Thursday, October 6, 2016


The time, said the Dane, is out of whack (he actually said "joint," but...).  Tomorrow is September jobs number and nobody is really sure what's going to come out.  Hint:  It's 31 days to the election...think it's going to be a bad number?  Which of course is what everyone else is thinking because it doesn't feel like it should be a good number but as everybody pretty much now realizes the numbers are cooked...well, that doesn't make anyone feel better either.  There is more watching and waiting for this one than there has been all year whilst at the same time there is a perceptible feeling that a lot of people would be just as happy if nothing was to be released as it will only add to the confusion.

Rates were well up today with the 10 year at 1.74%  which is right at the top of the range for the year and looking to go higher.  Stocks were obviously down and the dollar was up as we old guys would say it should be on the higher rates but commodities were up as well which makes us old guys ask what the hell is going on here?  If you are looking for an answer I don't have one but out of Washington, D.C. comes a few hints that all might not be so well in the alternative world of central banking as I suggested the other day.

Stanley Fisher gave a talk yesterday to the N.Y Fed and when Stan talks, people listen.  This is a little Pow-Wow the Fed puts on from time to time for fellow central bankers which will cumulate on Friday concerning the state of affairs in central bank land.  Yesterday, Stan got into the "Natural Rate," which for the life of me I don't understand but which appears to be the rate of interested (adjusted for inflation) that produces the best economic result.    I know, me neither, but if Stan says it exists, it exists.

He also said it is very, VERY low these days which could lead to rapid and dramatic dislocations which, because of its level, may be hard to reverse and which, if it persists may also lead to continued economic stagnation.  All stock and trade Stanley, very MIT-ish, very academic.  But let me suggest another thing about Mr. Fisher: he has never been one to call a spade a spade outright. But he has always, if you listen real hard, been one to send a clear message, and yesterday's message was, in my mind, that we, my central bank buddies, may well have gone too far and we may have to start figuring out how we are going to extract our posteriors out of this crack into which they have fallen.  Misunderstand that at your own risk.

And from D.C., according to my Deep Throats, there are mutterings.  Surprisingly, some are beginning to figure out just what the past few years have accomplished which pretty much stops at a world wide debt bomb being constructed, an inability to price risk and of course the effect central bank policies have had on banks world wide...aside from a few other terrible things.  Not surprisingly, Europe has probably suffered the effects the most, especially in its banking system, which is the primary provider of credit to the economy--but not when there is a loss involved.  Europe is hurting and I think we are beginning to see the beginning of, if not a reversal, but a real slowing of QE type policies we have witnessed for years.  The Bank of England admitted as much on Tuesday.  Will the ECB be far behind?  One can only hope but that mob's ability to amaze is boundless.

And yet, tomorrow is the number.  Will anybody care what with everything else is swirling about?  Depends upon on good they wish to make it.  But in any case, it's not the story.


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