Plosser: Taper Pace May be Too Slow
My second favorite Bad Cop says…
“We must back away from increasing the degree of policy accommodation in a manner commensurate with an improving economy,” Plosser told a panel in Paris. “Reducing the pace of asset purchases in measured steps is moving in the right direction, but the pace may leave us well behind the curve if the economy continues to play out according to the FOMC forecasts.”
Especially since they are not actually withdrawing policy. All tapering does is provide implied profit margin for banks and lenders, considering Fed Funds are held near 0% and the implied spread to longer term lending rates.
“If the economy continues to improve, we could find ourselves still trying to increase accommodation in an environment in which history suggests that policy should perhaps be moving in the opposite direction,” Plosser said.
Plosser is telling us, in not so many words, exactly what I have been claiming; as long as ZIRP is held, we are INCREASING accommodation, not decreasing it. The ‘taper’ hype is just that, hype.
Now I wonder why he does not just outright mention ZIRP? They want to tame the permissive bubble making policy? Do a surprise rate hike on the Fed Funds.
A nation hopped up on greed moves forward with the media obsessed on QE’s declining asset purchases and still nobody’s making a peep about the real inflation, which is where money is lent to financial institutions at 0% at the expense of Grandma, our kids and any other would-be savers.
I’d like to think the Bad Cops are sincere, but until they start to speak directly about ZIRP I have to believe they are just part of a media campaign designed to give the impression that there is some kind of debate about tightening policy. I’ve said it before and I’ll say it again, as long as ZIRP is held they are inflating. Period.
I have not noticed too many gold sector experts talking about certain indicators that are no longer favorable. Funny how that goes. It’s short term stuff though, so maybe the idea is to go along and get along. Don’t ruffle feathers or upset the apple cart. NFTRH 281 ruffles a few feathers but beyond the near term has significantly higher targets for later in 2014.
There is also some crackhead stuff in here as 6 Semiconductor charts that I find constructive are presented (with targets) in the event that the SOX holds its breakout and the market goes into blow off mode.
In all 34 pages of quality reporting. NFTRH 281, out now.
Guest Post by Doug Noland
Ominous geopolitical meets exuberant markets.
During Q4 2013, Total System Credit increased (nominal) $840bn to a record $58.991 TN, or 345% of GDP. On a percentage basis, total Credit expanded at a 5.8% rate during the quarter, up from Q3’s 3.8% but still below Q4 2012’s 6.2% pace. For all of 2013, system Credit expanded $2.139 TN, compared to 2012′s $1.613 TN increase. Total Corporate debt expanded $915bn, or 7.2%, to $13.622 TN. Non-financial Corporate debt expanded $783bn, or 9.0%, second only to 2007’s $856bn.
As for some other trades noted recently, the bowls of CORN and URG have been emptied. NFTRH 280 had noted the following last weekend…
“CORN (below) continues to hold the support zone so the brokerage portfolio continues to hold CORN. I would like to see an eventual shot toward the 200-day moving averages as a profit taking objective.”
Today it was sold as it popped up to that mark. A great little trade.
I had also noted in #280 that Ur-Energy may be sold and indeed it was, for the second time at an outstanding profit. Yet on this one I have a case of immediate remorse. I knew that would happen, but sometimes you’ve got to tune that shit out.
I am not thrilled with the level of speculation going on in commodities right now and have pared it all back as I nurse precious metals positions. Need to circle the wagons and figure some things out this weekend, because I am seeing some interesting and conflicting signs.
Meanwhile I still hold this goofy thing for some reason after coming close but not quite getting shaken out yesterday.
According to an email pal, GOGO is now getting touted out there on Twitter by trading jockeys and momentum heroes. Makes no never mind to me because I sold it today, taking my 15% and putting it in the bank. I’d consider buying it back down about the 50 day averages, but being a bottom feeder I don’t tend to play where the momos do.
A point I have been trying to make since the beginning, which in my case for public writing was 2004, is “but it is what it is” (biiwii). The name of the website was a direct (and bullish) response to my own bearish bias (which endures to this day because I have seen no improvement in monetary policy making) as the Greenspan era credit fueled cyclical bull market was getting ramped up. In other words, it is what it is; don’t fight it. It was bullish.
THE EMPLOYMENT SITUATION -- FEBRUARY 2014
Total nonfarm payroll employment increased by 175,000 in February, and the unemployment rate was little changed at 6.7 percent, the U.S. Bureau of Labor Statistics reported today. Employment increased in professional and business services and in wholesale trade but declined in information.
Employment Situation Summary from BLS