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Well folks, in the interest of streamlining the message and getting up and running on a more reliable and scalable host, biiwii.com is now shifting its primary functions to nftrh.com. That applies to public posts as well as protected subscriber-only content.
Go check out nftrh.com and bookmark, RSS or subscribe to posts by email. Also, please spread the word! I’d very much appreciate it.
As for Biiwii, good old ‘but it is what it is’… it is eventually going to transfer to the new host as well and I am going to think about how best to have it move forward. So keep it on your radar as well. It is not finishing, it is just changing and will be complimentary. But for now, most of what has gone on here for the last decade is now going to go on there.
Guest Post by Doug Noland
Central banks win the day and week.
October 21 – Reuters (Andreas Framke, Eva Taylor and Paul Carrel): “The European Central Bank is considering buying corporate bonds on the secondary market and may decide on the matter as soon as December with a view to begin buying early next year, several sources familiar with the situation told Reuters. The ECB has already carried out work on such purchases, which would widen out the private-sector asset-buying program it began on Monday – stimulus it is deploying to try to foster lending to businesses and thereby support the euro zone economy. ‘The pressure in this direction is high,’ said one person familiar with the work inside the ECB, speaking on condition of anonymity.”
Guest Analysis by Bob Hoye
Click for full report
Guest Post by David Stockman via Stealthflation
Wall Street Is One Sick Puppy—–Thanks To Even Sicker Central Banks
Last Wednesday the markets plunged on a vague recognition that the central bank promoted recovery story might not be on the level. But that tremor didn’t last long.
Right on cue the next day, one of the very dimmest Fed heads—James Dullard of St Louis—-mumbled incoherently about a possible QE extension, causing the robo-traders to erupt with buy orders. By the end of the day Friday, with the market off just 5% from its all-time highs, the buy-the-dips crowd was back, proclaiming that the “bottom is in”. This week the market has been energetically retracing what remains of the October correction.
Guest Post by Tom McClellan
October 24, 2014
I cannot believe the volume of the news stories I am seeing in the financial media, with people worrying about impending deflation. And as any card-carrying contrarian knows, when a topic gets too popular, you are near a turning point.
Guest Post by EWI
Evidence of Another Even More Sweeping Housing Bust is Already Starting to Appear
Editor’s note: With permission, the following article was adapted from the October 2014 issue of The Elliott Wave Financial Forecast, a publication of Elliott Wave International, the world’s largest market forecasting firm. You may review an extended version of the article for free here.
In February, The Elliott Wave Financial Forecast discussed the great boom in New York City’s residential real estate and its keen resemblance to what happened in 1929, when the demand for luxury housing also spiked to previously unseen heights. At 133 East 80th Street, we found this plaque commemorating the earlier era’s brick-and-mortar monuments to a Supercycle degree peak in social mood.
The plaque went up in 2010, demonstrating the strength of the bullish echo from the end of Supercycle wave (III) to the final after-effects of Supercycle wave (V). Another link to the prior manic era is that many of Rosario Candela-designed apartment towers from the 1920s have become “some of New York’s most coveted addresses.” As architectural historian Christopher Gray puts it, Candela is now Manhattan real estate brokers’ “name-drop of choice. Nowadays, to own a 10-to 20-room apartment in a Candela-designed building is to accede to architectural as well as social cynosure.”
Of course, the most brilliant stars in the New York skyline are those that sell for the highest prices, and that honor belongs to the brand new penthouses that the Financial Forecast talked about in February. Most are popping up along the rim of Central Park, forming a ring of cloud-topping towers that will be so pronounced it is already called Billionaires’ Row.
Here is a short video that shows two of them as they were topped off in February.
After one of my cynical posts finger pointing at a Fed talking head (in this case Janet Yellen) and answering her absolutely flawed rationalizations for the masses line by line, a financial blogger informed me this morning that the theme is picked up by the New York Times with an article written by former M&A banker William Cohan.
How Quantitative Easing Contributed to the Nation’s Inequality Problem –NY Times
This is good. The MSM is highlighting something very real and in my opinion, quite evil (there, I said it). But let’s clean up NYT’s theme a little bit too, just as we did Yellen’s outrageous remarks.
Quantitative easing adds to the problem of income inequality by making the rich richer and the poor poorer. By intentionally driving down interest rates to low levels, it allows people who can get access to cheap money on a regular basis to benefit in extraordinary ways.
QE, at least theoretically and on a surface level in a debt-based economy/society helps the little guy because he is borrowing on the long end and QE buys up his distressed MBA and provides him loans at lower long-term interest rates. It is in ZIRP (zero Fed Funds) that he gets screwed because while the banks get a ‘can’t lose’ profit motive, peoples’ ability and inclination to save are all but destroyed, or better yet effectively outlawed by policy.
The rest of the article goes on to illustrate just how rigged this game is and how we have changed nothing in the 1.4 decades since Alan Greenspan kick started the Age of ‘Inflation onDemand’©, where every problem has a financial solution and the rich get massively richer and the majority get screwed… every step of the way.
Today the 2 Horsemen rode newly brave bulls back out of town.
Nominal yields rise and the curve drops today. Its message continues to be risk ‘ON’ with the relief bounce in markets.
Guest Post by Michael Ashton
The following is a summary of my post-CPI tweets. You can follow me @inflation_guy (or follow the tweets on the main page at http://mikeashton.wordpress.com)
- Core CPI +0.14%, close to rounding to +0.2%. An 0.2% would have caused a panic in TIPS, where there have been far more sellers recently.
- y/y core to 1.73%, again almost rounding to 1.8% versus 1.7% expected. This just barely qualifies as being “as expected”, in other words.
- Core services fell to 2.4%, but core goods rose to -0.3% y/y.
- OER re-accelerated to 2.71% from 2.68% y/y. It will go higher.
- really interesting that core goods did not weaken MORE given dollar strength. $ strength is overplayed by inflation bears.
- Apparel went to 0.5% y/y from 0.0%. That’s the category probably most sensitive directly to dollar movements b/c apparel is all overseas.
- Accel major groups: Food/Bev, Apparel, Recreation (24.1% of basket). Decel: Housing, Transp, Med Care, Educ/Comm (72.5%).
- Though note that in housing, Primary rents rose from 3.18% to 3.29%, and OER from 2.68% to 2.71%, so weakness is mostly household energy.
- That’s a new high for primary rental inflation. Lodging away from home also went to new high, 5.04% y/y. But it’s choppier.
- Airfares continued to decelerate, -3.01% from -2.71%. Ebola scares can’t have helped that category, which most expected to rebound.
- But these days, airfares are very highly correlated to fuel prices (wasn’t always the case). [ed note: see chart below]
- In Medical Care, pharmaceuticals rose to 3.08% from 2.72%. But the medical services pieces decelerated.
- Decel in med services is the surprise these days as the passage of the sequester cause positive base effects.
- The weakness in med services holds down core PCE, too. Median CPI continues to be a better measure as a result.
- College tuition and fees 3.36% from 3.32%. Still low compared to where it’s been. Strong markets help colleges hold down tuitions.
- Core CPI ex-housing partly as a result of continued medical care weakness is down to a new low 0.877% from 0.911%.
- That continues to be the horse race: housing versus a wide variety of other things not inflating. Yet.