zerohedge.com / By Tyler Durden / 12/08/2012 11:03
Bloomberg’s Joshua Zumbrun has released a much overdue, MSM apocryphal, somewhat realistic outlook on the endspiel of Bernanke’s central planning: i.e., the unwind of the Fed’s balance sheet that from just under $3 trillion will reach $5 trillion by the end of 2014. We say “somewhat” because the conclusion in the article is that there is some hope still for an orderly wind down of the Fed’s assets without a complete market collapse. The reality is that there is no such hope.
As we have explained previously, the market now demands roughly $85 billion in ten year equivalent “Flow” per month injected by the Fed: this was what QEternity allowed the market to price in as the basis level for the future and is why we knew with 100% certainty that Twist would be extended the day it was announced on Sept 13, only without the offsetting sale of ZIRP-umbrella securities (which are irrelevant from a 10-year duration standpoint), a forecast that has now been adopted by everyone. In plain English: the market needs the Fed to inject $85 billion each month just to stay level, never mind grow (sure enough, the market highs for 2012 were hit the day after QEternity was announced, confirming the market will need to see even more monthly flow to continue rising).
Thanks to BrotherJohnF