Tuesday, April 15, 2014


"So, what's new about that?"  (He Who Knows All Things)

"Nothing I guess."

"About what this time?"

"Well I'm not even sure about that.  It seems that what should be happening isn't, and what isn't, is.  Janet is making all kinds of sounds like she and the guys are going to keep rates down as low as possible but at the same time continuing with tapering.  Inflation came in at 0.2 this morning which is essentially nothing unless you have to buy food and gasoline, all the really smart guys are saying things are looking wonderful in the economy, when all the dumb guys who are 99% of the population say it stinks, and if things are so good why is the ten year at 2.63% instead of headed non-stop to 3.00%?

"OK I can see that the dollar might not be making much headway but with the Euros and the ECB threatening negative interest rates, there stands the Euro at 1.38 which is killing them and you have to ask how in the hell can that be possible?  Yet, Greece borrows at 5% for five despite owing more money than they can ever repay before this go-around, and the Spanish are all whistling---those that are left--despite the country being an economic graveyard.  You still with me?"


"YES, WHAT!  You look at the numbers and you come to the conclusion that while things aren't great they don't appear to be so bad and yet nothing is really going on.  There's an ocean of liquidity out there and has been for years but there's nothing really to show for it.  Employment is picking up but not enough and when you look into the raw numbers half the jobs are part time.  There's more people permanently not working…"

"Like you."

"…like me, smart ass, but all that is seemed to be believed are the soothing voices telling us to find our inner selves.  I think the central banks actually believe their press releases and other people do as well.  Hell, Draghi doesn't even have to DO anything; he just has to say he's prepared to do something and all is well.  Janet screws the pooch first time out of the box then covers it up and the equity market acts like a yo-yo but not to worry, this is the real deal, not simply a result of having nothing better to do than buy equities with the liquidity, yada, yada--until it tanks six days in a row and that is explained as a good thing and sure enough, with a shooting war going now going on between the poor Ukraine and Russia which some might think is a bad thing, up they go by 70 points today."


"And, he says.  AND WHAT?  You can make an argument…any argument…you want to make and find support some where in some data even if all the data is contradictory.  It's almost as though……"

"Got it didn't you?"

"…the data was produced to support whatever argument there was to be made at any time."

"Very good, Charlie.  Don't believe the data.  The data is rubbish.  It's a head fake  Look at what the markets are saying and there's only one market that counts.  What the bonds are telling you is that they got it wrong.  It's going no where because the policies are wrong.  Will that change?  Not unless it is forced upon them.  Will it be?"

"You asking me?"


"I don't know.  I'm confused."

"Stay that way, Charlie.  At least you are an honest man."

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