Category Archives: Central Banks

Raghuram Rajan Speaks

By Biiwii

Of all the world’s Central Bankers, one stands out as a teller of truth and an adherer to sensible long-term policy.  Yes, my personal hero (insofar as one has heroes in the financial realm), Raghuram Rajan.  Thanks to Joe for the link…

India’s central bank chief accuses G-7 of currency manipulation

I mean sure, we all see and to varying degrees understand the bald faced currency manipulation (and other policy machinations) going on out there.  But it is important when a Central Banker cries out in the wilderness.  Even if said Central Banker is not overseeing the finances of a fully developed nation (yet).  It doesn’t sound like the IMF is listening.  That would be the International Muppet Fund.

Speed Readers

Speed readers everywhere see “does not mean that that the Committee has decided on the timing…”

And they’re off to the races!

For immediate release

[edit] Okay, so they dropped the word “patient” that everybody was hyperventilating about.  What did they replace it with?  That gobbledeegook above.  It really is unbelievable how so many take this so seriously.  Folks, we are in Wonderland…

T-Minus 1hr, 40 min. to the Great Drama

By Biiwii

Of course, at 2:01 US Eastern time the market could get very actionable, but for right now it is a ‘close to the vest’ market.  This means no big bets and no strong leans in one direction or the other.

Everyone Hates US Stocks  –Bloomberg

If that’s true, that ain’t bearish.

Hedge Funder Dalio Thinks the Fed Can Repeat 1937 All Over Again  –Bloomberg

I researched this gentleman and I love what he is all about, philosophically and in the way he views life as it relates to his vocation in the markets.  i.e. it’s not just some MSM b/s.  He is to be taken seriously IMO, in his knowledge of the markets but even more, as a respectable human (something lacking in this sphere, again IMO).

So here is the Fed’s idiotic Dot Plot that we are all supposed to be transfixed by.

dotplot

The stock market took a hit, bounced and now by my eye anyway, is not at all cut and dry.  Sentiment became toxic to the over bullish side a couple of weeks ago.  Then the market dropped and bounced.  This should not be an end to the downturn given the former sentiment profile that has not been nearly fixed yet.

But the leadership items we follow (esp. Biotech, Small Caps and Banks) are stable to good and then there are the AAII Individual Investors having been spooked, which is short-term positive (though the longer-term trend is over bullish and so, not healthy).

aaii

There’s lots more to the picture that can’t make it into a simple post.  But it is best to check assumptions at the door and let’s all just be prepared for what is on the other side.  It’s not so much the FOMC I am concerned about as my fellow market participants.  That’s why I have remained in a comfortable position and recommended the same in NFTRH.  It’s the ‘no strong leans’ market at the moment.

FOMC

In other words, we may raise interest rates or we may not.  Ha ha ha…

[edit] subtext:  screw the savers, let’s pretend that the hype is true and the great November ‘Jobs’ report is going to fan out and start enriching Main Street now that the top 1% are not only bailed out, but enriched beyond their wildest dreams.  Let’s pretend it has nothing to do with the fact that we already know we cannot raise interest rates without some… how shall we put it… significant side effects.

Release Date: December 17, 2014

For immediate release

Information received since the Federal Open Market Committee met in October suggests that economic activity is expanding at a moderate pace. Labor market conditions improved further, with solid job gains and a lower unemployment rate. On balance, a range of labor market indicators suggests that underutilization of labor resources continues to diminish. Household spending is rising moderately and business fixed investment is advancing, while the recovery in the housing sector remains slow. Inflation has continued to run below the Committee’s longer-run objective, partly reflecting declines in energy prices. Market-based measures of inflation compensation have declined somewhat further; survey-based measures of longer-term inflation expectations have remained stable.

Continue reading FOMC

Biggest Heist in History

Guest Post by Bill Bonner

The Biggest Financial Heist in History

1031-DRE-blog
Source: Wikipedia

If Mr. Market is afraid, he is putting on a brave face. The Fed’s QE ended on Wednesday. On Thursday, the Dow rose 221 points.

This is good news for Janet Yellen. She must think she has made a clean getaway. She has fled the scene of the biggest financial heist in history with no cops in sight. They’re not even aware a crime has been committed!

This grand larceny involved $3.6 trillion. Counterfeit – every dollar of it. Not a penny of it was ever honestly earned or earnestly saved… or dug out of the dirt and turned into coins.

No… We’re talking about the crime of the century… committed in broad daylight… with millions of witnesses. But hardly a single soul understood what was going on.

We begin by asking: How many TVs, luxury apartments, spaghetti dinners and parking places are there?

Continue reading Biggest Heist in History

BOJ Jumps the Shark…

Guest Post by David Stockman via Stealthflation

The BOJ Jumps The Monetary Shark—–Now The Machines, Mad Men And Morons Are Raging

This is just plain sick. Hardly a day after the greatest central bank fraudster of all time, Maestro Greenspan, confessed that QE has not helped the main street economy and jobs, the lunatics at the BOJ flat-out jumped the monetary shark. Even then, the madman Kuroda pulled off his incendiary maneuver by a bare 5-4 vote. Apparently the dissenters——Messrs. Morimoto, Ishida, Sato and Kiuchi—-are only semi-mad.

Never mind that the BOJ will now escalate its bond purchase rate to $750 billion per year—-a figure so astonishingly large that it would amount to nearly $3 trillion per year if applied to a US scale GDP. And that comes on top of a central bank balance sheet which had previously exploded to nearly 50% of Japan’s national income or more than double the already mind-boggling US ratio of 25%.

Continue reading BOJ Jumps the Shark…

Pre-FOMC Bounce

Okay admit it, who got the jitters and shorted bullion (or anything else) this morning?  My SLV calls just went green for the first time [edit; and I took the green, very modest though it was].  Looks like an asset party spanning across markets (as Uncle Buck gets heavy) to me.

Problem is, we have some interest rate manipulators in high places making an announcement tomorrow and a market full of casino enthusiasts trying to figure out which button to push in response.

I’d have preferred a thick and pervasive negativity heading into that statement, but whatever.  It may make sense to flatten out a bit or hedge into the statement.  I will not even be in front of a screen at 2:00 tomorrow.

gld.slv

Enter the Draghi

Guest Post by Michael Ashton

While we wait for our Employment Report tomorrow, there is plenty of excitement overseas.

The dollar continued to strengthen today, with the dollar index reaching the highest level since the middle of last year (see chart, source Bloomberg).

dollarindex

As with the rest of the dollar’s strengthening move, it was really not any of our own doing. The dollar is simply, and I suspect very temporarily, the best house in a bad neighborhood right now. In the UK, the Scots are about to vote for independence, or not, but it will be a close vote regardless. In Japan, the Yen is weakening again as the Bank of Japan continues to ease and Kuroda continues to jawbone against his currency.

Continue reading Enter the Draghi

US Money Pumping, Past & Present

Guest Post by Steve Saville

US money pumping by decade and Fed chairman

A large increase in the money supply will always lead to large increases in prices somewhere in the economy. However, monetary inflation affects different prices in different ways at different times, so the pertinent question is: which prices? The answer to this question is important from the perspective of almost everyone and is always obvious with the benefit of hindsight, but it is often difficult to determine ahead of time. Also, depending on which prices are affected the inflation will sometimes be widely perceived as a problem and at other times be widely perceived as a benefit or a non-issue.

Continue reading US Money Pumping, Past & Present

ECB Rate Cut: Charging Banks to Hold Cash

As we manage the breakout in the Semiconductors, the recovery in the fallen momentum items and a general return to a market melt up scenario, let’s again thank policy making for the global – not just US – stock market party.  The ECB cuts rates; click graphic for full MarketWatch story…

MWheadline

“The European Central Bank reduced interest rates Thursday and installed a negative rate on bank deposits for the first time in its history, as officials scramble to keep ultralow inflation from gaining traction and derailing the euro zone’s fragile recovery.”

“Ultra low inflation”?  Should that not be something desirable?  Well, as in the US, not in the Age of Inflation onDemand.  These creeps have got market participants so brainwashed as to believe that there is such a thing as low inflation (read: deflationary pressure) being bad.  It is only bad because decades of levering up inflation have made it bad.

Continue reading ECB Rate Cut: Charging Banks to Hold Cash

Piketty on the Fed

At the risk of sounding like a socialist, a theme one might sense in my writing about Fed policy and its slam dunk for asset owners, let me just say that I obviously agree with Thomas Piketty in his now widely known assertion that this policy benefits the few, the asset owners and to put it in highly technical terms, screw everybody else.

[Video removed due to technical glitch; it can be seen at the link below]

Fed-induced wealth effect raw deal for 99% –Piketty

I would add as usual note that it was Fed policy that created the hazards that became the ‘Great Recession’ and would-be ‘Depression 2.0′ that “The Hero” saved us from.  This little tidbit always seems to get left out of public debates on the subject, including the video above.

The Fed built the distortions that broke the system and the Fed is coming with the solutions that will break it again, in one way or another and in at one time or another.