlman said the same concerns raised in regard to the refugees – mainly that no reliable documents can be issued in a country in complete meltdown – apply to the Syrians already here.


“All civil order has collapsed, and meaningful background checks are impossible,” Mehlman said. “Instead, we rely on cross-checking databases. However, many people with ties to terrorist groups are not in any databases, which means there is no way we can identify them before they arrive here.”


A government official who expressed astonishment at such large immigration numbers from a relatively small country, said approximately half are legal permanent residents and the remainder came here on visas, the latter of which remains a point of contentious concern.


Screening of all immigrants and refugees must be tightened, said Rep. Mike McCaul, chairman of the House Homeland Security Committee.


“This administration has forbid our front line security professionals from more broadly incorporating social media information into the visa application process, something that might have kept this attacker out of our country,” said McCaul, R-Texas. “We need more robust vetting and screening of all visa applicants.”


Additional data obtained from CBP found that while five Syrians have been apprehended in 2014 and another five in 2015 attempting to cross over the southern border from Mexico, the northern border escapes public and political scrutiny. In 2014 eight Syrians were apprehended by Border Patrol attempting to cross into the U.S. from Canada. Since 2011, 1,229 Syrians have been granted entry from Canada.


http://www.foxnews.com/us/2015/12/16/as-lawmakers-clash-over-refugees-syrian-immigration-quietly-tops-100000-since/

Putin on S-400 Deployment in Syria: Let Turkish Aviation Fly Now

Putin on S-400 Deployment in Syria: Let Turkish Aviation Fly Now

12:39 17.12.2015(updated 16:22 17.12.2015) 

Topic:

Putin's 2015 Annual Year-End Press Conference (36)

Turkey will not be able to violate the Syria airspace after Russia had deployed S-400 defense system in Hmeymim airabse, Russian president Vladimir Putin told journalists during the press-conference in Moscow.

With Russia's deployment of the S-400 anti-aircraft system, Turkey will not be able to violate Syria's airspace with impunity, as they had previously done, Russian President Vladimir Putin said Thursday at his annual press conference.

"They [Turkish authorities] thought that we would turn tail and run! No, Russia is not that country. We have increased our presence in Syria, have increased the number of combat aircraft deployed there. There was no Russian air defense system there –now there's the S-400. If before, Turkey had constantly violated Syrian airspace, let them try it now."

© AP PHOTO/ DUSAN VRANIC

Russia's Stance on Syria Not Changed: Syrian People Will Decide Their Fate

Following the incident involving the Russian Su-24M bomber which was shot down by a Turkish F-16 over Syria on the Turkish border, Russia deployed its latest anti-aircraft missile system – the S-400 to Syria, also deploying the missile cruiser Moskva and the submarine Rostov-on-Don off the shores of Syria in the Mediterranean.

The S-400 Triumf (NATO reporting name SA-21 Growler) is Russia's next-generation air defense system, carrying three different types of missiles capable of destroying aerial targets at short-to-extremely long range.

In late November, the S-400 systems were deployed at the Hmeimim airbase near the Syrian port city of Latakia to protect anti-terror operations by Russia’s Aerospace Forces. The decision was made one day after Turkey shot down a Russian Su-24 aircraft.

Read more: http://sputniknews.com/politics/20151217/1031887147/putin-press-conference-s400.html#ixzz3uaXlCcY6

More Attacks Coming: Chemical Weapons Plot Foiled in Switzerland; War-Grade Weapons Seized in France |

Posted on December 14, 2015 by Mac Slavo

The Paris attacks last month were just the beginning. With tens of thousands of undocumented middle eastern migrants swarming Europe it is only a matter of time before there’s more carnage.
In Geneva, Switzerland authorities have arrested two Syrians suspected of being involved in a possible chemical weapons attack. The Daily Mail reports:

Two suspected Syrians were arrested in Geneva on suspicion oftransporting ‘explosives and toxic gases’ as part of a probe into a terror threat.
Switzerland’s attorney general said the men were also suspected of making and hiding the dangerous materials.
…the two men, who spoke Arabic and had valid Syrian passports, had just arrived in Geneva.
They were subjected to extra checks because of their ‘behaviour and their nationality’,

And to reiterate: they are not the only ones. Just a day earlier French police shut down mosques and raided scores of residences searching for terror suspects, weapons cachesand intelligence. According to theDaily Wire, “a lot of war-grade weapons” have been seized:

Over the last few days, they kicked down doors, closed three mosques (with plans to close potentially more than a hundred), and in the processfound an alarming number of weapons, ammo, and terrorist propaganda.
In an effort to “close the net on Islamic extremists,” French authorities have begun the process of shutting down radicalized mosques and raidinglocations suspected of housing Muslim extremists. France’s Interior Minister Bernard Cazeneuve said that the raids in recent weeks have resulted in the seizure of an unprecedented number of “war-grade weapons.”

Even if less than one-percent of those who have migrated to Europe have ties to terrorgroups like the Islamic State and Al Queda there are likely hundreds of jihadists now in the region preparing for Holy War.
Mac Slavo is co-creator of The Daily Sheeple, an alternative media venue for breaking news, opinion, commentary and information. Mac is also the founder of the popularSHTFplan.com community oriented website which aims to help individuals understand and prepare for troubling times. Wake the Flock Up!

More Attacks Coming: Chemical Weapons Plot Foiled in Switzerland; War-Grade Weapons Seized in France
Mac Slavo
Mon, 14 Dec 2015 12:36:33 GMT

LIBERTY UNIVERSITY PRESIDENT URGES STUDENTS TO ARM SELVES

LYNCHBURG, Va. (AP) The president of Liberty University urged students at the Christian school to carry concealed weapons on campus to counter any possible armed attack like the mass killings in San Bernardino, Calif.

"Let's teach them a lesson if they ever show up here," President Jerry Falwell Jr. told students at a convocation Friday.

The call-to-arms was met with rousing applause from students, but some said Falwell went too far when he appeared to be referring specifically to Muslims, the News & Advance reported (http://bit.ly/1Na9kYd).

"I've always thought if more good people had concealed carry permits, then we could end those Muslims before they walked in .," Falwell said.

Questioned by a student on social media, Falwell said he was referring to Islamic terrorists.

"I was referring to 'those Muslims' that just carried out attacks in Paris and California," he said in response on Twitter.

Reached later by the newspaper, Falwell said, "There are many good Muslims, many good moderate Muslims."

He did not respond to an email from The Associated Press seeking additional comment.

In his call to arms, Falwell encouraged students to take a free class offered by campus police to obtain a permit to carry a concealed weapon.

Falwell said he's decided to carry a gun after recent mass attacks. "If anything we need more people with concealed carry permits," he said.

Falwell said he had also reached out to a first responder in San Bernardino to see if the school could offer scholarships to his children.

Unlike his late father, the Rev. Jerry Falwell, the younger Falwell has been a low-key leader at Liberty. His father's barbed statements on contemporary issues made him a reviled figure to some and a pioneering conservative crusader to others.

"That's not my thing," Falwell said in an interview with the AP earlier this year at Liberty, which was founded by his father.

-

This story corrects the spelling of San Bernardino

© 2015 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Learn more about our Privacy Policy and Terms of Use.

BY TABOOLA SPONSORED LINKS You May Like

COP21: Climate Action Or Pushing A Hoax?

The NSA Will Stop Collecting Your Phone Metadata Tonight!

Thanks to Edward Snowden, a once-secret and always useless government surveillance programs draws to an end.

Nick Gillespie|Nov. 29, 2015 5:03 pm

At midnight tonight, the National Security Agency (NSA) must stop its bulk collection of essentially all phone calls made in the United States.

The conclusion of the vast surveillance system comes as the result of the USA Freedom Act, which Congress passed back in June. At the time, the NSA was allotted 18o days to end its controversial practices and find new ways to keep Americans safe (that hopefully don’t include spying on ordinary citizens). Now, the government agency is out of time, and the White House says that it has a less invasive process ready to replace the old program.

Though it’s been two years since Snowden first brought the surveillance to public attention, the end of the program marks a considerable victory for privacy watchdog groups, who have long lambasted the government for what some considered an abuse of power. Now, should a certain phone number be deemed suspicious by government officials, they must make a specific request to the appropriate telephone company in order to retrieve the data. No longer will the NSA have its own records of this sort of information.

Read more here.

So you can relax maybe a little bit. The government now must actually suspect you of something before collecting information on you. One thing you don't have to worry about is that American intelligence will in any way be compromised by having to follow new procedures. Earlier this year, the conservative Washington Times summarized a Justice Department study on the prgroram, which had been justified under Section 215 of the original Patriot Act:

[The] report adds ammunition to...opponents [of bulk collection of phone records], with the inspector general concluding that no major cases have been broken by use of the Patriot Act’s records-snooping provisions.

“The agents we interviewed did not identify any major case developments that resulted from use of the records obtained in response to Section 215 orders,” the inspector general concluded.

So whaddya know? This Thanksgiving weekend really did present something for which to be grateful.

As Scott Shackford noted here when it passed in June, The USA Freedom Act isn't exactly the bee's knees when it comes to scaling back the surveillance state, but it represented a real if modest reduction in the government's ability to do whatever it wanted without serious review. Read about it here.

About a month ago, Reason TV talked with Edward Snowden's lawyer, Jesselyn Radack of ExposeFacts.org. Among the key takeaways: Characters such as Hillary Clinton, Dianne Feinstein, and Mitch McConnell, who both wanted to keep the bulk collection program intact and who have vilified Snowden for bringing his information to government officials, Radack stresses there are basically NO proper channels:

The NSA Will Stop Collecting Your Phone Metadata Tonight!
kurtnimmo
Mon, 30 Nov 2015 03:17:26 GMT

Donald Sutherland Explains The Real Meaning Of Hunger Games And Why Its Message Must Be Understood

Posted on November 29, 2015 by Matt Agorist

Hollywood actor, Donald Sutherland, just dropped a bombshell on the military industrial complex. Sutherland, who plays President Coriolanus Snow in the blockbuster movie series Hunger Games, was recently asked what the movie was really about – he held no punches in his answer.

If there’s any question as to what it’s an allegory for I will tell you.

It is the powers that be in the United States of America.

It’s profiteers.

War is for profit. It’s not “to save the world for democracy” or “for king and country.”

No, bulls**t.

It’s for the profit of the top 10%, and the young people who see this film must recognize that for the future ‘blind faith in their leaders,’ as Bruce Springsteen said, “will get you dead.”

Those who are awake to the war machine, and have watched the movies or read the books, have undoubtedly seen the underlying anti-establishment theme within. However, those who do not notice it should heed Sutherland’s words.

It is no question that war is for the profit of very few people. In fact, as the famous, two-time Medal of Honor recipient, Major General Smedley Butler of the USMC said,

WAR is a racket. It always has been.

It is possibly the oldest, easily the most profitable, surely the most vicious. It is the only one international in scope. It is the only one in which the profitsare reckoned in dollars and the losses in lives.

A racket is best described, I believe, as something that is not what it seems to the majority of the people. Only a small “inside” group knows what it is about. It is conducted for the benefit of the very few, at the expense of the very many. Out of war a few people make huge fortunes.

In the World War [I] a mere handful garnered the profits of the conflict. At least 21,000 new millionaires and billionaires were made in the United States during the World War. That many admitted their huge blood gains in their income tax returns. How many other war millionaires falsified their tax returns no one knows.

How many of these war millionaires shouldered a rifle? How many of them dug a trench? How many of them knew what it meant to go hungry in a rat-infested dug-out? How many of them spent sleepless, frightened nights, ducking shells and shrapnel and machine gun bullets? How many of them parried a bayonet thrust of an enemy? How many of them were wounded or killed in battle?

Sutherland does get one thing wrong, however, and that is the percentage that he assigns to those who profit from war. It is nowhere near 10% as he states. Those who profit from war, as Smedley Butler points out above, are a tiny group of people. The ruling elite.

It’s the weapons manufacturers, the arms dealers, the inside politicians, and the State itself. Everyone else involved in war, including those who die for it, are merely pawns. They are cogs in the machine whose only purpose is to spread death and destruction.

Please share this article and video so that others, who may have missed the point of this movie series, may see its true purpose – calling out the elite for the criminals that they are.

Courtesy of The Free Thought Project.

Donald Sutherland Explains The Real Meaning Of Hunger Games And Why Its Message Must Be Understood
Matt Agorist
Sun, 29 Nov 2015 11:10:13 GMT

Obama Accepted $1.3M in Gifts Last Year from a Country Who Beheads more People than ISIS.. but he can’t really keep it.

NOVEMBER 29, 2015

By Andrew Emett

Released a day before Thanksgiving, the U.S. Department of State disclosed its annual list of gifts from foreign governments to federal employees. Although the State Department publicly condemned Saudi Arabia for numerous human rights violations, the Saudi king gave President Obama and his family roughly $1.35 million in gifts last year.

According to the Office of the Federal Register, many world leaders offered the president and multiple other federal employees lavish gifts throughout 2014. While British Prime Minister David Cameron gave Obama a photograph and facsimile telegram from Winston Churchill estimated at $440, Saudi King Abdullah bin Abdulaziz Al-Saud offered First Lady Michelle Obama $1.13 million in jewelry sets. As Prince William pompously gave the president a signed photographic portrait of Prince William valued at $888, the Saudi King sent $80,000 jewelry sets to Obama’s daughters.

The Saudi government also gave the president two gold wristwatches valued at $85,240. Leading the international community in attempting to whore out our commander-in-chief, the Saudi king also presented Obama with a gold-plated brass replica of the Makkah Clock Tower on marble base estimated at $57,000.

Israeli Prime Minister Benjamin Netanyahu offered a $440 photograph of the first American consulate in Jerusalem circa 1888, while Palestinian President Dr. Mahmoud Abbas gave Obama an ornate metallic disc plaque valued at $625. The Iraqi government sent a vase worth $430.

Instead of giving alms to the poor, Pope Francis presented Obama with a bronze medal valued at $1,015. His Eminence Cardinal Pietro Parolin, Secretary of State of the Holy See, gave the president a folio of lithographs worth $1,707.

On January 5, 2014, the Saudi king gave a $19,628 silver wristwatch to White House Staff Member Prem Kumar. He also sent $8,170 gold wristwatches to White House Staff Members Philip Gordon, Rob Malley, and Ben Rhodes. With no sense of dignity or integrity, the Saudi government also gave Dr. Susan Rice a gold wristwatch and figurine valued at $6,340.

Before passing away earlier this year, King Abdullah reportedly spent over $9.8 million on U.S. lobbyists in 2013. According to the State Department’s 2014 human rights report, the Saudi government physically abuses detainees, holds political prisoners, denies due process, commits arbitrary arrests, and restricts freedom of expression. While allowing corrupt government officials to operate with impunity, the Saudis also beheaded Mohammad bin Bakr al-Alawi, a Saudi national, for practicing sorcery.

Although the State Department listed several gifts to CIA Director John Brennan and multiple anonymous agency employees, the donors’ names have been redacted because “such information could adversely affect United States intelligence sources or methods.” Besides receiving a $10,000 Omega men’s watch, Brennan was also given a $7,500 decorative rug. While world leaders openly gave the president books, a CIA employee received an unidentified series of children’s books valued at $832.13. For some reason, the kids books were “retained for official use.”

Fortunately, the First Family cannot keep any of these gifts without paying market value for them when Obama leaves office. According to U.S. law, the president must pay for the gifts/bribes or turn them over to the National Archives or other organizations for storage or display. According to the State Department, non-acceptance of the gifts “would cause embarrassment to the donor and U.S. Government.”

Andrew Emett writes for TheFreeThoughtProject.com

Obama Accepted $1.3M in Gifts Last Year from a Country Who Beheads more People than ISIS
Activist Post
Sun, 29 Nov 2015 20:32:27 GMT