I mean unless you are devoted to another daily Russia Trump conspiracy story, the only real news out there is the Fed. Janet was up on the Hill today making it clear I thought that this might be her last hurrah. In the mean time it was about an upbeat report as one could have expected: with the exception of lower than expected hourly earnings and inflation (?), everything is looking good. Equities responded with another record-setting day and bonds were benign. Anticipation is building in regard to second quarter earnings even among airlines and especially banks. The latter bunch should really knock it out of the park as all the stars aligned in the past three months.
But the really interesting event of the week was the nomination by the Trump administration of Randal Quarles as a member of the Fed, as a Vice Chairman and the head of Supervision finally filling the seat occupied by the unconfirmed Big Danny (unconfirmed due to having never been proposed, having no chance of being confirmed, having...oh, forget it). With all the talk of Draining the Swamp, there is no more of a D.C. Insider than Mr. Quarles. Bush 41 and 43 insider, Carlyle Group, this dude is Son of the Swamp Monster. Then again, from what I hear he's not a bad guy with few ideological hang-ups and he will certainly come to the position without the madness of Big Danny and with considerably more real world experience which is exactly what is needed. Things are looking up all over. Remarkably, with the headlines dominated by the political reporters, it is surprising to note that The Donald is actually getting stuff done which...without any plan on his part other than some serious serial dumbness...under the radar. Genius? Ha! But it's happening. Guy's off to Gay Paris tomorrow to meet with the new French Prez. Not a word among the talking heads about that. Macron may just find common cause with this guy from the standpoint of attempting to demolish the status quo of Euroland (Germany, if you haven't been paying attention). Problem is I'm not at all sure as for what purpose. Allons Enfants! Could be a good ride.
Showing posts with label Federal Reserve. Show all posts
Showing posts with label Federal Reserve. Show all posts
Wednesday, July 12, 2017
Wednesday, July 5, 2017
FED WORLD
it's always good to get a look inside at the musings of the Fed as occurred today in another release of it's minutes from last month. Reassuring as well. Seems as though the decision has been made to reduce the balance sheet from its present $4.5 trillion level and thank goodness the Fed is sure that there will be no upsetting the market while so doing. Whew! Knowing that is, I guess we should pay no attention to the movement of 10's all over the world in the past week at the suggestion of what was announced would be announced. The again, $4.5 trillion are a lot of bonds to be moving around, keeping in mind that the Euros and the Japanese and the Brits have more than that on their own as we keep pointing out and which are going to be moving at the same time. Look, I certainly hope the Fed is right but.......
From the mysteries of international finance we turn to the Little Fat Nut who shot off what people are calling a game changing missile to celebrate July 4, a G-20 meeting that according to some has the potential of turning into a Brannigan and the mess that is the Middle East...all of which seem to have absolutely no effect on global markets (other than bond yields) as equities slowly reach new highs every week. I continue to stand in amazement at the seemingly complete lack of concern. Then again, the Triplets turn 10 in two days so what do I have to worry about. We're headed off for the birthday party weekend and will be back on Tuesday. May try to sneak in one tomorrow on The Donald's Excellent Adventure Over There but the bet is nothing happens until he and The Put go Mano a Mano. My bet is that is anti climatic as well. The Little Fat Nut? Ah, that's a different deal, but not this week. The U.S.A...in the year of its Independence, the 241st. And the Trips in their 10th. Not sure which event is more glorious, but I know it will be a good weekend.
From the mysteries of international finance we turn to the Little Fat Nut who shot off what people are calling a game changing missile to celebrate July 4, a G-20 meeting that according to some has the potential of turning into a Brannigan and the mess that is the Middle East...all of which seem to have absolutely no effect on global markets (other than bond yields) as equities slowly reach new highs every week. I continue to stand in amazement at the seemingly complete lack of concern. Then again, the Triplets turn 10 in two days so what do I have to worry about. We're headed off for the birthday party weekend and will be back on Tuesday. May try to sneak in one tomorrow on The Donald's Excellent Adventure Over There but the bet is nothing happens until he and The Put go Mano a Mano. My bet is that is anti climatic as well. The Little Fat Nut? Ah, that's a different deal, but not this week. The U.S.A...in the year of its Independence, the 241st. And the Trips in their 10th. Not sure which event is more glorious, but I know it will be a good weekend.
Monday, June 26, 2017
THINGS ARE LOOKING UP
There is actually stuff bubbling up about which I can write! Stress tests, for example. Everybody passed with flying colors! At least the quantitative portion which everybody passed except when Big Danny was the self-appointed risk maven and he hated Citibank. Still have the qualitative portion to go but I suspect that with the new sheriffs in town we are not going to see much action there either. Except for...perhaps..Wells Fargo. Hell, why not. Pile on. They're too dumb to worry about, but of course it's the wrong forum.
All of this is a big yawn for me of course as is most of the safety mechanisms touted as being reason the system is sooooo much safer today. Another reason might be that those business lines about which there was so much concern have shifted to the non-banking sector...the very much under regulated sector I might add...but why repeat myself. However, test results such as this do raise some interesting issues as it is based on these results --and other criteria--that regulators decide the amount of capital, if any, can be returned to investors. Anyone say "Citibank?"
Back in 2008 you could have bought a share of Citigroup for about $3 a share. I did. I mean, too big to fail, right? Well I got my money back...last year. Didn't make much in the meantime as Citi didn't pay a dividend for a year, but with the management of Mike & Mike, they did begin to make money, clean up an unbelievable mess and grow capital. They really grew capital to a point where their return on capital was awful. Could they have done better? Probably. Are they over capitalized? Although it's impossible to know what a bank really looks like unless you are inside of it, undoubtably. But because of the low investment returns, clearly required in past years, the continued non recognition of the investor base by both regulators and the market not only penalizes Citigroup investors...ME...but I would argue that the continuing questioning does no good for an industry as a whole which, even to this day, is really only as strong as it's weakest member. Ok, that may be a bit much and it is not the regulator's job to look after poor'ol Charlie, but Citibank is not the Last National Bank of Boot Hill. It counts. I think it's good to think about these things.
Tomorrow The Regulators Euro and La Bell' Italia. You can't make this stuff up.
All of this is a big yawn for me of course as is most of the safety mechanisms touted as being reason the system is sooooo much safer today. Another reason might be that those business lines about which there was so much concern have shifted to the non-banking sector...the very much under regulated sector I might add...but why repeat myself. However, test results such as this do raise some interesting issues as it is based on these results --and other criteria--that regulators decide the amount of capital, if any, can be returned to investors. Anyone say "Citibank?"
Back in 2008 you could have bought a share of Citigroup for about $3 a share. I did. I mean, too big to fail, right? Well I got my money back...last year. Didn't make much in the meantime as Citi didn't pay a dividend for a year, but with the management of Mike & Mike, they did begin to make money, clean up an unbelievable mess and grow capital. They really grew capital to a point where their return on capital was awful. Could they have done better? Probably. Are they over capitalized? Although it's impossible to know what a bank really looks like unless you are inside of it, undoubtably. But because of the low investment returns, clearly required in past years, the continued non recognition of the investor base by both regulators and the market not only penalizes Citigroup investors...ME...but I would argue that the continuing questioning does no good for an industry as a whole which, even to this day, is really only as strong as it's weakest member. Ok, that may be a bit much and it is not the regulator's job to look after poor'ol Charlie, but Citibank is not the Last National Bank of Boot Hill. It counts. I think it's good to think about these things.
Tomorrow The Regulators Euro and La Bell' Italia. You can't make this stuff up.
Tuesday, June 20, 2017
FED AND FRIENDS
As we said, the Fed tightened as expected and indicated that there would be at least another move this year. Once again, Billy the Dud felt it necessary to comment on things with a bright, rosy outlook for the economy. The move and Billy bumped the two year up sharply but a funny thing happened; since the move and the jabbering, the 10 year actually declined to 2.18 % yesterday giving us the flattest yield curve in the past....well, as long as I can remember. What happened?
The Dud has one answer. Demand. Everybody wants U.S. Debt. Makes sense except I thought that everybody wants yield; Argentina...yeah, ARGENTINA...today announced plans for a $2.3 billion ONE HUNDRED YEAR private placement with a coupon in the area of 7.8 %. Maybe just crazy people want yield, but then again if the Argies pay interest for 9 years, you break even and every trader out there is absolutely sure he/she knows at the level this thing should be. So maybe, except for Argentina Sovereign Debt Billy is right.
Or maybe some folks actually paid attention to what else the Fed talked about, namely the intention to "normalize" it's balance sheet which in case you missed it is up to $4.6 Trillion. Nothing official, but number in the neighborhood of $300 Billion a year had been batted about. Call me in 2025 to tell me how that works out. Oh yeah, Mr Kaplan, new to the Dallas Fed says no problem so maybe you don't have to call me.
Anyway, that is a hell of a lot of money to spread about and a goodly portion of it is not straight treasury debt but mortgage backed...remember that stuff. And one should also keep in mind that the ECB is up to it's gills under it's own program and at last look, still buying! Then we have brother Carney at the Old Lady facing the May Mess and the Bank of Japan who was itself not an insignificant player. There is probably the better part of $10 Trillion of sterilized debt out there that at some point needs to be normalized. Of course we can all rest easy in the knowledge of the existing close cooperation and coordination that exists between the major central banks of the world. What Me Worry?
One thing to reduce concern is the number that this Administration seems to be doing on Dodd/Frank which will hopefully result in the recognition that the cost of unnecessary capital have proven to definitely reduce the liquidity of capital markets including the Treasury market and fix the situation. Quick. The problems we have faced in the past were, in many cases, begun with the mispricing of risk. I would suggest that a spread of 35b.p. between 2 and 10 year risk is no spread at all and as the 10 years is the starting point for all...or most...pricing of risk, may I further suggest that we haven't a real good handle..as we didn't at the turn of the century..as to how to price anything. 10 years ago with a theoretically far more liquid market, everything stopped. Perhaps The Dud should stop talking and start thinking about that.
The Dud has one answer. Demand. Everybody wants U.S. Debt. Makes sense except I thought that everybody wants yield; Argentina...yeah, ARGENTINA...today announced plans for a $2.3 billion ONE HUNDRED YEAR private placement with a coupon in the area of 7.8 %. Maybe just crazy people want yield, but then again if the Argies pay interest for 9 years, you break even and every trader out there is absolutely sure he/she knows at the level this thing should be. So maybe, except for Argentina Sovereign Debt Billy is right.
Or maybe some folks actually paid attention to what else the Fed talked about, namely the intention to "normalize" it's balance sheet which in case you missed it is up to $4.6 Trillion. Nothing official, but number in the neighborhood of $300 Billion a year had been batted about. Call me in 2025 to tell me how that works out. Oh yeah, Mr Kaplan, new to the Dallas Fed says no problem so maybe you don't have to call me.
Anyway, that is a hell of a lot of money to spread about and a goodly portion of it is not straight treasury debt but mortgage backed...remember that stuff. And one should also keep in mind that the ECB is up to it's gills under it's own program and at last look, still buying! Then we have brother Carney at the Old Lady facing the May Mess and the Bank of Japan who was itself not an insignificant player. There is probably the better part of $10 Trillion of sterilized debt out there that at some point needs to be normalized. Of course we can all rest easy in the knowledge of the existing close cooperation and coordination that exists between the major central banks of the world. What Me Worry?
One thing to reduce concern is the number that this Administration seems to be doing on Dodd/Frank which will hopefully result in the recognition that the cost of unnecessary capital have proven to definitely reduce the liquidity of capital markets including the Treasury market and fix the situation. Quick. The problems we have faced in the past were, in many cases, begun with the mispricing of risk. I would suggest that a spread of 35b.p. between 2 and 10 year risk is no spread at all and as the 10 years is the starting point for all...or most...pricing of risk, may I further suggest that we haven't a real good handle..as we didn't at the turn of the century..as to how to price anything. 10 years ago with a theoretically far more liquid market, everything stopped. Perhaps The Dud should stop talking and start thinking about that.
Tuesday, May 23, 2017
THE BEST LAID PLANS
Remember quantitative easing? Sure you do. That was the last Really Good Idea to prevent financial collapse when you reached a point when interest rates were at zero or below and nothing was going on. How does it work. Simple. You fold the economy with cash by the method of having the Central Bank buy everything out there and anything that can be issued to, in the case of the Fed, over $4 trillion and about half that for the ECB. In this country we used to have what we called the "Bond Vigilantes" who kept things honest through the operation of the markets, but with the entry of the guy that makes the money, discipline evaporates and as we have seen over the past few years, government is run through "continuing fiscal resolutions"--don't need no damn budget...free money!
So what happens when things begin to look better economically and the reason given for this activity seems to be lessening. One would think that the activity should cease, right? Not so fast my friend because it seems that as some of us have been suggesting and as reported in the WSJ the other day it may not be so easy. In fact, it may be quite difficult, unsettling and perhaps dangerous to markets. Consider this yet again: $4 trillion is a lot of jack, Jack. When you start spreading that kind of size in any market there is going to be a reaction, but more importantly, let us not forget that the geniuses that created Dodd/Frank imposed substantial liquidity AND capital requirements, forcing in the first case financial institutions to hold the most liquid of assets...govvies or govvie backed paper while at the same time charging them for the privilege. Then, just to make sure they got it ALL wrong, you can't trade the damn things for your own account. Bye, bye liquidity. Now dump a trillion or two...which is why no brighter light like Billy the Dud was heard musing that maybe the Fed will only unload 50% of its holdings as if this bright bulb has a clue as to what the right number might be.
The Fed has a bit of dilemma but at least the assets in question are of similar quality. Shift thoughts to Over There where the assets held by the ECB are definitely not of the same quality, so, in a far less liquid market even as compared to the compromised market Over Here, who buys what and at what price? Mario, I suspect, is in no rush to normalize but I'll but a Euro to a Drachma that with the uptick in the economic outlook the clamor from the less concerned, Germany, Netherlands, etc. will begin to build. Of course, if everybody could just agree to a common fiscal policy and a real central bank....anyway the whole thing seemed like a good idea at the time. Then again, so was freely operating markets. The bit about tangled webs wasn't a bad thought either.
So what happens when things begin to look better economically and the reason given for this activity seems to be lessening. One would think that the activity should cease, right? Not so fast my friend because it seems that as some of us have been suggesting and as reported in the WSJ the other day it may not be so easy. In fact, it may be quite difficult, unsettling and perhaps dangerous to markets. Consider this yet again: $4 trillion is a lot of jack, Jack. When you start spreading that kind of size in any market there is going to be a reaction, but more importantly, let us not forget that the geniuses that created Dodd/Frank imposed substantial liquidity AND capital requirements, forcing in the first case financial institutions to hold the most liquid of assets...govvies or govvie backed paper while at the same time charging them for the privilege. Then, just to make sure they got it ALL wrong, you can't trade the damn things for your own account. Bye, bye liquidity. Now dump a trillion or two...which is why no brighter light like Billy the Dud was heard musing that maybe the Fed will only unload 50% of its holdings as if this bright bulb has a clue as to what the right number might be.
The Fed has a bit of dilemma but at least the assets in question are of similar quality. Shift thoughts to Over There where the assets held by the ECB are definitely not of the same quality, so, in a far less liquid market even as compared to the compromised market Over Here, who buys what and at what price? Mario, I suspect, is in no rush to normalize but I'll but a Euro to a Drachma that with the uptick in the economic outlook the clamor from the less concerned, Germany, Netherlands, etc. will begin to build. Of course, if everybody could just agree to a common fiscal policy and a real central bank....anyway the whole thing seemed like a good idea at the time. Then again, so was freely operating markets. The bit about tangled webs wasn't a bad thought either.
Thursday, April 6, 2017
RETHINK
i was rereading yesterday's post and it came to me that I might have taken the wrong fork in the road and wound on the wrong side of the tracks. In trying to over-analyze the Curious Case of the Richmond Fed from the standpoint of Big Danny' s involvement I had probably missed the big issue standing out for all to see. What went on with Lacher was a side show; his crime was to confirm by his silence what was already known, which means that someone else had let the cat out of the bag, Which could possibly mean that the real bad guy (or girl) in this tale of financial skullduggery might well be in Washington at the Big Board as well as anywhere else which means that Big Danny's motives in speaking out might be entirely different which means who the hell spoke to Dick Medley's guy in the first place and why has it taken five years to find out?
It pains me to say this but I might...I repeat, Might...have given Big Danny a bad spin on this one. As was pointed out to me the Fed IG must have investigated this one and in that case where's the report? Lacher probably should have resigned/been fired but he's small fry. And might Big Danny's motives been to point this out to all concerned? Yea Danny.
Frankly, what was dead and buried might now be burrowing up from a shallow grave and if the Fed haters in the Congress--and there a lot of those-- choose to pick this thing up there could be hell to pay from the standpoint of Fed credibility and future independence. Not a good thing all around which is why we shouldn't canonize our boy just yet. I mean, like, Dude, why not just drop a dime and accomplish the same thing? Course that doesn't get you the bright lights and Danny do like those. It will be fun to watch where this thing goes.
Well, Xi is here just at the time that the Fat Little Nut shoots off another one; The Donald gets really po.ed at Assad...and his supposed buddy, Putin; the Don is threatening to strike Devon and the Indians and the Pakis are arguing (just words thank goodness) as to who is going to be first to let go a Big One if things heat up. Do the markets care? Nope. Everyone is waiting for the jobs number tomorrow. All the other minor stuff is going to come down over the weekend but it's the Masters so few will about that. Let's hope for Monday...that we have one
It pains me to say this but I might...I repeat, Might...have given Big Danny a bad spin on this one. As was pointed out to me the Fed IG must have investigated this one and in that case where's the report? Lacher probably should have resigned/been fired but he's small fry. And might Big Danny's motives been to point this out to all concerned? Yea Danny.
Frankly, what was dead and buried might now be burrowing up from a shallow grave and if the Fed haters in the Congress--and there a lot of those-- choose to pick this thing up there could be hell to pay from the standpoint of Fed credibility and future independence. Not a good thing all around which is why we shouldn't canonize our boy just yet. I mean, like, Dude, why not just drop a dime and accomplish the same thing? Course that doesn't get you the bright lights and Danny do like those. It will be fun to watch where this thing goes.
Well, Xi is here just at the time that the Fat Little Nut shoots off another one; The Donald gets really po.ed at Assad...and his supposed buddy, Putin; the Don is threatening to strike Devon and the Indians and the Pakis are arguing (just words thank goodness) as to who is going to be first to let go a Big One if things heat up. Do the markets care? Nope. Everyone is waiting for the jobs number tomorrow. All the other minor stuff is going to come down over the weekend but it's the Masters so few will about that. Let's hope for Monday...that we have one
Wednesday, April 5, 2017
THE DAY OF THE FED
China? Nah. Russia's? Nah. Syria? Nah. Susan Rice? Nah. Today was all about the Fed. First, the good news.
Big Danny Tarullo is gone. Back to Boston. Back to Mama (Harvard or CrazyLizzy?). But not without a few parting shots among which was the suggestion that it was the Fed itself that wacked Jeff Lacker, the former President of the Richmond Fed for his complicity in the release of important confidential information in 2012. Of course Big Danny meant to leave the impression that when he says, " the Fed" he means the gang in D.C. And the gang in D.C. is certainly in his mind Big Danny. Perhaps I am being unkind and he really was referring to the underbosses on the Richmond Board but I doubt it. Of one thing I am sure...I will find out. Does it make a differences? Probably not. Anybody asking why it took five years? Probably not either. I find that out as well.
Now comes the good part. In his bye, bye speech Danny also let it be known that in his humble opinion there are parts of Dodd/Frank that don't work real well; to wit the VOLKER Rule AND of all things, the thought that the subjective portion of the "stress tests" on which the banking system has reportedly spent around $2 billion over the past few years trying to understand might not be necessary. Now I have spent a lot of space in the past discussing these two landmarks of legislative genius so no reason to continue to beat a dead horse but do you think ANYONE present at this intellectual Epiphany asked Danny why the hell he was the leading advocate of these two provisions in the first place? Nope. At least not that I can find. And so, billions of dollars later...dismissed with a failing grade. Thank you for your service.
Finally, out goes Danny with the thought that although the capital position of the banking system has more than doubled in the past 8 years, wrecking returns, wrecking returns to shareholders and placing the system at a considerable disadvantage to its major competitors in the world, it still needs more capital. Akin to this, Danny seems to still miss the point the the alternative banking universe in the U.S. has grown by leaps and bounds to a great extent at the expense of traditional providers of capital and is considerably less capitalized and for all intents and purposes, completely unregulated. If the balloon goes up again I want to be in the basket underneath Citibank and J. P. Morgan.
So good bye and good luck to Mr. Tarullo. Fortunately, we still have his colleagues and his old shop to count on for a chuckle or two.
The minutes of the last meeting were released today. Seems as though
1. Them seem to think equities are somewhat overvalued despite having never had a clue about equities in the past 50 years.
2. The course seems to be set on at least two more bumps in interest rates this year...memo to the Fed: by raising rates you will certainly find out if the valuations on equities are too high or not.
3. They are trying to figure out a way to start reducing that $4.5 trillion dollar balance sheet. First step...reduce to $18billion next month's purchase of mortgage backs. Seems to make sense in as much as the rise in interest rates has put a big crimp in the refinancing of home mortgages. Yeah, really. Ain't that the damnedest.
Oh, upon the release of the minutes, equities reversed to the extent of about 250 points on the DOW closing down. Over 40 points. Funny how these things seem to be related. Ha, ha............
Mr. Xi comes to the Palm Beaches tomorrow. Good luck to both leaders. This really counts...as does the above mentioned. Sometimes I need a lead-in. Don't always take me too seriously.
Big Danny Tarullo is gone. Back to Boston. Back to Mama (Harvard or CrazyLizzy?). But not without a few parting shots among which was the suggestion that it was the Fed itself that wacked Jeff Lacker, the former President of the Richmond Fed for his complicity in the release of important confidential information in 2012. Of course Big Danny meant to leave the impression that when he says, " the Fed" he means the gang in D.C. And the gang in D.C. is certainly in his mind Big Danny. Perhaps I am being unkind and he really was referring to the underbosses on the Richmond Board but I doubt it. Of one thing I am sure...I will find out. Does it make a differences? Probably not. Anybody asking why it took five years? Probably not either. I find that out as well.
Now comes the good part. In his bye, bye speech Danny also let it be known that in his humble opinion there are parts of Dodd/Frank that don't work real well; to wit the VOLKER Rule AND of all things, the thought that the subjective portion of the "stress tests" on which the banking system has reportedly spent around $2 billion over the past few years trying to understand might not be necessary. Now I have spent a lot of space in the past discussing these two landmarks of legislative genius so no reason to continue to beat a dead horse but do you think ANYONE present at this intellectual Epiphany asked Danny why the hell he was the leading advocate of these two provisions in the first place? Nope. At least not that I can find. And so, billions of dollars later...dismissed with a failing grade. Thank you for your service.
Finally, out goes Danny with the thought that although the capital position of the banking system has more than doubled in the past 8 years, wrecking returns, wrecking returns to shareholders and placing the system at a considerable disadvantage to its major competitors in the world, it still needs more capital. Akin to this, Danny seems to still miss the point the the alternative banking universe in the U.S. has grown by leaps and bounds to a great extent at the expense of traditional providers of capital and is considerably less capitalized and for all intents and purposes, completely unregulated. If the balloon goes up again I want to be in the basket underneath Citibank and J. P. Morgan.
So good bye and good luck to Mr. Tarullo. Fortunately, we still have his colleagues and his old shop to count on for a chuckle or two.
The minutes of the last meeting were released today. Seems as though
1. Them seem to think equities are somewhat overvalued despite having never had a clue about equities in the past 50 years.
2. The course seems to be set on at least two more bumps in interest rates this year...memo to the Fed: by raising rates you will certainly find out if the valuations on equities are too high or not.
3. They are trying to figure out a way to start reducing that $4.5 trillion dollar balance sheet. First step...reduce to $18billion next month's purchase of mortgage backs. Seems to make sense in as much as the rise in interest rates has put a big crimp in the refinancing of home mortgages. Yeah, really. Ain't that the damnedest.
Oh, upon the release of the minutes, equities reversed to the extent of about 250 points on the DOW closing down. Over 40 points. Funny how these things seem to be related. Ha, ha............
Mr. Xi comes to the Palm Beaches tomorrow. Good luck to both leaders. This really counts...as does the above mentioned. Sometimes I need a lead-in. Don't always take me too seriously.
Tuesday, March 28, 2017
WHAT THE HECK...!
That's what my grandson says when things don't go his way which is generally all the time because he's eight. That's the way I felt this morning when the consumer confidence number came in at 126 which hasn't been seen around these climes since Trump was in short pants, followed shortly there after by manufacturing which was up, the Ford Motor Company announcing further U. S. expansion and the equity markets which surged on the news leading to a closing number on the DOW of up 150. Sure enough. Stan Fisher pops up to express the view that things are looking pretty good and yes, there will be two more increases this year. Trump then trashed a couple of more Obama self-made laws with the stroke of HIS PEN and needless to say, the 10 year closed at 2.43%; everything to which I had alluded yesterday was out the window. How dumb do I feel cannot be described here.
Well not everything. In trying to save face let's classify all of e above as "event risk" and the ol' blog don't look so bad. It may not be reflected in the statistics gang, but the vol in these markets is way up there...perhaps not in manner as measured today but as we old guys understood it way back in the past century--and more so--where if the right guy in London caught a cold everybody started sneezing. The other thing is that at this little precise moment in time we are not getting much warning from standard sources as to trending events as the media seems to be totally obsessed with anything that might in any way lead to Trump's impeachment a very little as to what the hell is going on in the world. Yes, you are right: me too. We are too much into the guy from either one side or the other...or no side for that matter. Time to start getting real.
What today's events do point out, however, is that the economic mood of this country, despite the presence of THIS President has changed to a far more bullish outlook which is not just limited to the Fly-Over Zone. And you have to give the guy credit: he appears unfazed by anything. I have to be honest and admit that I am enjoying it. Never a dull moment as is said. Tax policy seems to be next on the turn table waiting for a spin and there was even some pointed talk today in some circles about having a go at Dodd/Frank which would be a very good thing indeed. Forget about the EPA and coal; that's a side show the issues involved to be settled by the market and the future--at least with $3.00 gas--appears relatively clear. If the optimism out there proves correct, fixing the financial infrastructure of this country will be far, far more important...and that also includes getting a handle on such things as the so-called "shadow banking system" which has grown like Topsy in the past ten years. A big part of the "fix" is finally getting the regulatory piece right. What the heck. We'll never get a better chance
Well not everything. In trying to save face let's classify all of e above as "event risk" and the ol' blog don't look so bad. It may not be reflected in the statistics gang, but the vol in these markets is way up there...perhaps not in manner as measured today but as we old guys understood it way back in the past century--and more so--where if the right guy in London caught a cold everybody started sneezing. The other thing is that at this little precise moment in time we are not getting much warning from standard sources as to trending events as the media seems to be totally obsessed with anything that might in any way lead to Trump's impeachment a very little as to what the hell is going on in the world. Yes, you are right: me too. We are too much into the guy from either one side or the other...or no side for that matter. Time to start getting real.
What today's events do point out, however, is that the economic mood of this country, despite the presence of THIS President has changed to a far more bullish outlook which is not just limited to the Fly-Over Zone. And you have to give the guy credit: he appears unfazed by anything. I have to be honest and admit that I am enjoying it. Never a dull moment as is said. Tax policy seems to be next on the turn table waiting for a spin and there was even some pointed talk today in some circles about having a go at Dodd/Frank which would be a very good thing indeed. Forget about the EPA and coal; that's a side show the issues involved to be settled by the market and the future--at least with $3.00 gas--appears relatively clear. If the optimism out there proves correct, fixing the financial infrastructure of this country will be far, far more important...and that also includes getting a handle on such things as the so-called "shadow banking system" which has grown like Topsy in the past ten years. A big part of the "fix" is finally getting the regulatory piece right. What the heck. We'll never get a better chance
Monday, March 6, 2017
FOR WHAT ONE WISHES
A couple of things. Higher interest rates? I don't think there is any doubt that the Fed is moving higher in a couple of weeks. Everybody seems on line for this one except for some of the people who have Been asking for a higher environment for some time. Why? Well, it seems that things appear to be trending pretty good as of late so why do anything to mess it up? That was the latest word of wisdom from a couple of the talking heads on this morning's news shows. OK, dismissible, but it certainly makes one wonder if Flint, MI. is the only place in the country with a water problem. Remarkably, however, whether a rate rise is in order or not no one seems to care. President Trump's Excellent Journey is the only thing that people care about. It's like watching Phil Mickelson play golf: he may not be in contention but you can't take your eyes off of him. Maybe that's the plan. If it is it's a lousy plan.
But then again, if this administration is about anything it is "AmericaFirst" which I suppose includes the concept of a singular focus on actions, legislation, the creation of conditions which benefit this country irrespective of most foreign concerns, or an expansion upon Jimmy Baker's famous advice to a European diplomat, " The dollar is your problem." Remarkably, although I doubt very much if was intended, the proposals floating about as to what laws and policies in this country may look like in nine months are having more of an international effect that they are having domestically and far more of an effect than the great internationalist, Obama, could have ever imagined. To be honest, what Obama did or tried to do was, after a brief period of infatuation, was mostly ignored. Whilst I have written of this in earlier chapters, the Trump Effect on EVERY upcoming European election is becoming more pronounced. Problem is nobody has any idea as to the final effect as ever side is citing Trump and his policies(?) as either a reason for support in either a positive or negative sense. And of course the topper is no one either Over Her or Over There has the slightest idea as to what the final products resulting from what are now almost pure streams of consciousness might result! Trump. Internationalist!
There is of course even a greater problem: I don't have a clue either where this thing is going and consequently I have nothing intelligent to say...which of course to some may simply be a continuation of life over the past 10 years or so but I thought from time to time I had a few truths to be revealed. I mean, think about it. Nothing, NOTHING of consequence has been produced within the financial sector to fundamentally change the outlook from, say, five months ago: except for the anticipation of events resulting In what is one of the greatest booms in equity. markets we've ever seen is such a short space of time. So maybe the No Change in Rates guys are right! Lassez les Bon temps and all that stuff, but come on guys, I'm dying out here.
But then again, if this administration is about anything it is "AmericaFirst" which I suppose includes the concept of a singular focus on actions, legislation, the creation of conditions which benefit this country irrespective of most foreign concerns, or an expansion upon Jimmy Baker's famous advice to a European diplomat, " The dollar is your problem." Remarkably, although I doubt very much if was intended, the proposals floating about as to what laws and policies in this country may look like in nine months are having more of an international effect that they are having domestically and far more of an effect than the great internationalist, Obama, could have ever imagined. To be honest, what Obama did or tried to do was, after a brief period of infatuation, was mostly ignored. Whilst I have written of this in earlier chapters, the Trump Effect on EVERY upcoming European election is becoming more pronounced. Problem is nobody has any idea as to the final effect as ever side is citing Trump and his policies(?) as either a reason for support in either a positive or negative sense. And of course the topper is no one either Over Her or Over There has the slightest idea as to what the final products resulting from what are now almost pure streams of consciousness might result! Trump. Internationalist!
There is of course even a greater problem: I don't have a clue either where this thing is going and consequently I have nothing intelligent to say...which of course to some may simply be a continuation of life over the past 10 years or so but I thought from time to time I had a few truths to be revealed. I mean, think about it. Nothing, NOTHING of consequence has been produced within the financial sector to fundamentally change the outlook from, say, five months ago: except for the anticipation of events resulting In what is one of the greatest booms in equity. markets we've ever seen is such a short space of time. So maybe the No Change in Rates guys are right! Lassez les Bon temps and all that stuff, but come on guys, I'm dying out here.
Monday, February 20, 2017
PRESIDENTS DAY
or Vice President Day as the case may be as Michael Pence delivered one of the toughest policy speeches in a long time in Brussels at the NATO summit in Brussels this afternoon. In short, Pence repeated his boss' admonition to the NATO allies to pay their "fair share" in front of all of Europe and repeated it when questioned.
Why is this important? In this as in all other things is would appear that this administration's method of negotiation is going to be, "what you hear is what you get" with Europe as with everybody else, marking a dramatic change from Il Duce's approach as well as the approach of most prior administrations. Now defense policy is one thing: frankly, I think the less chance of misunderstanding the better but when it comes to finance, the dance of the seven veils isn't always a bad thing. Here's why.
The greatest element of international finance these days is the explosion of cross border trading in practically every financial instrument of any importance and is addition, instruments invented simply to act as trading vehicles, having no other useful purpose for their existence. Certainty may reduce the opportunity to make a very handsome return on a thoughtful (that means speculative) risk position but it also encourages far larger positions and leverage in order to make profits. Further, underlying conditions change rapidly. Changing positions to reflect changing conditions is always harder when the wiggle room factor is zero and if we have learned one thing over the past few years world financial conditions can change in a New York minute. Memo to President Trump on Your day: want to see global financial conditions change? Bugger up this promised tax reform you will see a beaut. Markets don't like uncertainty but it sure has hell keeps them honest. What they hate even more is a promise that isn't. Then again, you have half of Goldman Sachs in your administration. I guess I should feel safe.
Anyway, while we were trying to get this house in shape, Janet was up on the Hill sounding rather hawkish and why not? Going where the market wants you to go is a rather good strategy and having no further political objectives you might even get reappointed. Now all you have to worry about is the dollar going through the roof but that's the worry of the Goldie Guys so it's clear sailing to a gentle, regular increase through year end. Sit back Bubbala and enjoy the ride which of course will be made easier now that Big Danny I gone but then you have to start worrying about who's next. Lael Brainard I'm sure; this Washington is not the place for her. The Great One? I hope not but Stanley may opt out. Then again she still has to deal with the Kardashian of Central Bankers up in Minneapolis who last week proclaimed that banks needed 20% in capital. One assumes that like utilities, he's prepared to guarantee banks a return on the same. Then again (again) perhaps we should just recall the only really bright thing that Big Danny ever said when he proclaimed the the most important job of the President of the Minneapolis Fed was to keep the parking lot and sidewalks free of snow and ice in the winter. Then again, the Minny Fed has underground parking. Maybe it wasn't so bright.
Good to be back.
Why is this important? In this as in all other things is would appear that this administration's method of negotiation is going to be, "what you hear is what you get" with Europe as with everybody else, marking a dramatic change from Il Duce's approach as well as the approach of most prior administrations. Now defense policy is one thing: frankly, I think the less chance of misunderstanding the better but when it comes to finance, the dance of the seven veils isn't always a bad thing. Here's why.
The greatest element of international finance these days is the explosion of cross border trading in practically every financial instrument of any importance and is addition, instruments invented simply to act as trading vehicles, having no other useful purpose for their existence. Certainty may reduce the opportunity to make a very handsome return on a thoughtful (that means speculative) risk position but it also encourages far larger positions and leverage in order to make profits. Further, underlying conditions change rapidly. Changing positions to reflect changing conditions is always harder when the wiggle room factor is zero and if we have learned one thing over the past few years world financial conditions can change in a New York minute. Memo to President Trump on Your day: want to see global financial conditions change? Bugger up this promised tax reform you will see a beaut. Markets don't like uncertainty but it sure has hell keeps them honest. What they hate even more is a promise that isn't. Then again, you have half of Goldman Sachs in your administration. I guess I should feel safe.
Anyway, while we were trying to get this house in shape, Janet was up on the Hill sounding rather hawkish and why not? Going where the market wants you to go is a rather good strategy and having no further political objectives you might even get reappointed. Now all you have to worry about is the dollar going through the roof but that's the worry of the Goldie Guys so it's clear sailing to a gentle, regular increase through year end. Sit back Bubbala and enjoy the ride which of course will be made easier now that Big Danny I gone but then you have to start worrying about who's next. Lael Brainard I'm sure; this Washington is not the place for her. The Great One? I hope not but Stanley may opt out. Then again she still has to deal with the Kardashian of Central Bankers up in Minneapolis who last week proclaimed that banks needed 20% in capital. One assumes that like utilities, he's prepared to guarantee banks a return on the same. Then again (again) perhaps we should just recall the only really bright thing that Big Danny ever said when he proclaimed the the most important job of the President of the Minneapolis Fed was to keep the parking lot and sidewalks free of snow and ice in the winter. Then again, the Minny Fed has underground parking. Maybe it wasn't so bright.
Good to be back.
Wednesday, December 14, 2016
JANET TIME .....YAWN
Fed moved 25 b.p. today as everyone knew they would. Ms. Yellen's statement sounded like nothing had happened since the last meeting...nothing, zero, nada on the election or it's possible aftermath. She was a bit bullish in he predictions which called for a probable thrice-hike of 1/4% in 2017 and an eventual top rate of 3.00% by end-2018. Down went the DOW 114 points; up went the dollar index; the 2, 5 and 10 year shot up with the latter easily passing 2.53% but the Long Bond sat still. Damnedest thing...the curve actually flattened on the long end. What does all this mean? Beats me. Markets are bullish; rates have been moving up; employment is at full capacity according to the manner by which it is counted which is of course rubbish and sentiment is sky high. Janet, who loves data followed the data. Can we all move on now?
Oh, if you are looking for truly nuts, the Greeks are back in the news. Not to be content with BREXIT, the mess in Italy, the upcoming French and Dutch elections, the Euros have decided to grant the Greeks no further debt relief because it appears the Germans threw a hissy fit over PM Tsaspris' decision to grant Christmas bonuses which was verboten under the standing agreement. OK, say the Greeks, we're going to call for snap elections early next year so you guys have THAT, too, to deal with and of course a conservative government will win on a campaign of dump the Euro and if it comes to it, the Union as well. Guys, can't we all just get along? The Greeks can NEVER pay what they owe so why care.
And of course the Italians are forming a new interim government, the 1,236,202 in the last hundred years and people are actually bidding up the shares of Italian banks like this is a good thing. UniBank is talking up their capital raising exercise and Monte di Paschi is as well. Speaking of wells, there has to be something in the water in Italy...the old Roman viaducts broke down or something. They gotta test that stuff.
And the other Wells...Fargo that is. Their living will was rejected. Poor Big Danny Tarullo: the only saving and loan on his watch list (he likes that kind of business model) has let him down. Talk about the Grinch who stole Christmas. Danny is left pontificating while staring out into space wondering how did it all go so terribly wrong so fast. Worst yet, in 45 days of so he's going to have to deal with that bunch of thugs from Goldman Sachs over at Treasury so here is my first prediction for the new year: Mr. Tarullo will be the next governor to resign from the Federal Reserve...IT'S BEGINNING TO LOOK A LOT LIKE CHRISTMAS........!
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Tomorrow will be the last regular entry for a while except for the occasional effort. We head East to baby sit and then for Christmas and when we return we'll be all-consumed selling our house and moving to another smaller location in the neighborhood. Very bittersweet. This place has been great to us and in the almost 16 years we have owned it not very many bad things have happened. But it's time. I hope to be up and running by mid-January. A most Merry and Blessed Christmas to all, you my readers and a Brilliant New Year.
Oh, if you are looking for truly nuts, the Greeks are back in the news. Not to be content with BREXIT, the mess in Italy, the upcoming French and Dutch elections, the Euros have decided to grant the Greeks no further debt relief because it appears the Germans threw a hissy fit over PM Tsaspris' decision to grant Christmas bonuses which was verboten under the standing agreement. OK, say the Greeks, we're going to call for snap elections early next year so you guys have THAT, too, to deal with and of course a conservative government will win on a campaign of dump the Euro and if it comes to it, the Union as well. Guys, can't we all just get along? The Greeks can NEVER pay what they owe so why care.
And of course the Italians are forming a new interim government, the 1,236,202 in the last hundred years and people are actually bidding up the shares of Italian banks like this is a good thing. UniBank is talking up their capital raising exercise and Monte di Paschi is as well. Speaking of wells, there has to be something in the water in Italy...the old Roman viaducts broke down or something. They gotta test that stuff.
And the other Wells...Fargo that is. Their living will was rejected. Poor Big Danny Tarullo: the only saving and loan on his watch list (he likes that kind of business model) has let him down. Talk about the Grinch who stole Christmas. Danny is left pontificating while staring out into space wondering how did it all go so terribly wrong so fast. Worst yet, in 45 days of so he's going to have to deal with that bunch of thugs from Goldman Sachs over at Treasury so here is my first prediction for the new year: Mr. Tarullo will be the next governor to resign from the Federal Reserve...IT'S BEGINNING TO LOOK A LOT LIKE CHRISTMAS........!
-----------------------------------------------------
Tomorrow will be the last regular entry for a while except for the occasional effort. We head East to baby sit and then for Christmas and when we return we'll be all-consumed selling our house and moving to another smaller location in the neighborhood. Very bittersweet. This place has been great to us and in the almost 16 years we have owned it not very many bad things have happened. But it's time. I hope to be up and running by mid-January. A most Merry and Blessed Christmas to all, you my readers and a Brilliant New Year.
Monday, November 28, 2016
RETURN
Sorry about last week. I couldn't do it Monday and Tuesday and then it was off for Thanksgiving. It has been a rough few weeks and seeing the grand kids certainly helped. Anyway, let's try to catch up by highlighting a few events of what is a rather important week before us.
The transition of governance continues apace Over Here with some of our major institutions such as the New York Times and NBC still in a total state of denial and in some cases approaching madness in contemplating a Trump administration. It's a bit fun to watch but at at time when a true healing is much needed the attempts of the political left to continue to de-legitimatize Trump himself are becoming overwhelming by the new attempt to de-legitimatize the election itself with ridiculous calls for a recount in three states that Hillary couldn't have possibly lost...I mean...like...could she? I could care less but this stupidity demeans discussion on real issues and will no doubt provoke a backlash among Trump's more ardent supporters who not on;y have the wind at their backs but the votes as well. At a time when solid reasoning and debate are needed, we run a good chance of getting...another two years as we had under Obama? For those who don't live within these borders and may have a hard time understanding what this is all about, allow me to make one of my rare forays into the political thicket. It goes like this.
Hilliary won the popular vote by a plurality. So what. In our system, it is the electoral vote that counts and that may not bode well for the Democratic Party in the future. The Dems are the party of the coasts; the Repubs have everything in the middle and the urbanization of America may not be the sure thing that has been spoken of almost as Gospel over the past few years. Yet, with the majority of votes in just two states, California and New York, a Democratic candidate might just win the whole thing in the future if there was no electoral college. This is the first battle in that fight. A change would require an amendment to the Constitution and that is no easy thing. It would also logically require a change in the nature of government to a parliamentary system. So much for We the People of the United States...and--whether you like it or not--the greatest political document ever written. Then again, perhaps it is time. Keep this analysis in mind as we navigate through the next few years in out history.
Anyway, the week to come. The ECB gets together on Wednesday and quite frankly I have no idea with what Sr. Draghi is up to although I suspect not much at the present time because in Europe as Over Here, political events are beginning to supplant monetary events as the driving force as, IMHO, they should. And there is a very big political event this weekend in Italy where a referendum proposed by the prime minister, if supported, could change the political face of that country forever and almost assuredly, the political face of the European Union. It is far too close to call but I have booked a call to my friend Massimo for tomorrow and as a result I expect to have a better feel for the situation by deadline time tomorrow.
Oh yeah, we have a job number on Friday that supposedly will make the decision for the Fed in December. Don't waste your time. The Fed will raise a quarter point and try to get the hell out of the way, allowing markets to drive the monetary scene for a while and--hopefully in its mind--getting out of the bore-sight of the incoming administration where it has very few friends. Survival, even at that high level is a very basic emotion.
More tomorrow.
The transition of governance continues apace Over Here with some of our major institutions such as the New York Times and NBC still in a total state of denial and in some cases approaching madness in contemplating a Trump administration. It's a bit fun to watch but at at time when a true healing is much needed the attempts of the political left to continue to de-legitimatize Trump himself are becoming overwhelming by the new attempt to de-legitimatize the election itself with ridiculous calls for a recount in three states that Hillary couldn't have possibly lost...I mean...like...could she? I could care less but this stupidity demeans discussion on real issues and will no doubt provoke a backlash among Trump's more ardent supporters who not on;y have the wind at their backs but the votes as well. At a time when solid reasoning and debate are needed, we run a good chance of getting...another two years as we had under Obama? For those who don't live within these borders and may have a hard time understanding what this is all about, allow me to make one of my rare forays into the political thicket. It goes like this.
Hilliary won the popular vote by a plurality. So what. In our system, it is the electoral vote that counts and that may not bode well for the Democratic Party in the future. The Dems are the party of the coasts; the Repubs have everything in the middle and the urbanization of America may not be the sure thing that has been spoken of almost as Gospel over the past few years. Yet, with the majority of votes in just two states, California and New York, a Democratic candidate might just win the whole thing in the future if there was no electoral college. This is the first battle in that fight. A change would require an amendment to the Constitution and that is no easy thing. It would also logically require a change in the nature of government to a parliamentary system. So much for We the People of the United States...and--whether you like it or not--the greatest political document ever written. Then again, perhaps it is time. Keep this analysis in mind as we navigate through the next few years in out history.
Anyway, the week to come. The ECB gets together on Wednesday and quite frankly I have no idea with what Sr. Draghi is up to although I suspect not much at the present time because in Europe as Over Here, political events are beginning to supplant monetary events as the driving force as, IMHO, they should. And there is a very big political event this weekend in Italy where a referendum proposed by the prime minister, if supported, could change the political face of that country forever and almost assuredly, the political face of the European Union. It is far too close to call but I have booked a call to my friend Massimo for tomorrow and as a result I expect to have a better feel for the situation by deadline time tomorrow.
Oh yeah, we have a job number on Friday that supposedly will make the decision for the Fed in December. Don't waste your time. The Fed will raise a quarter point and try to get the hell out of the way, allowing markets to drive the monetary scene for a while and--hopefully in its mind--getting out of the bore-sight of the incoming administration where it has very few friends. Survival, even at that high level is a very basic emotion.
More tomorrow.
Thursday, November 17, 2016
A MIDNIGHT CONVERSATION
He Who Knows All Things called late last night.
"You know why he saying those things, don't you?"
"Who?"
"Stan of course. What are you, drunk."
"No, I'm asleep."
"Oh. Anyway, do you know why?"
"NO, I DON'T KNOW WHY!" Alright, alright, because he has to. Happy?"
"Actually, yes. I'm rather pleased you came so close. I would not say 'had to' but 'needed to'."
'Like there's a difference?"
"Oh yes, there's quite a difference. "Had" implies a need, while 'needed" implies a conscious choice. You see..."
"No you may see, but at midnight not only don't I see but..."
"...You see, what Stan was saying is, "look gang, we are thinking about these issues and you had better be thinking about them as well.'"
"Hummmmmm."
"Just what do mean by Hummmmm?"
"That means I'm thinking. Problem is I don't have a solution to the problem if there is a problem."
"Oh, there's a problem all right and the other problem is that no one knows if the Fed has one either." Oh for that matter if any one there is working on a solution."
"A cry in the wilderness, then?"
"Not quite but certainly a suggestion what with the new administration in town if there is to be a solution now is the time to find it."
"And for this you called me at midnight?"
"Not for me, Charlie, I'm somewhere East of Suez. Middle of the day here."
"What the hell are you doing there."
"Solving problems, Ol' Son, solving problems."
I hung up. GOD! He's a pain, but as usual he was right.
------------------------------------
Ten Year was all over the place today closing at 2.30%. Let's hope we don't have an "event."
"You know why he saying those things, don't you?"
"Who?"
"Stan of course. What are you, drunk."
"No, I'm asleep."
"Oh. Anyway, do you know why?"
"NO, I DON'T KNOW WHY!" Alright, alright, because he has to. Happy?"
"Actually, yes. I'm rather pleased you came so close. I would not say 'had to' but 'needed to'."
'Like there's a difference?"
"Oh yes, there's quite a difference. "Had" implies a need, while 'needed" implies a conscious choice. You see..."
"No you may see, but at midnight not only don't I see but..."
"...You see, what Stan was saying is, "look gang, we are thinking about these issues and you had better be thinking about them as well.'"
"Hummmmmm."
"Just what do mean by Hummmmm?"
"That means I'm thinking. Problem is I don't have a solution to the problem if there is a problem."
"Oh, there's a problem all right and the other problem is that no one knows if the Fed has one either." Oh for that matter if any one there is working on a solution."
"A cry in the wilderness, then?"
"Not quite but certainly a suggestion what with the new administration in town if there is to be a solution now is the time to find it."
"And for this you called me at midnight?"
"Not for me, Charlie, I'm somewhere East of Suez. Middle of the day here."
"What the hell are you doing there."
"Solving problems, Ol' Son, solving problems."
I hung up. GOD! He's a pain, but as usual he was right.
------------------------------------
Ten Year was all over the place today closing at 2.30%. Let's hope we don't have an "event."
Friday, November 11, 2016
STANLEY HAS SPOKEN
In a conference hosted by the Central Bank of Chile of all people, Stanley Fisher revealed that in his opinion it looked as though it was about time for a gradual rise in interest rates. So much for uncertainty. The Fed will raise in December and continue to raise until...well, until it catches up with the market. Oh, the 10 year closed at 2.15% today.. From the standpoint of economic meddling, the Fed is dead and I would bet that the happiest guy in the room is Stanley.
What we are looking at in the near future is exactly what Stan Fisher has been quietly calling for and hoping for: if there is to be stimulus let it be of the fiscal kind and with it let there be a restructuring of economic governance in taxes, regulation and alike that has been so long needed in this and other western economies. I don't know what are Mr. Fisher's politics---frankly, I don't know if anyone does--but I suspect he is appreciative of how the markets are responding to Mr. Trump's election and taking the Fed out of a nasty little corner into which they had put themselves.
They are not out of the woods of course. There is a little matter of $4 Trillion on their balance sheet that they have to work off and there are rather clear signs that inflation is afoot the containment of which is their primary (some think otherwise--some are wrong) mandate through monetary governance. Spilling their balance sheet into the world is not exactly compatible with controlling inflation but this was always going to happen and one can only hope that there have been a few good folks thinking about this. And while we are on the subject of thinking, think about the greatest reversal of sentiment we have ever seen. From stated fears of total destruction of all things in the event of a Trump win we have seen the Masters of the Universe turn on a dime and buy the DOW to an all-time record close in the space of three days. Who the hell in their right mind would give their money to these guys to manage?
From now the tale will become how much of the Obama "legacy" will be dismantled in the next six months. Big Danny Tarullo will probably, in an operational sense wind up sleeping with the fishes if he doesn't decide to slip out the back door into the loving arms of Crazy Lizzy who, believing she is Ms. Clinton's natural sucessor, will want no part of him (she needs money...Wall Street has money...Wall Street hates him). Dodd/Frank will catch a good kicking but not entirely disappear which may not be a bad thing although how they are going to fix it is beyond my poor powers of comprehension. Somebody had better start thinking about the BIS meetings at which risk accountability will be a primary topic and since the meetings start on January 9, all we have is a very lame duck bunch of bankers and regulators to carry the flag. Not good. There had better be quick thought and even quicker action on the part of the Trumpsters in getting a message Over There and finding the right people to do it. Hint: Lael Brainard is not one of those people. I can supply a few names if anyone is interested. This could get ugly...more on that at a later time. There is so much more.
But the really great thing to watch in the coming months will be the interplay between the Trumpsters and Chuck Schumer in the Senate. Chuck replaces that most odious of creatures, Harry Reid, and while he will become the leader of the "loyal opposition," Chuck has always known on which side his bread is buttered and that is the side that reads "Wall Street." He's a nasty piece of political work but he's in a tough spot. Lizzy on his left, the Street (now) on his right, and his buddy The Donald in the White House..oh yes, they are good friends. This could be better than "Hamilton." The happiest guy around? Why me of course! I have material for at least...two years?
Have a great weekend!
What we are looking at in the near future is exactly what Stan Fisher has been quietly calling for and hoping for: if there is to be stimulus let it be of the fiscal kind and with it let there be a restructuring of economic governance in taxes, regulation and alike that has been so long needed in this and other western economies. I don't know what are Mr. Fisher's politics---frankly, I don't know if anyone does--but I suspect he is appreciative of how the markets are responding to Mr. Trump's election and taking the Fed out of a nasty little corner into which they had put themselves.
They are not out of the woods of course. There is a little matter of $4 Trillion on their balance sheet that they have to work off and there are rather clear signs that inflation is afoot the containment of which is their primary (some think otherwise--some are wrong) mandate through monetary governance. Spilling their balance sheet into the world is not exactly compatible with controlling inflation but this was always going to happen and one can only hope that there have been a few good folks thinking about this. And while we are on the subject of thinking, think about the greatest reversal of sentiment we have ever seen. From stated fears of total destruction of all things in the event of a Trump win we have seen the Masters of the Universe turn on a dime and buy the DOW to an all-time record close in the space of three days. Who the hell in their right mind would give their money to these guys to manage?
From now the tale will become how much of the Obama "legacy" will be dismantled in the next six months. Big Danny Tarullo will probably, in an operational sense wind up sleeping with the fishes if he doesn't decide to slip out the back door into the loving arms of Crazy Lizzy who, believing she is Ms. Clinton's natural sucessor, will want no part of him (she needs money...Wall Street has money...Wall Street hates him). Dodd/Frank will catch a good kicking but not entirely disappear which may not be a bad thing although how they are going to fix it is beyond my poor powers of comprehension. Somebody had better start thinking about the BIS meetings at which risk accountability will be a primary topic and since the meetings start on January 9, all we have is a very lame duck bunch of bankers and regulators to carry the flag. Not good. There had better be quick thought and even quicker action on the part of the Trumpsters in getting a message Over There and finding the right people to do it. Hint: Lael Brainard is not one of those people. I can supply a few names if anyone is interested. This could get ugly...more on that at a later time. There is so much more.
But the really great thing to watch in the coming months will be the interplay between the Trumpsters and Chuck Schumer in the Senate. Chuck replaces that most odious of creatures, Harry Reid, and while he will become the leader of the "loyal opposition," Chuck has always known on which side his bread is buttered and that is the side that reads "Wall Street." He's a nasty piece of political work but he's in a tough spot. Lizzy on his left, the Street (now) on his right, and his buddy The Donald in the White House..oh yes, they are good friends. This could be better than "Hamilton." The happiest guy around? Why me of course! I have material for at least...two years?
Have a great weekend!
Thursday, November 3, 2016
HEY, HEY, CUBBIES!
...as the late, great Jack Brickhouse would have put it/ After a 108 year hiatus, the Chicago Cubs won the World Series. Prayers answers, dreams fulfilled and who the hell cares about the most important election in the past 108 years.
But, life tho suspended for a moment in time goes on. Tomorrow is the jobs report which will have less meaning than people thought simply because no one voting cares about anything else by the trials of Hilliary (real and perhaps future ones) and whether The Donald can pull this one out merely by keeping his mouth shut as revelations both from Wiki Leaks and leaks from the FBI point towards a level of corruption and duplicity withing the center of government that in many ways compairs unfavorably to the every day goings-on in Nigeria. Can one say Third World Republic? What we are learning is unspeakable if true.
Meantime, in Janet's World, things are still on hold but there are signs that the rate rise is coming in December. That and the heightened possibility that Trump could actually win this thing or the specter of a crippled Hilliary battling scads of investigations for the next four years sent the DOW down for the seventh day on the trot. More importantly, however, is the general view as expressed here over the past few days that interest rates are going up world-wide as central banks pull back from the money-creating operations of the past few years. The Bank of Japan is the latest to essentially declare that mums the word when it comes to continued softening of monetary policy.
That all of this is occurring in the face of not-so-great economic performance as witnessed by third quarter profit reports and economic performance figures world wide is unsettling. Job numbers, no matter what tomorrow brings have been holding up but besides the bedpan and burger gains a closer examination reveals that there is a lot of part-time work included in the numbers and whilst the government points to wage gains and family wealth performance, the data backing up these "wins" is clearly suspect. Yet we are OK if not great Over Here. Over There, I see further signs of economic and political malaise extending into 2017. If Trump were to win, the effect of the Union could very well be calamitous for the internationalists and Brussels. Even a close loss will have an effect. The politics of Europe are, in my mind, the single greatest risk to be faced in the near future...and that's even without BREXIT which took a strange turn yesterday when the British High Court ruled that BREXIT could not go forward without parliamentary approval. Having bypassed the people's elected representatives and gone directly to the constituency by referendum, it seems a bit odd to throw the whole thing back to the folks from whom it was taken away in the first place. I mean, like, DUDE, that only happens in California, but then again it might make perfect sense once I read the opinion.
Anyway, we'll keep an eye on this and the number when it comes out tomorrow. There's a parade in Chicago tomorrow and half the town will be knee-walking tonight so I hope they're still trading on the exchange at 8:30 a.m. EDT. But the Cubbies did it and good on 'em and their ever-so-patient fans. Can we all restore normalcy at this stage and go back to rooting for the Yankees?
But, life tho suspended for a moment in time goes on. Tomorrow is the jobs report which will have less meaning than people thought simply because no one voting cares about anything else by the trials of Hilliary (real and perhaps future ones) and whether The Donald can pull this one out merely by keeping his mouth shut as revelations both from Wiki Leaks and leaks from the FBI point towards a level of corruption and duplicity withing the center of government that in many ways compairs unfavorably to the every day goings-on in Nigeria. Can one say Third World Republic? What we are learning is unspeakable if true.
Meantime, in Janet's World, things are still on hold but there are signs that the rate rise is coming in December. That and the heightened possibility that Trump could actually win this thing or the specter of a crippled Hilliary battling scads of investigations for the next four years sent the DOW down for the seventh day on the trot. More importantly, however, is the general view as expressed here over the past few days that interest rates are going up world-wide as central banks pull back from the money-creating operations of the past few years. The Bank of Japan is the latest to essentially declare that mums the word when it comes to continued softening of monetary policy.
That all of this is occurring in the face of not-so-great economic performance as witnessed by third quarter profit reports and economic performance figures world wide is unsettling. Job numbers, no matter what tomorrow brings have been holding up but besides the bedpan and burger gains a closer examination reveals that there is a lot of part-time work included in the numbers and whilst the government points to wage gains and family wealth performance, the data backing up these "wins" is clearly suspect. Yet we are OK if not great Over Here. Over There, I see further signs of economic and political malaise extending into 2017. If Trump were to win, the effect of the Union could very well be calamitous for the internationalists and Brussels. Even a close loss will have an effect. The politics of Europe are, in my mind, the single greatest risk to be faced in the near future...and that's even without BREXIT which took a strange turn yesterday when the British High Court ruled that BREXIT could not go forward without parliamentary approval. Having bypassed the people's elected representatives and gone directly to the constituency by referendum, it seems a bit odd to throw the whole thing back to the folks from whom it was taken away in the first place. I mean, like, DUDE, that only happens in California, but then again it might make perfect sense once I read the opinion.
Anyway, we'll keep an eye on this and the number when it comes out tomorrow. There's a parade in Chicago tomorrow and half the town will be knee-walking tonight so I hope they're still trading on the exchange at 8:30 a.m. EDT. But the Cubbies did it and good on 'em and their ever-so-patient fans. Can we all restore normalcy at this stage and go back to rooting for the Yankees?
Wednesday, September 21, 2016
POETRY IN MOTION
One bright day in the middle of the night,
Two blind boys got up to fight;
Back to back they faced each other,
Drew their swords and shot each other.
A deaf policeman heard the noise
Ran up and shot the two dead boys.
The Bank of Japan and the Federal Reserve Board met today. The above is the result. The BOJ decided that they would hold their 10 year note at essentially 0.00% by buying (or not buying) sufficient amounts of debt to make it happen but at the same time it committed itself to the purchase of 80 trillion Yen of government as had been previously announced. Hold on, you might ask, how the hell can they do both at the same time? Beats the hell out of me I would reply and as it seems, so would everybody else. This they think will steepen the yield curve and drive inflation up to the magic 2% level. I suspect what it will really do is the convince the remainder of the world who still doesn't believe that the Japanese really have no policy in which they believe or that makes sense to fall in line. Nevertheless, the Yen strengthened--I suppose because of the lack of action on the short end and Janet & Co. actions--or lack of them--later on in the day.
As predicted the Fed did nothing although the vote was a rather contentious 7-3. It probably was really 6-4 in philosophy and belief but Stan Fisher would never vote against the Chair if she would still be the majority. Janet then gave a rather folksy press conference in which it seemed that the only reason that the Fed didn't move was to preserve the momentum in the job market which has seemed to replace all of the other criteria to justify a rate rise. It was amusing to hear her with great passion (as much as you get from her) to emphasize that the Fed is totally non-political and all discussions are devoid of politics which if anyone didn't believe her they could read the transcript of the meetings which will be released in five years. Thank you Ms. Yellen but I think I'll pass. The ONLY reason you didn't raise rates was the upcoming election and the effect a rate rise might have on the most visible--from a public sense--economic indicator of them all, the stock market. Right on cue the markets closed way up for the day on the continuing lust for free money. So there we have it. The continuation of policies that for either nation have not worked as though this was planned and coordinated which I don't think it was.
Of course there could be another explanation: they are simply are out of bullets and are beginning to realize it but are not yet prepared to admit it. In any case, today was truly Mundo Bizzarro; a global fizzle, that in a sense makes life harder for everyone. By far, Japan's actions have the greater chance of causing mischief as the BOJ is now locked into an impossible strategy. Again, let me say that it is the FX markets that bear watching. Heading into the end of the year is always a frothy time. With so much policy uncertainty it could get downright gnarly.
Two blind boys got up to fight;
Back to back they faced each other,
Drew their swords and shot each other.
A deaf policeman heard the noise
Ran up and shot the two dead boys.
The Bank of Japan and the Federal Reserve Board met today. The above is the result. The BOJ decided that they would hold their 10 year note at essentially 0.00% by buying (or not buying) sufficient amounts of debt to make it happen but at the same time it committed itself to the purchase of 80 trillion Yen of government as had been previously announced. Hold on, you might ask, how the hell can they do both at the same time? Beats the hell out of me I would reply and as it seems, so would everybody else. This they think will steepen the yield curve and drive inflation up to the magic 2% level. I suspect what it will really do is the convince the remainder of the world who still doesn't believe that the Japanese really have no policy in which they believe or that makes sense to fall in line. Nevertheless, the Yen strengthened--I suppose because of the lack of action on the short end and Janet & Co. actions--or lack of them--later on in the day.
As predicted the Fed did nothing although the vote was a rather contentious 7-3. It probably was really 6-4 in philosophy and belief but Stan Fisher would never vote against the Chair if she would still be the majority. Janet then gave a rather folksy press conference in which it seemed that the only reason that the Fed didn't move was to preserve the momentum in the job market which has seemed to replace all of the other criteria to justify a rate rise. It was amusing to hear her with great passion (as much as you get from her) to emphasize that the Fed is totally non-political and all discussions are devoid of politics which if anyone didn't believe her they could read the transcript of the meetings which will be released in five years. Thank you Ms. Yellen but I think I'll pass. The ONLY reason you didn't raise rates was the upcoming election and the effect a rate rise might have on the most visible--from a public sense--economic indicator of them all, the stock market. Right on cue the markets closed way up for the day on the continuing lust for free money. So there we have it. The continuation of policies that for either nation have not worked as though this was planned and coordinated which I don't think it was.
Of course there could be another explanation: they are simply are out of bullets and are beginning to realize it but are not yet prepared to admit it. In any case, today was truly Mundo Bizzarro; a global fizzle, that in a sense makes life harder for everyone. By far, Japan's actions have the greater chance of causing mischief as the BOJ is now locked into an impossible strategy. Again, let me say that it is the FX markets that bear watching. Heading into the end of the year is always a frothy time. With so much policy uncertainty it could get downright gnarly.
Friday, August 26, 2016
BETTER IF BUT SLIGHTLY
My blogging prospects. I've decided that nothing much else counts any more.
Janet did her thing pretty much just as expected. After announcing that conditions seem to be more appropriate for a rate rise sooner rather than later she covered up by adding that the Fed's decision were still data dependent which was taken to mean that there probably will not be a rise in September. Janet likes the Labor market and the economy...why is a bit of a mystery as estimates for this quarter came in for an annual growth rate of 1% which is not exactly robust. But Janet had a job to do on behalf of her political masters in making things look as good as possible and trying to insure that rates stay just as they are until after the election and she did it pretty well. Not only that, nut she indicated that the Fed could probably do a couple of trillion more in QUE in Case things got a bit dodgy. Right after the speech, the DOW traded up into double digits. All was right with the world, the packing for the weekend in Sagaponic was underway and then Stanley Fisher showed up.
Stanley doesn't get the political thing. So when asked what he thought about Janet's talk he opined that he certainly would support a rise sooner rather than latter. The DOW immediately traded down 100 points. Fear not children, there will not be a raise in September but when this little dance points out is how completely artificial are the valuations of various markets as a result of Fed monetary nonsense...especially the stock market which is about as fully priced as any market has ever been...one could not be faulted for exhibiting some concern.
In any discussion of economics it is the stock market that the great unwashed seems to understand. Market goes up, things are good; market goes down...bad for incumbents. The effect of the Fed on the market--much less on things like pensions, banks, credit allocation? Forget it. No interest. So the market will stay up as long as the pesky Fisher guy can be held in place. Problem is everybody knows he's the smartest guy in the room so it gets sticky at times but Janet will prevail with help from Big Danny and Lael. Anyway, the DOW closed down 56 which was everyone getting square BUT the 10 year got out of it's own way and closed at 1.62%. Odds it's back into the 1.50-1.59% range next week --assuming no big shock which will be something completely unforeseen as with Labor Day approaching everything will shut down on Wednesday.
So next week I plan to turn to Europe where things are becoming interesting in the aftermath of the BREXIT non Yellen, Fisher, event which as I predicted might...and I emphasize MIGHT--be having a greater effect more on the Union than on the Brits. Interesting stuff.
Back on Monday.
Janet did her thing pretty much just as expected. After announcing that conditions seem to be more appropriate for a rate rise sooner rather than later she covered up by adding that the Fed's decision were still data dependent which was taken to mean that there probably will not be a rise in September. Janet likes the Labor market and the economy...why is a bit of a mystery as estimates for this quarter came in for an annual growth rate of 1% which is not exactly robust. But Janet had a job to do on behalf of her political masters in making things look as good as possible and trying to insure that rates stay just as they are until after the election and she did it pretty well. Not only that, nut she indicated that the Fed could probably do a couple of trillion more in QUE in Case things got a bit dodgy. Right after the speech, the DOW traded up into double digits. All was right with the world, the packing for the weekend in Sagaponic was underway and then Stanley Fisher showed up.
Stanley doesn't get the political thing. So when asked what he thought about Janet's talk he opined that he certainly would support a rise sooner rather than latter. The DOW immediately traded down 100 points. Fear not children, there will not be a raise in September but when this little dance points out is how completely artificial are the valuations of various markets as a result of Fed monetary nonsense...especially the stock market which is about as fully priced as any market has ever been...one could not be faulted for exhibiting some concern.
In any discussion of economics it is the stock market that the great unwashed seems to understand. Market goes up, things are good; market goes down...bad for incumbents. The effect of the Fed on the market--much less on things like pensions, banks, credit allocation? Forget it. No interest. So the market will stay up as long as the pesky Fisher guy can be held in place. Problem is everybody knows he's the smartest guy in the room so it gets sticky at times but Janet will prevail with help from Big Danny and Lael. Anyway, the DOW closed down 56 which was everyone getting square BUT the 10 year got out of it's own way and closed at 1.62%. Odds it's back into the 1.50-1.59% range next week --assuming no big shock which will be something completely unforeseen as with Labor Day approaching everything will shut down on Wednesday.
So next week I plan to turn to Europe where things are becoming interesting in the aftermath of the BREXIT non Yellen, Fisher, event which as I predicted might...and I emphasize MIGHT--be having a greater effect more on the Union than on the Brits. Interesting stuff.
Back on Monday.
Monday, August 22, 2016
JACKSON HOLE
Hail, hail, the gang's all there! The annual meeting in one of the nation's prettiest spots (you don't think they would go to Gary, Indiana do you?) is really the only thing of interest and if they can get Billy the Dud (he's there!) to keep his mouth shut it might remain as such. The one good thing about it is that it is only two days so by tomorrow we should have it pretty much down pat...well, Wednesday at the latest. The problem is there is going to be a lot of tooing and frowing and nothing of real substance coming out of this thing except for perhaps a primordial scream from Stanley Fisher who at this stage must be near bonkers from dealing with this mob for a few years. I bet he keeps asking himself why he took the job in the first place.
Forgive me but I find it near madness as I am sure Stanley does as well to focus on the great issues surrounding the increase of 1/4 percent in the discount rate in either September, December or never for that matter. There was a story running about today involving pension funds, looking for yield, finding it in selling covered puts to investors. Not my pension fund I hope. Then again, I can weather this thing out (I'm old) whereas the younger folks might be more receptive to a bit of cash flow in these lean times.
Or, if you really only want to talk about rates, you can talk about what happens when the world is headed south whilst we are headed north? Implications for that?
Or, as has been suggested on numerous occasions, the liquidity in all markets continues to deteriorate. Is this a made-up issue or something to spend a bit of time thinking about in the event of a...ah...correction which of course can never happen given where the VIX stands today.
Odd things do happen. Remember I said last week that I was worried about the weekend? Sure enough, I awakened this morning and there was a strange woman in my kitchen. Took me a while but I figured out it was T & S.
"Back?" said I. Filthy look. "I mean, haven't seen you in a while. Thought you were gone for good." (Anticipating)
"Don't be a smart ass."
"No...I mean...well...it has been a while."
"How long is a while."
"Well let's see...it was...about two weeks...no longer. Seventeen days to be exact."
"And...?"
"Well, I don't know, but...oh, have the Olympics ended?"
"Last night Sherlock. I'm good for four more years."
I guess that's good. I mean after 45 I've gotten used to it but it just shows how quickly things can change.
Forgive me but I find it near madness as I am sure Stanley does as well to focus on the great issues surrounding the increase of 1/4 percent in the discount rate in either September, December or never for that matter. There was a story running about today involving pension funds, looking for yield, finding it in selling covered puts to investors. Not my pension fund I hope. Then again, I can weather this thing out (I'm old) whereas the younger folks might be more receptive to a bit of cash flow in these lean times.
Or, if you really only want to talk about rates, you can talk about what happens when the world is headed south whilst we are headed north? Implications for that?
Or, as has been suggested on numerous occasions, the liquidity in all markets continues to deteriorate. Is this a made-up issue or something to spend a bit of time thinking about in the event of a...ah...correction which of course can never happen given where the VIX stands today.
Odd things do happen. Remember I said last week that I was worried about the weekend? Sure enough, I awakened this morning and there was a strange woman in my kitchen. Took me a while but I figured out it was T & S.
"Back?" said I. Filthy look. "I mean, haven't seen you in a while. Thought you were gone for good." (Anticipating)
"Don't be a smart ass."
"No...I mean...well...it has been a while."
"How long is a while."
"Well let's see...it was...about two weeks...no longer. Seventeen days to be exact."
"And...?"
"Well, I don't know, but...oh, have the Olympics ended?"
"Last night Sherlock. I'm good for four more years."
I guess that's good. I mean after 45 I've gotten used to it but it just shows how quickly things can change.
Friday, August 19, 2016
A MESS
The entire week. Loss of power wrecked Wednesday, had a medical procedure yesterday, ( no big deal but needed anesthesia...Wheee!) and today..well, just let's say it was the perfect end to a mess.
Everything was about will the Fed or won't the Fed with the betting for the day at least slipping over into the "will" position once again. So I'm just bagging this week and coming back on Monday. Funny thing though; I am very nervous about these next few days. I don't think we are in such a great place. Probably the drugs. Yeah, that's it, the drugs. Think I'll have a drink.
Everything was about will the Fed or won't the Fed with the betting for the day at least slipping over into the "will" position once again. So I'm just bagging this week and coming back on Monday. Funny thing though; I am very nervous about these next few days. I don't think we are in such a great place. Probably the drugs. Yeah, that's it, the drugs. Think I'll have a drink.
Tuesday, August 16, 2016
A LAUGH A MINUTE
Billy the Dud was at it again. The President of the New York Fed just can't keep himself off TV to the point that if he and Charlie Schumer ever wound up in the same room when the red light went on it's 6-5 either side as to who would wind up dead.
Anyway, the guy is good for laughs. Says he today that a rate rise in September should not be ruled out and the Fed will in no way be influenced by the upcoming election. The guy is funnier than Jack Benny. The most politicized Fed in history is going to raise ra...ah, hell it doesn't even deserve consideration, except by the equity boys who sold the thing off today ostensibly fearing a rate hike. More like the entire market was pretty toppy to begin with and volume looked like a day from the 1960ies. with the Hampton's packed to the gills or so it seemed to me.
On the other hand, the real action--as predicted I might add--is in the currency markets with the short position in Sterling believed to be at a 31 year high. The Pound closed at 1.30, up from yesterday's 1.2980 but that was due entirely to a bit of shot covering in the end. Speculation has it at 1.26 on the high side to 1.19-20 at the low by year end. "There are no buyers" I was told today which tells me that if you are short, get square because the downside to that position is enormous. Mr. Carney is a bit of an unknown but the history of the Old Lady has been one of not enjoying the sight of her currency being trashed despite the value to the U.K. export business which is becoming even more important. Further, any positive news on a variety of fronts...especially any relating to BREXIT could produce a rout and one can be practically certain that the Bank will be in no mood to stabilize things. OK, OK I admit it: that's what I hope will happen but I don't think I'm far off on the basic premise that this is way overdone.
Anyway, it has been a good day for chuckles and happy thoughts. Oh. by the by, the rain? Yep, we got a bit last evening and into the night. Ten Inches to be exact. Not a cloud in the sky as a write this. Welcome to the Fly-Over Zone! Vaughn is laughing too.
Anyway, the guy is good for laughs. Says he today that a rate rise in September should not be ruled out and the Fed will in no way be influenced by the upcoming election. The guy is funnier than Jack Benny. The most politicized Fed in history is going to raise ra...ah, hell it doesn't even deserve consideration, except by the equity boys who sold the thing off today ostensibly fearing a rate hike. More like the entire market was pretty toppy to begin with and volume looked like a day from the 1960ies. with the Hampton's packed to the gills or so it seemed to me.
On the other hand, the real action--as predicted I might add--is in the currency markets with the short position in Sterling believed to be at a 31 year high. The Pound closed at 1.30, up from yesterday's 1.2980 but that was due entirely to a bit of shot covering in the end. Speculation has it at 1.26 on the high side to 1.19-20 at the low by year end. "There are no buyers" I was told today which tells me that if you are short, get square because the downside to that position is enormous. Mr. Carney is a bit of an unknown but the history of the Old Lady has been one of not enjoying the sight of her currency being trashed despite the value to the U.K. export business which is becoming even more important. Further, any positive news on a variety of fronts...especially any relating to BREXIT could produce a rout and one can be practically certain that the Bank will be in no mood to stabilize things. OK, OK I admit it: that's what I hope will happen but I don't think I'm far off on the basic premise that this is way overdone.
Anyway, it has been a good day for chuckles and happy thoughts. Oh. by the by, the rain? Yep, we got a bit last evening and into the night. Ten Inches to be exact. Not a cloud in the sky as a write this. Welcome to the Fly-Over Zone! Vaughn is laughing too.
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