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.
Showing posts with label Yellen. Show all posts
Showing posts with label Yellen. Show all posts
Wednesday, December 14, 2016
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.
Wednesday, August 24, 2016
...HOW WEARY, FLAT, STALE AND UNPROFITABLE...
No, I'm not thinking of topping myself like poor, ol' Hamlet, but boy, this is really getting tough. Nothing is happening...nothing. Well, there as a really good auction in the five year today with the yield coming in at a shade over 1.12% with coverage in record range. The ten year has been trading in a 10 point range, 1.50-1.60% seemingly forever with the action being from foreign sources given the alternatives out there. The short end has been slowing ticking up which is giving us probably the flattest yield curve I can remember except for a time long, long ago when it was inverted. I would not like to be running a bank right now except for the fact that is is getting a bit more expensive to borrow unless you're in the fixed income market because--wait for it--responding to government regulations, the banks have been forced to cut back on their traditional businesses. There used to be a beer commercial that talked about "men of real genius." Those guys portrayed in those adds had nothing on our regulators and central bankers of today. Funny as they were, this group is a gut-buster.
The other thing of course is the "Waiting for Go...ah...Yellen" moment that is scheduled for Friday. Two days ago the currency market sold the dollar; today the market bought it. This is seen as a sign that Janet will be bullish on tightening...although it was bearish on Monday. What it really is is traders (those who are still around) screwing about having nothing better to do, making a pip here and two pips there and giving most of it back in the end. Except for Sterling which still has a short book like it was 1974. I keep thinking this could really be fun and expect it will be; Lord, give me a topic. My words fly up...at least I hope they do.
But September is coming and the gang will be headed back to their jobs from the Midi, Cornwall or the Hamptons and things will liven up I am sure. The Premiership is in full swing and American football is just around the corner. Just have to wait it out. It will come. If it be not now, yet it will come. Very Bardish these days.
The other thing of course is the "Waiting for Go...ah...Yellen" moment that is scheduled for Friday. Two days ago the currency market sold the dollar; today the market bought it. This is seen as a sign that Janet will be bullish on tightening...although it was bearish on Monday. What it really is is traders (those who are still around) screwing about having nothing better to do, making a pip here and two pips there and giving most of it back in the end. Except for Sterling which still has a short book like it was 1974. I keep thinking this could really be fun and expect it will be; Lord, give me a topic. My words fly up...at least I hope they do.
But September is coming and the gang will be headed back to their jobs from the Midi, Cornwall or the Hamptons and things will liven up I am sure. The Premiership is in full swing and American football is just around the corner. Just have to wait it out. It will come. If it be not now, yet it will come. Very Bardish these days.
Friday, May 27, 2016
BACK HOME AGAIN
Good trip, great wedding marred only by Delta completely destroying T & S's checked luggage. She was ready to kill but I told her I can probably parlay this into a freebe back out to Ca. in July so that calmed her down a bit. More walkin' around fold.
Anyway, we should have stayed away; things were going pretty good while we were watching over the Left Coast where, if anyone is interested, they are feeling The Bern. Could be a kick of a primary in a week.
Janet was on stage today and was more open than expected in forecasting another rate rise within the next few months. Interestingly, bank stocks reacted on the hope of higher earnings from higher rates with the geniuses completely forgetting that the absolute level of rates has nothing whatsoever to do with it--it is the spread between maturities that count. In the C & I sector, interest differential income is the game and while short term rates have moved, the longer end of the curve has stayed stubbornly flat, or at least relatively so. Flat yield curves are anathema to banks so if the girl is serious this is the thing to watch. Meanwhile, everyone--except us drivers- is thrilled about rising oil prices. I merely wish to point out that a couple of things have happed that haven't received the attention they deserve, to wit: Alberta damn near burned down, Nigeria is at war and Venezuela is becoming closer and closer to shutting down completely. Can it last? I doubt it but money is being made.
Finally, On this Memorial Day weekend, Il Duce is off giving a speech in Hiroshima of so little substance and of such great moral equivalency that its sole purpose has to be for his own self-amusement. Sorry, but this is a week-end in which our fallen are supposed to be remembered. Some were good friends of mine. It's hard to do that from 10,000 miles away.
See you next week--it's good to be back.
Anyway, we should have stayed away; things were going pretty good while we were watching over the Left Coast where, if anyone is interested, they are feeling The Bern. Could be a kick of a primary in a week.
Janet was on stage today and was more open than expected in forecasting another rate rise within the next few months. Interestingly, bank stocks reacted on the hope of higher earnings from higher rates with the geniuses completely forgetting that the absolute level of rates has nothing whatsoever to do with it--it is the spread between maturities that count. In the C & I sector, interest differential income is the game and while short term rates have moved, the longer end of the curve has stayed stubbornly flat, or at least relatively so. Flat yield curves are anathema to banks so if the girl is serious this is the thing to watch. Meanwhile, everyone--except us drivers- is thrilled about rising oil prices. I merely wish to point out that a couple of things have happed that haven't received the attention they deserve, to wit: Alberta damn near burned down, Nigeria is at war and Venezuela is becoming closer and closer to shutting down completely. Can it last? I doubt it but money is being made.
Finally, On this Memorial Day weekend, Il Duce is off giving a speech in Hiroshima of so little substance and of such great moral equivalency that its sole purpose has to be for his own self-amusement. Sorry, but this is a week-end in which our fallen are supposed to be remembered. Some were good friends of mine. It's hard to do that from 10,000 miles away.
See you next week--it's good to be back.
Wednesday, December 2, 2015
WHICH WAY IS UP?
Janet sounded pretty confident today about the state of the economy and a rate increase. So confident in fact that she knocked the crap out of the equity market which appears to have finally agreed to believer her. Funny things are going on. A good deal of the talk leading up to December 12 was designed to increase the slope of the yield curve by moving the long end out in anticipation of steadily--if slowly--rising interest rates. Instead the exact opposite has happened with the long end remaining almost motionless and the short end closing in rapidly. In case you are wondering why, don't ask me but I suspect some of the underlying assumptions for this theory are not quite as sound as suspected, like that relating to an improving economy which is entirely dependent as to how one defines "improving." If you define it as "it stinks," you are in my camp but I admit there is an argument to be made. Of course, if you believe that any improvement in sectors such as consumer and autos is merely the result of zero cost of financing, the Fed's move might be questionable. Needless to say, industrial output which crashed today and cap spending levels which continue to decline belie the "improvement" argument...but then employment number is expected to show a good rise on Friday...unless you are like me who, more and more, thinks the number is crap.
But there are odder things about. While Janet is ready to raise, Mario is ready to lower...or at least announce QE II as far as the Euros are concerned...no doubt because his first effort had such a profound positive effect. Now liquidity is liquidity; if we raise Over Here and they "lower" Over There (the method is immaterial) the effect is going to be pretty much a wash. Dollars and Euros and Sterling and Yen and now, FOR THE VERY FIRST TIME, the Yuan whip around the world at the push of a computer's button. In some circles with all of these conflicting economic theories emerging from central banks who keep trying to tell us that they are on the same page may bring whispers of the Joys of Arbitrage and the soft singing of that catchy tune, "Spec u laaaa tion...COME ON! Perhaps the Lords of Finance got it all wrong in 1929 but at least they were on the same page; I'm not sure this mob is reading the same book.
Then again, we have the Brits. This week they announced, after months of preparing us for the opposite, that all the British banks had passed their stress tests and all was right with the world. As a result, Smart Mark expressed the view that adequate capitalization was in place and no rise would be necessary. Hang on. I just though Big Danny Tarullo had told us a lot more capital would be needed? I thought we were dealing in a global market place? The Brits' capital is good, ours isn't and we don't know what the deal is for the Euros yet? Of course the Chinese system is broke, the Japanese...who knows...and we're all slogging about in the same cabbage patch with God knows how many trillions being transferred and exchanged every day? But fear not, we have Dodd/Frank. Is it just me asking these questions or shouldn't I worry as--clearly--there is some great force of Genius and Good guiding all of this. Anyway, forgive this little outpouring; I collapsed late this morning with the Tripletitis which has yet to leave. I am mimicking the economy; improving but it's hard to define. Drink lots of fluids says the quack, quickly adding without mood enhancers. Yeah, sure. Post time.
But there are odder things about. While Janet is ready to raise, Mario is ready to lower...or at least announce QE II as far as the Euros are concerned...no doubt because his first effort had such a profound positive effect. Now liquidity is liquidity; if we raise Over Here and they "lower" Over There (the method is immaterial) the effect is going to be pretty much a wash. Dollars and Euros and Sterling and Yen and now, FOR THE VERY FIRST TIME, the Yuan whip around the world at the push of a computer's button. In some circles with all of these conflicting economic theories emerging from central banks who keep trying to tell us that they are on the same page may bring whispers of the Joys of Arbitrage and the soft singing of that catchy tune, "Spec u laaaa tion...COME ON! Perhaps the Lords of Finance got it all wrong in 1929 but at least they were on the same page; I'm not sure this mob is reading the same book.
Then again, we have the Brits. This week they announced, after months of preparing us for the opposite, that all the British banks had passed their stress tests and all was right with the world. As a result, Smart Mark expressed the view that adequate capitalization was in place and no rise would be necessary. Hang on. I just though Big Danny Tarullo had told us a lot more capital would be needed? I thought we were dealing in a global market place? The Brits' capital is good, ours isn't and we don't know what the deal is for the Euros yet? Of course the Chinese system is broke, the Japanese...who knows...and we're all slogging about in the same cabbage patch with God knows how many trillions being transferred and exchanged every day? But fear not, we have Dodd/Frank. Is it just me asking these questions or shouldn't I worry as--clearly--there is some great force of Genius and Good guiding all of this. Anyway, forgive this little outpouring; I collapsed late this morning with the Tripletitis which has yet to leave. I am mimicking the economy; improving but it's hard to define. Drink lots of fluids says the quack, quickly adding without mood enhancers. Yeah, sure. Post time.
Wednesday, October 14, 2015
SURORISE, SURPRISE
If you had any allusions about the politicalization of the Federal Reserve, you probably lost them this week.
In well-coordinated seperate announcements, Big Jim Tarullo and Lael Brainard, the two governors most directly connected to the administration, parroted the White House's favorite economists Larry Summers and Little Paulie Krugman along with the house organ, the New York Times in proclaiming--perhaps demanding--that there be no interest rate rise this year. I've been around for a bit and while I have witnessed disagreements among board members, we the public generally found out about them in well-schooled leaks to the press...always unattributable of course...but I have never seen an orchestrated campaign to promote such supposed differences in policy matters such as we are witnessing here.
I suspect two things are at work. Ms. Yellen is clearly Obama's gal but can't say so, and as Chair, she is playing the roll of Caesar's wife but in addition, the two afore-mentioned Governors are probably getting their shots in at Stan Fisher whose views are not quite in line with those of the administration and its sycophants. As everyone knows, Mr. Fisher is the smartest guy in the room; this is a problem.
Now as you know I don't think it makes a bit of difference whether the Fed raises a 1/4 point or not in the near term. The problem, Horatio, is not in the rates but as Angel Gurria pointed out, in the structure of things, and while we are no where near as mucked up as Europe, we are moving in the wrong direction (the Democratic "debate" last night was truly spooky). A rate rise is an attitude adjustment and with attitude comes action and with action comes a reassessment as to whether this liquidity gravy train can go on forever. To that question, you know my answer. But while this "debate" continues, we face some fairly grim situations which perhaps--just perhaps--are becoming recognized.
The economy, touted as moving ahead, isn't doing much at all. With more than 1/3 of the capable workforce not working the 5.1% unemployment rate is a nonsense, a fact sustained by the realization that if we were really close to "full employment," wages would not be stagnant and consumer purchases--save for autos which is all the result of borrowed "free money," would not be going no where. On top of all that, in recent years a growing amount of the business of American corporations has been directed internationally--particularly towards the emerging markets. That is an ugly place to be doing business right now. Which the profit numbers as they emerge in the following weeks.
The solution to all of this is of course for the Fed to hold the course. To do otherwise would of course admit to a monumental policy mistake but more importantly, to a rejection of political theory that has governed our major political parties (yes, Toto, the Repubs are to blame as well) for too many years. Egos will certainly be bruised. But it is quite brilliant to focus the conversation on the Fed; reality can be awkward. And all the while the chance of an "event risk" in the Middle East and other places becomes greater as TOW missiles marked "Made in the U.S.A." are knocking off tanks marked, "Made in Russia." At some point there are going to be Russians in those tanks and old Yuri in Red Square with a bottle of home brew in his belly, will not wish to understand the niceties in the of the difference between 'Made In" or "Supplied By" as the body bags come home.
I've been getting more political in tone the past couple of weeks which I promised I would never do but unfortunately, politics is becoming such a big part in all our activities that it is difficult to avoid.
The new situation in Syria is just going to make the flow of refugees worse and I really fear for Europe. This is a economic as well as a societal catastrophe in the making and one with which I suspect, they are not capable of dealing. We need something to cheer us up...like the Mets beating the Devil's Team, the Dodgers and meeting the Cubbies in the NLCS. New York against Chicago...the First against the Second City...good against evil...at least for seven games. That's my kind of war! Go Mets!
In well-coordinated seperate announcements, Big Jim Tarullo and Lael Brainard, the two governors most directly connected to the administration, parroted the White House's favorite economists Larry Summers and Little Paulie Krugman along with the house organ, the New York Times in proclaiming--perhaps demanding--that there be no interest rate rise this year. I've been around for a bit and while I have witnessed disagreements among board members, we the public generally found out about them in well-schooled leaks to the press...always unattributable of course...but I have never seen an orchestrated campaign to promote such supposed differences in policy matters such as we are witnessing here.
I suspect two things are at work. Ms. Yellen is clearly Obama's gal but can't say so, and as Chair, she is playing the roll of Caesar's wife but in addition, the two afore-mentioned Governors are probably getting their shots in at Stan Fisher whose views are not quite in line with those of the administration and its sycophants. As everyone knows, Mr. Fisher is the smartest guy in the room; this is a problem.
Now as you know I don't think it makes a bit of difference whether the Fed raises a 1/4 point or not in the near term. The problem, Horatio, is not in the rates but as Angel Gurria pointed out, in the structure of things, and while we are no where near as mucked up as Europe, we are moving in the wrong direction (the Democratic "debate" last night was truly spooky). A rate rise is an attitude adjustment and with attitude comes action and with action comes a reassessment as to whether this liquidity gravy train can go on forever. To that question, you know my answer. But while this "debate" continues, we face some fairly grim situations which perhaps--just perhaps--are becoming recognized.
The economy, touted as moving ahead, isn't doing much at all. With more than 1/3 of the capable workforce not working the 5.1% unemployment rate is a nonsense, a fact sustained by the realization that if we were really close to "full employment," wages would not be stagnant and consumer purchases--save for autos which is all the result of borrowed "free money," would not be going no where. On top of all that, in recent years a growing amount of the business of American corporations has been directed internationally--particularly towards the emerging markets. That is an ugly place to be doing business right now. Which the profit numbers as they emerge in the following weeks.
The solution to all of this is of course for the Fed to hold the course. To do otherwise would of course admit to a monumental policy mistake but more importantly, to a rejection of political theory that has governed our major political parties (yes, Toto, the Repubs are to blame as well) for too many years. Egos will certainly be bruised. But it is quite brilliant to focus the conversation on the Fed; reality can be awkward. And all the while the chance of an "event risk" in the Middle East and other places becomes greater as TOW missiles marked "Made in the U.S.A." are knocking off tanks marked, "Made in Russia." At some point there are going to be Russians in those tanks and old Yuri in Red Square with a bottle of home brew in his belly, will not wish to understand the niceties in the of the difference between 'Made In" or "Supplied By" as the body bags come home.
I've been getting more political in tone the past couple of weeks which I promised I would never do but unfortunately, politics is becoming such a big part in all our activities that it is difficult to avoid.
The new situation in Syria is just going to make the flow of refugees worse and I really fear for Europe. This is a economic as well as a societal catastrophe in the making and one with which I suspect, they are not capable of dealing. We need something to cheer us up...like the Mets beating the Devil's Team, the Dodgers and meeting the Cubbies in the NLCS. New York against Chicago...the First against the Second City...good against evil...at least for seven games. That's my kind of war! Go Mets!
Tuesday, February 24, 2015
DIDN'T GET IT (HELP)
Today was truly the theater of the absurd. Greece submitted their plan and it was immediately accepted. It contained no numbers, promises to do what they have promised to do for the last 30 years and no explanation as to how they were going to get there. Anyway, they have their extension and we will revisit all of this in four month or earlier if the government collapses or they begin to renege on their promises which they will probably do.
Janet Yellen testified before the Senate today in the first half of her semi-annual report. She said nothing. Do not expect any sort of a rate rise until well after mid year.
10 year yield crashed down to 1.66% Somebody out there is making (or losing) a fortune on this vol.
Barca beat Man City 2-1 in the first leg. Wonderful fun match.
It's snowing and freezing and I'm bored. Might go Al Gore hunting. He's sure to be some place where it is warm.
Janet Yellen testified before the Senate today in the first half of her semi-annual report. She said nothing. Do not expect any sort of a rate rise until well after mid year.
10 year yield crashed down to 1.66% Somebody out there is making (or losing) a fortune on this vol.
Barca beat Man City 2-1 in the first leg. Wonderful fun match.
It's snowing and freezing and I'm bored. Might go Al Gore hunting. He's sure to be some place where it is warm.
Friday, October 31, 2014
THE EARLY BIRD
Well not exactly. I couldn't sleep last night so there I was, up at 5:00am with a cup of Joe and nothing to do as it was too early for the newspaper delivery. Naturally, I turned on the TV and what do I find but the futures indicating a DOW opening of 188 points higher. OK, the ending of QE III was met with a yawn and things went up yesterday, but this? Ah ha! QE did not end! It simply slipped across the Big Pond to Japan.
In a surprise move, the Bank of Japan announced today their own version of Quantitative Easing involving trillions of Yen of asset purchases. Ben and Janet have nothing on these guys when they want to make a move. Of course the markets loved it and doubly so because the common thinking is that it would force Sr. Draghi to pull out his ol' bazooka and this time finally shoot it when the ECB gets down to brass tacks next week. Guess what? Anyone who believed that there is no connectivity in markets just got schooled. The other lesson is all QE is fungible. Right on schedule, the Dow opened damn near what the futures indicated as of 5:00am.
I was still trying to come to grips with all this when the other part of the day's doings that I had missed popped up again. Not only had the Bank of Japan stepped in with QE but the MOF announced that pension fund's allocation to equities and especially foreign equities would be dramatically increased to nearly 500 billion dollars. I watched equities all day which I never do (makes me cry) and the damn number didn't move. Oh sure, it dipped a bit and rose a bit but just now the DOW closed up 195. It was as though ALL of the buying followed the announcement from Japan. Damndest thing. Economic numbers were pretty good too, but they didn't influence the opening level one bit through the entire course of the day. Thank you BOJ.
Then I got to thinking. Janet shuts down her program and up pops Tenaka with his. Mario is on tap next week and the betting is now that you hear a boom from Frankfurt, so do you think that the three of them have been talking? Sure looks like it and mind you, I don't think that's a bad thing. Only problem is if the effect in Japan and in Euroland is the same as it was Over Here, what's plan B guys because plan A didn't work--or as we have said it didn't work enough to notice. The U.S. is slowly coming out of our economic malaise but that's because of the incredible restructuring of the American marketplace in spite of every obstacle the government has managed to set up along the way not the least of which has been the assault upon the banking system as we knew it which is being rapidly replaced by other sources of unregulated capital providers which in the long run may NOT be a good thing. Japan and Euroland with the exception of the UK have not restructured and had better take this opportunity to do so otherwise we're going to face this mess again, once there is no more Yen or Euros to print and the U.S. gets sick and tired of watching it's trade balance go to hell again despite our near energy independence because of of a world filled with central bank devalued currencies. In case you missed it, the Yen was down three points today--not three pips...POINTS! Tora...tora....tora.
Have a great weekend.
In a surprise move, the Bank of Japan announced today their own version of Quantitative Easing involving trillions of Yen of asset purchases. Ben and Janet have nothing on these guys when they want to make a move. Of course the markets loved it and doubly so because the common thinking is that it would force Sr. Draghi to pull out his ol' bazooka and this time finally shoot it when the ECB gets down to brass tacks next week. Guess what? Anyone who believed that there is no connectivity in markets just got schooled. The other lesson is all QE is fungible. Right on schedule, the Dow opened damn near what the futures indicated as of 5:00am.
I was still trying to come to grips with all this when the other part of the day's doings that I had missed popped up again. Not only had the Bank of Japan stepped in with QE but the MOF announced that pension fund's allocation to equities and especially foreign equities would be dramatically increased to nearly 500 billion dollars. I watched equities all day which I never do (makes me cry) and the damn number didn't move. Oh sure, it dipped a bit and rose a bit but just now the DOW closed up 195. It was as though ALL of the buying followed the announcement from Japan. Damndest thing. Economic numbers were pretty good too, but they didn't influence the opening level one bit through the entire course of the day. Thank you BOJ.
Then I got to thinking. Janet shuts down her program and up pops Tenaka with his. Mario is on tap next week and the betting is now that you hear a boom from Frankfurt, so do you think that the three of them have been talking? Sure looks like it and mind you, I don't think that's a bad thing. Only problem is if the effect in Japan and in Euroland is the same as it was Over Here, what's plan B guys because plan A didn't work--or as we have said it didn't work enough to notice. The U.S. is slowly coming out of our economic malaise but that's because of the incredible restructuring of the American marketplace in spite of every obstacle the government has managed to set up along the way not the least of which has been the assault upon the banking system as we knew it which is being rapidly replaced by other sources of unregulated capital providers which in the long run may NOT be a good thing. Japan and Euroland with the exception of the UK have not restructured and had better take this opportunity to do so otherwise we're going to face this mess again, once there is no more Yen or Euros to print and the U.S. gets sick and tired of watching it's trade balance go to hell again despite our near energy independence because of of a world filled with central bank devalued currencies. In case you missed it, the Yen was down three points today--not three pips...POINTS! Tora...tora....tora.
Have a great weekend.
Tuesday, October 21, 2014
INDESCRIBABLE
I mean, why? Now we know that Janet Yellen is a Democrat, but one would think that she's been around long enough to realize that two weeks before a major election the Chairperson of the Federal Reserve should stay away from hot button topics, but there she was last week speaking out against the dangers of the wealth gap and income distribution in a manner that placed her firmly on The Leader's election campaign committee. Guaranteed to raise a few eyebrows. But then consider that there is very little disagreement that one of the reason for this terrible state of affairs has been the actions of the Fed which has enormously benefited those who control financial assets. Like, girl, it's one thing to be partisan but do you have to be a dumb partisan at the same time, putting a whacking big hurt on the reputation of the institution you chair and the people within it who serve?
I really couldn't believe that this was a real policy statement on the part of the Fed so I called everybody I know to try to figure out just how much attention this received before Janet went blah-blah. No one to whom I spoke really knew but the consensus was that it was not one of those passed around things that every one has a shot at drafting and every phrase is carefully parsed. Yeah, the board knew but no one had paid it much attention. That of course is indicative of another problem it being you can't take too seriously what these buggers say any more much less believing in their independence. Not good, but I came away feeling mollified to an extent. Then yesterday, came Billy the Dud.
One has to go back in time a bit to try to figure this one out. William Dudley became the President of the New York Federal Reserve as a result of Being There, having joined from his senior economic position at---you guessed it--Goldman Sachs where he was what is known in the trade as a "Fed Watcher," a job not associated with star power. He is a good, academic economist, who as far as I can tell has never had, nor does he have now, the slightest understanding of what the Fed has meant to the world…and I mean WORLD…of finance. He has never really understood that he is the President of a public policy institution…a GLOBAL public policy institution…whose utterances has enormous implications rather than just his bright idea of the day. So, when Billy the Dud makes a speech yesterday right out of the playbook of Occupy Wall Street which you might remember turned entire neighborhoods in New York City into cess pools a few years ago on top of Janet's redistribute the wealth remarks, one might call up the lines from a few years back, "Something happening here, what it is ain't exactly clear…"
In a nut shell, The Dud told the banks that unless they cleaned up their act and demonstrated an ability to manage their vast businesses, they wee going to be broken up. He also got into designing completely unworkable compensation programs but that's small potatoes, so let's stick to the headline-making ideas.
Now there is no real secret that The Dud wants to be the Secretary of the Treasury and may well get that job as the present occupier of the seat, our dear friend Jacob/Jack is completely hopeless and recognized around the world as a mere political tool. Gravitas is not a word with which he is easily associated. But then again The Dud, whose remarks were greeted today in a street blog as being akin to a "Chicago alderman threatening Al Capone" can be said to suffer from the same juxtapositional absence. But suddenly, in conjunction with Janet's pronouncements of last week there is no longer any doubt as to the total politicalization of the Federal Reserve which in any case is a mere shadow of its former self. Once an institution that commanded profound respect it has become just another quasi-public institution run out of pure self interest rather than for the purpose of the public good.
There is really no point in going into exactly what it is he said other than to point out in making his case he used examples of dastardly deeds committed by the world of banking such as the "London Whale," forgetting that it was the shareholders and perps who suffered from the loss of $6.5 billion and their jobs not the public and most importantly, the affair was overlooked entirely by the regulators who reported to HIM! Is ritual seppuku on line? Should be easy to find a second to lop off his head after an appropriate amount of time of his screaming over his severed guts. Or should one merely ask ones self is he simply a Fed Watcher and that is what he will always be or is he a particularly stupid Fed Watcher. The implications of the latter could have grave consequences.
All of this, of course, is made more meaningful by the presence of Crazy Lizzy Warren who will give cover and succor to anyone who she believes can produce the right stuff to allow her to kill a bank in conjunction with her partner in the Fed. Lizzy is desperately trying to schedule hearings on this and other subjects before the end of this Congress in January in case there is a change in control as a result of the elections. If she succeeds it will be terrible for the banks, but what might well be standing in the way is my old buddy, Charles ("call me Chuck") Schumer who, when things get ugly has never forgotten where his cash comes from which is not far removed from Wall Street. That showdown could be delicious, but if there is a change in leadership, what a Republican Congress could and might do in relation to the Fed, is something about which I shudder to think. Then again, the institution has sown the seeds of it's own destruction as one of the finest institutions still standing over the last century with a continued diminishing of the quality of. More than a pity.
I really couldn't believe that this was a real policy statement on the part of the Fed so I called everybody I know to try to figure out just how much attention this received before Janet went blah-blah. No one to whom I spoke really knew but the consensus was that it was not one of those passed around things that every one has a shot at drafting and every phrase is carefully parsed. Yeah, the board knew but no one had paid it much attention. That of course is indicative of another problem it being you can't take too seriously what these buggers say any more much less believing in their independence. Not good, but I came away feeling mollified to an extent. Then yesterday, came Billy the Dud.
One has to go back in time a bit to try to figure this one out. William Dudley became the President of the New York Federal Reserve as a result of Being There, having joined from his senior economic position at---you guessed it--Goldman Sachs where he was what is known in the trade as a "Fed Watcher," a job not associated with star power. He is a good, academic economist, who as far as I can tell has never had, nor does he have now, the slightest understanding of what the Fed has meant to the world…and I mean WORLD…of finance. He has never really understood that he is the President of a public policy institution…a GLOBAL public policy institution…whose utterances has enormous implications rather than just his bright idea of the day. So, when Billy the Dud makes a speech yesterday right out of the playbook of Occupy Wall Street which you might remember turned entire neighborhoods in New York City into cess pools a few years ago on top of Janet's redistribute the wealth remarks, one might call up the lines from a few years back, "Something happening here, what it is ain't exactly clear…"
In a nut shell, The Dud told the banks that unless they cleaned up their act and demonstrated an ability to manage their vast businesses, they wee going to be broken up. He also got into designing completely unworkable compensation programs but that's small potatoes, so let's stick to the headline-making ideas.
Now there is no real secret that The Dud wants to be the Secretary of the Treasury and may well get that job as the present occupier of the seat, our dear friend Jacob/Jack is completely hopeless and recognized around the world as a mere political tool. Gravitas is not a word with which he is easily associated. But then again The Dud, whose remarks were greeted today in a street blog as being akin to a "Chicago alderman threatening Al Capone" can be said to suffer from the same juxtapositional absence. But suddenly, in conjunction with Janet's pronouncements of last week there is no longer any doubt as to the total politicalization of the Federal Reserve which in any case is a mere shadow of its former self. Once an institution that commanded profound respect it has become just another quasi-public institution run out of pure self interest rather than for the purpose of the public good.
There is really no point in going into exactly what it is he said other than to point out in making his case he used examples of dastardly deeds committed by the world of banking such as the "London Whale," forgetting that it was the shareholders and perps who suffered from the loss of $6.5 billion and their jobs not the public and most importantly, the affair was overlooked entirely by the regulators who reported to HIM! Is ritual seppuku on line? Should be easy to find a second to lop off his head after an appropriate amount of time of his screaming over his severed guts. Or should one merely ask ones self is he simply a Fed Watcher and that is what he will always be or is he a particularly stupid Fed Watcher. The implications of the latter could have grave consequences.
All of this, of course, is made more meaningful by the presence of Crazy Lizzy Warren who will give cover and succor to anyone who she believes can produce the right stuff to allow her to kill a bank in conjunction with her partner in the Fed. Lizzy is desperately trying to schedule hearings on this and other subjects before the end of this Congress in January in case there is a change in control as a result of the elections. If she succeeds it will be terrible for the banks, but what might well be standing in the way is my old buddy, Charles ("call me Chuck") Schumer who, when things get ugly has never forgotten where his cash comes from which is not far removed from Wall Street. That showdown could be delicious, but if there is a change in leadership, what a Republican Congress could and might do in relation to the Fed, is something about which I shudder to think. Then again, the institution has sown the seeds of it's own destruction as one of the finest institutions still standing over the last century with a continued diminishing of the quality of. More than a pity.
Thursday, August 14, 2014
WHAT'S IN A NAME
He Who Knows All Things called yesterday.
"The phrase you are looking for is "Structural adjustment."
"What are you talking about?"
"The point Stan was trying to make. What is needed is structural adjustment."
"Isn't that what I said?"
"No. You see it is vitally important that you use the exact phrase in these matters." You see, despite what you have implied, there are a number of people who have figured this out and they call it "structural adjustment."
"Anybody who counts?"
"Anybody who counts isn't smart enough to figure it out…but they have heard the phrase and have begun to think."
"Is that good?"
"In some cases it is, in other cases it's hopeless."
"But now with Stan…"
"Ah, Stan indeed. This is a very formidable guy. Larry Summers doesn't even get into the ring with him , and is a very smart guy. The problem is those who count and would get into the ring are not Larry Summers."
"Like Janet?"
"I didn't say that."
"You mean Janet isn't smart or that Janet doesn't count?"
"What an inappropriate question…I know, I know, there are no inappropriate questions, just inappropriate answers. Let me put it this way, Janet is going to be a good soldier unless the bullets start flying in great numbers. But then again, she is not the stake-holder in this. But Mr. Fisher has a big hill to climb."
"And the real stake-holders?"
"Oh stop, I don't have to tell you that."
"No, you probably don't, but what gets him to the top."
"Sadly, probably continuing failure, a Republican win in November, a combination of the same but more importantly, I think, what happens in Europe, both politically and economically. Both are disaster areas." The is no economic advancement with Germany now suffering from the overall malaise and France is stopped, economically. The President today asked for the intervention of Draghi into this mess. Curious, Draghi has been a lot of talk--very successful talk--but very little real action. And remember, that talk was limited to the financial system which is his bailiwick. I have a suspicion that Mario and Stan are not too far apart in their views. Will it happen? I doubt it but then one can never be sure."
"And politically?"
"Ask Putin." Although it seems clear that the dogs and cats that used to be the Ukrainian military are getting some help based on their recent performance, it's still up to him. It's quite scary."
"So, structural adjustment is the phrase of the day, eh?"
"Indeed, but use it wisely, otherwise Mum's the word."
"The phrase you are looking for is "Structural adjustment."
"What are you talking about?"
"The point Stan was trying to make. What is needed is structural adjustment."
"Isn't that what I said?"
"No. You see it is vitally important that you use the exact phrase in these matters." You see, despite what you have implied, there are a number of people who have figured this out and they call it "structural adjustment."
"Anybody who counts?"
"Anybody who counts isn't smart enough to figure it out…but they have heard the phrase and have begun to think."
"Is that good?"
"In some cases it is, in other cases it's hopeless."
"But now with Stan…"
"Ah, Stan indeed. This is a very formidable guy. Larry Summers doesn't even get into the ring with him , and is a very smart guy. The problem is those who count and would get into the ring are not Larry Summers."
"Like Janet?"
"I didn't say that."
"You mean Janet isn't smart or that Janet doesn't count?"
"What an inappropriate question…I know, I know, there are no inappropriate questions, just inappropriate answers. Let me put it this way, Janet is going to be a good soldier unless the bullets start flying in great numbers. But then again, she is not the stake-holder in this. But Mr. Fisher has a big hill to climb."
"And the real stake-holders?"
"Oh stop, I don't have to tell you that."
"No, you probably don't, but what gets him to the top."
"Sadly, probably continuing failure, a Republican win in November, a combination of the same but more importantly, I think, what happens in Europe, both politically and economically. Both are disaster areas." The is no economic advancement with Germany now suffering from the overall malaise and France is stopped, economically. The President today asked for the intervention of Draghi into this mess. Curious, Draghi has been a lot of talk--very successful talk--but very little real action. And remember, that talk was limited to the financial system which is his bailiwick. I have a suspicion that Mario and Stan are not too far apart in their views. Will it happen? I doubt it but then one can never be sure."
"And politically?"
"Ask Putin." Although it seems clear that the dogs and cats that used to be the Ukrainian military are getting some help based on their recent performance, it's still up to him. It's quite scary."
"So, structural adjustment is the phrase of the day, eh?"
"Indeed, but use it wisely, otherwise Mum's the word."
Wednesday, July 16, 2014
THE SILLY SEASON
That's what this time of year is called in the UK, probably because football is done for a full month and there is nothing on which they can concentrate. Strange things happen and are said. It kinda holds true Over Here as well especially if you have congressional testimony from the Chairman of the Fed and Crazy Lizzy Warren is around.
Janet Yellen gave folks a whole lot to chew on not the least of which was her advisory warning that certain segments of the market had perhaps gotten ahead of themselves and some decent discussion of where the Fed was and where it was going, not to mention that in her view the jobs picture was not quite as good as some had made it out to be. Good, solid Central Bank testimony, called for by statute, mostly unexciting but sufficient to satisfy the requirement without putting anybody to sleep. Up rose ol' Crazy Lizzy then, not the least bit interested in all of that monetary stuff but focused solely on whether J.P. Morgan & Co. had presented to the Fed a "living will" as required by the legislative disgrace known as Dodd/Frank and whether Ms. Yellen and her colleagues had accepted it. Further, if they had not accepted it, then she inquired, why hadn't The Fed exercised the remedies granted to it and broken up J.P Morgan? Ms. Yellen hung in there long enough so that time ran out on Warren.
Now, one could simply dismiss all this by saying, "stupid is as stupid does," but let's face it the woman is a U.S. Senator and has a hell of a lot of power and influence not to mention her lap dog on the Fed Board of whom we have spoken in the past. There aren't five people in that august body who believe that a living will could ever work but she is clever enough to recognize that the real lever she has is the possibility to begin reducing the size of financial institutions, as you can be damn sure that a plan, outlined in some 10,000-odd pages covering a financial institution of over $2 trillion in assets under constantly changing markets and conditions will ever be accepted by the Fed. Nobody is that stupid. But what we saw yesterday is the opening salvo it what is going to become a constant bombardment on the regulatory apparatus and the public to "solve" the "too big to fail" problem by reducing the size of the institutions that fit that category according to the Gospel of St. Lizzy. And it's going all the way through to 1916 because Lizzy has her sights set on far higher office having now been convinced by the left wing of her party that Hillary must be stopped.
The result will not be success in either the acceptance of her views or her quest, but she has the ability to sure as hell stop the financial legislative process dead in it's tracks. When recognized, I think we will see the industry itself begin to shrink as a result of this pressure and also as a result of the inability to produce a proper return on the amount of capital required to support a substantial balance sheet. Once again, I shall be bold in my prediction that within the industry we will see its own form of "inversion"--not for tax reasons but simply to get the hell out from under. What we shall also see is the migration of corporate financings from today's institutions to an entirely new breed of financial intermediaries…or principals for that matter…who are far less subject to overall financial regulation or oversight. The growth of the Blackstones of this world will continue even more unabated.
Perhaps that is a good thing. I know I'm not smart enough to figure that one out, but it troubles me. What troubles me even more is that Crazy Lizzy thinks she is. That's not silly. That's downright…well…crazy.
Janet Yellen gave folks a whole lot to chew on not the least of which was her advisory warning that certain segments of the market had perhaps gotten ahead of themselves and some decent discussion of where the Fed was and where it was going, not to mention that in her view the jobs picture was not quite as good as some had made it out to be. Good, solid Central Bank testimony, called for by statute, mostly unexciting but sufficient to satisfy the requirement without putting anybody to sleep. Up rose ol' Crazy Lizzy then, not the least bit interested in all of that monetary stuff but focused solely on whether J.P. Morgan & Co. had presented to the Fed a "living will" as required by the legislative disgrace known as Dodd/Frank and whether Ms. Yellen and her colleagues had accepted it. Further, if they had not accepted it, then she inquired, why hadn't The Fed exercised the remedies granted to it and broken up J.P Morgan? Ms. Yellen hung in there long enough so that time ran out on Warren.
Now, one could simply dismiss all this by saying, "stupid is as stupid does," but let's face it the woman is a U.S. Senator and has a hell of a lot of power and influence not to mention her lap dog on the Fed Board of whom we have spoken in the past. There aren't five people in that august body who believe that a living will could ever work but she is clever enough to recognize that the real lever she has is the possibility to begin reducing the size of financial institutions, as you can be damn sure that a plan, outlined in some 10,000-odd pages covering a financial institution of over $2 trillion in assets under constantly changing markets and conditions will ever be accepted by the Fed. Nobody is that stupid. But what we saw yesterday is the opening salvo it what is going to become a constant bombardment on the regulatory apparatus and the public to "solve" the "too big to fail" problem by reducing the size of the institutions that fit that category according to the Gospel of St. Lizzy. And it's going all the way through to 1916 because Lizzy has her sights set on far higher office having now been convinced by the left wing of her party that Hillary must be stopped.
The result will not be success in either the acceptance of her views or her quest, but she has the ability to sure as hell stop the financial legislative process dead in it's tracks. When recognized, I think we will see the industry itself begin to shrink as a result of this pressure and also as a result of the inability to produce a proper return on the amount of capital required to support a substantial balance sheet. Once again, I shall be bold in my prediction that within the industry we will see its own form of "inversion"--not for tax reasons but simply to get the hell out from under. What we shall also see is the migration of corporate financings from today's institutions to an entirely new breed of financial intermediaries…or principals for that matter…who are far less subject to overall financial regulation or oversight. The growth of the Blackstones of this world will continue even more unabated.
Perhaps that is a good thing. I know I'm not smart enough to figure that one out, but it troubles me. What troubles me even more is that Crazy Lizzy thinks she is. That's not silly. That's downright…well…crazy.
Wednesday, June 18, 2014
THEY ARE NUTS
No, not the Argies. The Federal Reserve Board. What a show that was today. The headline is that the Fed will continuing with the tapering, knocking another $10 billion off monthly purchases and keeping the accommodative monetary policy in place for the foreseeable future. Then Janet got up to explain all this...or not, as the case may be.
For the first time that I can remember, the Chairperson of the Fed essentially admitted she had no idea what the hell is going on, our guess is as good as hers and therefore, why change anything? She also said the economy was getting better, the job picture was getting better and there was no sign of any inflation to cause worries. Absolute horse crap on all accounts.
Inflation is rapidly rising on all things that human beings need to stay alive. Food, fuel, clothing, air fare and just about anything else one can think of. What isn't going up are all the things in the Fed's little basket which nobody can name because nobody needs them. It is a joke.
The job number is precisely the same as it was at the end of 2007. Only problem is the country has 16 million more people. The job participation rate, however, is down from approximately 67% to 62% which means a bunch of people have simply given up. Wages are stagnant, wage growth is slow. Oh by the way, Janet, the reason for this is that the economy stinks and why does it stink? Well, not because of you Bubbala, but you can't fix it either despite how much money you leave floating about in Fed Nation. It stinks because The Leader is out there talking about oceans with this DiCaprio guy who apparently earned his expertise on the subject by drowning on the Titanic. It stinks because all you geniuses passed Dodd/Frank which means the banks wont take a risk. It stinks because the morons in the Patent Office decided today that they are the guardians of morality as to what one names his franchise, never for a moment believing that if a name is offensive the product will not be bought. The country is rudderless as the latest opinion polls indicate and the Fed can't fix it.
What you can do, however, and are doing (along with Super Mario) is creating the most God-awful bubble in equities and crap fixed income, much of which is sovereign and none of which is sustainable. Of course when everyone decides at the same time to unload, where is the bid going to be to maintain an orderly market? Not at the banks as in the past because you see, they can't do that any more and wont that be a lovely war! You are also putting a severe hurt on those of us living on a fixed income who sit and watch your non-inflation beat the crap out of our savings and income. And in the big picture none of this has helped and it never will. And yet you press forward with the same nonsense policies, clearly indicating that you are clueless. Oh while, we are at it, you might call to mind the definition of insanity about doing the same thing and believing the result is going to be different. Insanity: that's a step or two above nuts.
Oh yeah, in case you're interested Spain went out of the Cup losing 2-nil to Chile. More people care about that than what you had to say today.
For the first time that I can remember, the Chairperson of the Fed essentially admitted she had no idea what the hell is going on, our guess is as good as hers and therefore, why change anything? She also said the economy was getting better, the job picture was getting better and there was no sign of any inflation to cause worries. Absolute horse crap on all accounts.
Inflation is rapidly rising on all things that human beings need to stay alive. Food, fuel, clothing, air fare and just about anything else one can think of. What isn't going up are all the things in the Fed's little basket which nobody can name because nobody needs them. It is a joke.
The job number is precisely the same as it was at the end of 2007. Only problem is the country has 16 million more people. The job participation rate, however, is down from approximately 67% to 62% which means a bunch of people have simply given up. Wages are stagnant, wage growth is slow. Oh by the way, Janet, the reason for this is that the economy stinks and why does it stink? Well, not because of you Bubbala, but you can't fix it either despite how much money you leave floating about in Fed Nation. It stinks because The Leader is out there talking about oceans with this DiCaprio guy who apparently earned his expertise on the subject by drowning on the Titanic. It stinks because all you geniuses passed Dodd/Frank which means the banks wont take a risk. It stinks because the morons in the Patent Office decided today that they are the guardians of morality as to what one names his franchise, never for a moment believing that if a name is offensive the product will not be bought. The country is rudderless as the latest opinion polls indicate and the Fed can't fix it.
What you can do, however, and are doing (along with Super Mario) is creating the most God-awful bubble in equities and crap fixed income, much of which is sovereign and none of which is sustainable. Of course when everyone decides at the same time to unload, where is the bid going to be to maintain an orderly market? Not at the banks as in the past because you see, they can't do that any more and wont that be a lovely war! You are also putting a severe hurt on those of us living on a fixed income who sit and watch your non-inflation beat the crap out of our savings and income. And in the big picture none of this has helped and it never will. And yet you press forward with the same nonsense policies, clearly indicating that you are clueless. Oh while, we are at it, you might call to mind the definition of insanity about doing the same thing and believing the result is going to be different. Insanity: that's a step or two above nuts.
Oh yeah, in case you're interested Spain went out of the Cup losing 2-nil to Chile. More people care about that than what you had to say today.
Friday, May 2, 2014
IF IT WAS SO GOOD, THEN WHY...
The jobs report of this morning. Up 288,000, way above estimates and unemployment down to 6.3%. Wow, I thought, we're going through the roof on this one.
Nope, wrong again. The markets sloshed around all day with the DOW finally closing down 45. The ten year did nothing except to slide down in yield, the exact opposite of what one would have thought and volumes slipped. Perhaps it was the dismal GDP number of 0.1% but that was expected. Or was it the market reflecting upon the fact that the decline in unemployment was solely as a result of another large "drop out" number from the work force bringing the total number of unemployed in the country to almost 100,000,000. That is a dreadful statistic by any measure and by anyone's politics.
I don't mean to be political but the question that is being increasingly asked is who's running the show and the answer increasingly appears to be, no one. At this stage if one looks to the Fed it's same-oh, same-oh but we have to start asking with 100 million not even looking for work, how are we going to deal with this and the only answer I see is by keep printing money. Now if that is the case logic would indicate that we must see a rise in interest rates which everybody with whom I have spoken is looking for and which is believed to be needed but not a peep from Janet & Co. If anything, all indications are that she is determined to keep things right where they are in almost a perverse battle with the bond boys who are about as short as the world has ever seen according to Mad Max who checked in today asking the same questions. Of course, if Janet really does want a fight, she isn't doing herself much good because with interest rates as at these levels Max and his lot can stay short forever…it's a free roll. I don't get it.
Anyway, on the international front, The Leader and Angie met today to agree on new sanctions to be agreed upon at a later date if Russia crosses another red line in regard to the Ukraine. I'm told Putin is shivering down to his jack boots. It may be as cold in Moscow as it is in the fly-over zone…46F. as we speak on May 2. I just don't know why I'm so confused about everything again.
Have a great weekend.
Nope, wrong again. The markets sloshed around all day with the DOW finally closing down 45. The ten year did nothing except to slide down in yield, the exact opposite of what one would have thought and volumes slipped. Perhaps it was the dismal GDP number of 0.1% but that was expected. Or was it the market reflecting upon the fact that the decline in unemployment was solely as a result of another large "drop out" number from the work force bringing the total number of unemployed in the country to almost 100,000,000. That is a dreadful statistic by any measure and by anyone's politics.
I don't mean to be political but the question that is being increasingly asked is who's running the show and the answer increasingly appears to be, no one. At this stage if one looks to the Fed it's same-oh, same-oh but we have to start asking with 100 million not even looking for work, how are we going to deal with this and the only answer I see is by keep printing money. Now if that is the case logic would indicate that we must see a rise in interest rates which everybody with whom I have spoken is looking for and which is believed to be needed but not a peep from Janet & Co. If anything, all indications are that she is determined to keep things right where they are in almost a perverse battle with the bond boys who are about as short as the world has ever seen according to Mad Max who checked in today asking the same questions. Of course, if Janet really does want a fight, she isn't doing herself much good because with interest rates as at these levels Max and his lot can stay short forever…it's a free roll. I don't get it.
Anyway, on the international front, The Leader and Angie met today to agree on new sanctions to be agreed upon at a later date if Russia crosses another red line in regard to the Ukraine. I'm told Putin is shivering down to his jack boots. It may be as cold in Moscow as it is in the fly-over zone…46F. as we speak on May 2. I just don't know why I'm so confused about everything again.
Have a great weekend.
Wednesday, April 16, 2014
ALL THINGS CENTRAL (BANKS, THAT IS)
Janet is having a big week and it's only half over. Monday she was out there arguing the case for more bank capital which is wonderfully politically correct but hardly useful in the prevention of another 2007/08-like event. In fact it does more harm than good in making people believe they are safer, but the art of make-believing as we wrote yesterday is what it sees to be about these days.
Today, she took it a step further. If you didn't believe me when I said at the time of her nomination that she was a bigger dove than Bernanke, her comments today proved that to be true…in spades. Janet made in quite clear that the Fed's free money policy will not change for at least two years, stating that she is less than happy with the rate of economic growth although things were getting better which indicates a nuance that I can't understand. Janet seeds no inflation: indeed, she bemoans the fact. Of course, any question as to whether the inputs to the CPI should be examined will not be appreciated, but in keeping with the policy of creating any data that is needed we shall pass that by. Janet is into her Part II of her dual mandate, namely keep the economy running and full employment in spades, far surpassing her predecessor in this regard. Of course, while tacitly admitting the economy stinks and in the face of everybody now recognizing that all the employment numbers are rubbish, one might ask "why?" and I wouldn't have an answer except she thinks that it's her job.
Hey, hold on, one might say, where is the administration in all this? No where of course, except on the endless campaign trail trying to re-elect the party in order to continue the policies of the past five years. The sad part is--and beginning with Greenspan--we have allowed our politicians to foster the belief that it IS the Fed's job to run the economy! Call me old fashioned, but if that is the case why don't we just cut the Federal government in half and sit back and relax. Oh, and institute direct elections for the Fed Chairman as well. Meanwhile, out here in fly-over land, we take note of actions of our politicians like this one that came to light last week.
The Farm Bureau has just instituted a new policy to make life better--and safer--for all. In a few short months, the used grain resulting from the making or beer will have to be cleaned, dried, purified and bagged to be sold as pet food before it can be fed to cows. Now the fact that the used grain has been fed to cows since the Egyptians started making beer and that the farmers gave it away thereby reducing everyone's cost doesn't seem to matter. The Farm Bureau is supposed to create regulations which save us from ourselves and by the by, create a new product which can be taxed. We have a lot of cows out here. Janet should come visit if she wants to see how things work--and don't work-- in the real world. Anyway, keeps those rates at zero my girl and keep feeling good about yourself. Just don't make the mistake that you are accomplishing anything.
Meanwhile, Over There, the Euro Parliament has created a "banking union" which supposedly brings all the banks in the Eurozone under one umbrella and subjects over 100 of the largest to direct supervision by the ECB. I don't have enough details to comment fully, but be aware of one salient fact in all of this. Practically all of Europe, especially the governments is financed by the banking systems. Or sure, governments issue bonds but they are bought overwhelmingly by banks. There is no capital market as we know it. See the problem? You think a French finance minister is going to allow an Italian-born Central Bank President, under constant pressure from the Germans to control his funding source? Think about it. More when I figure it out.
Today, she took it a step further. If you didn't believe me when I said at the time of her nomination that she was a bigger dove than Bernanke, her comments today proved that to be true…in spades. Janet made in quite clear that the Fed's free money policy will not change for at least two years, stating that she is less than happy with the rate of economic growth although things were getting better which indicates a nuance that I can't understand. Janet seeds no inflation: indeed, she bemoans the fact. Of course, any question as to whether the inputs to the CPI should be examined will not be appreciated, but in keeping with the policy of creating any data that is needed we shall pass that by. Janet is into her Part II of her dual mandate, namely keep the economy running and full employment in spades, far surpassing her predecessor in this regard. Of course, while tacitly admitting the economy stinks and in the face of everybody now recognizing that all the employment numbers are rubbish, one might ask "why?" and I wouldn't have an answer except she thinks that it's her job.
Hey, hold on, one might say, where is the administration in all this? No where of course, except on the endless campaign trail trying to re-elect the party in order to continue the policies of the past five years. The sad part is--and beginning with Greenspan--we have allowed our politicians to foster the belief that it IS the Fed's job to run the economy! Call me old fashioned, but if that is the case why don't we just cut the Federal government in half and sit back and relax. Oh, and institute direct elections for the Fed Chairman as well. Meanwhile, out here in fly-over land, we take note of actions of our politicians like this one that came to light last week.
The Farm Bureau has just instituted a new policy to make life better--and safer--for all. In a few short months, the used grain resulting from the making or beer will have to be cleaned, dried, purified and bagged to be sold as pet food before it can be fed to cows. Now the fact that the used grain has been fed to cows since the Egyptians started making beer and that the farmers gave it away thereby reducing everyone's cost doesn't seem to matter. The Farm Bureau is supposed to create regulations which save us from ourselves and by the by, create a new product which can be taxed. We have a lot of cows out here. Janet should come visit if she wants to see how things work--and don't work-- in the real world. Anyway, keeps those rates at zero my girl and keep feeling good about yourself. Just don't make the mistake that you are accomplishing anything.
Meanwhile, Over There, the Euro Parliament has created a "banking union" which supposedly brings all the banks in the Eurozone under one umbrella and subjects over 100 of the largest to direct supervision by the ECB. I don't have enough details to comment fully, but be aware of one salient fact in all of this. Practically all of Europe, especially the governments is financed by the banking systems. Or sure, governments issue bonds but they are bought overwhelmingly by banks. There is no capital market as we know it. See the problem? You think a French finance minister is going to allow an Italian-born Central Bank President, under constant pressure from the Germans to control his funding source? Think about it. More when I figure it out.
Thursday, March 20, 2014
HOW'S THAT AGAIN, JANET?
The common story is that it was a rookie mistake. The Chair of the Federal reserve announced yesterday that tightening might begin after the end of QE but not for a considerable time…and then defined "considerable" a six month. Panic all around. Why? Well everybody had decided that QE would be ended this fall so six month meant 1st quarter 2015 which was quicker than anyone thought. Down go equities, up goes yields. But wait, did she really mean that? Probably not, just a rookie mistake in being so specific. Up go equities, down go…or do they?
The answer is who cares. What Ms. Yellen did yesterday about which no one is speaking is lay bare the entire nonsense of this bank and its operations of the past 10 years. Remembering the targeting of the employment rate to tightening? She scrapped it. Now everyone knows that the employment figures are crap; you couldn't have gotten a bet before the 2012 that the unemployment rate wouldn't not fall below 7%. Everyone knew it would. Everyone knows today that the unemployment rate isn't 6.7% or whatever the hell it is. Nobody cares. And when nobody cares it's effect is meaningless. But when the Fed targets monetary policy, which does have an effect in the real world to a nonsensical target, then people care, especially FOMC who winds up with it's butt in a crack and nasty options on how to try to get it out.
So what Janet told the world yesterday--not that she wanted to mind you--was that they hadn't a clue as to forward guidance and were just going to wing it. THAT was the rookie mistake. She told what in fact is the truth.
The guys at risk figured this out. The yield curve flattened out to the Long Bond which never moved. The risk is short term and everybody knows it. The 10 year gapped out from 2.62% two days ago to 2.77% as I write, down from 2.83%. What will come will come and hopefully, a lot of people will start preparing for it now which may mean leaving some profit on the table for the sake of better positioning which will really not be a bad thing.
What I hope, however, is that the realization of what has occurred over the past 10-15 years will become obvious. The Fed has been a disaster. Aside from creating one liquidity bubble after another, upon the abandonment of any cogent fiscal or economic policy in Washington, the Fed has, without hesitation lept into their so-called second mandate and tried to run everything, and most of it in the midst of a financial crisis--that they missed--that lingers until today. This economy stinks; just like the employment rate it is fooling no one. and what have wee see from the Fed. Well, first, in order to stem the rout, they pour liquidity into the banks up promptly turn around and put it right back into the Fed. Why? Well why not? The Fed is paying interest on those "free reserves." Why the hell are you paying interest. Huuuum, good question. If you have a positive carry with absolutely no risk during a time when no one is really looking for earning gains, it's a no-brainer.
But haven't things changed? Sure, but the Fed was way out front in crafting that catastrophe known as Dodd/Frank, whose primary result was to discourage risk while at the same time the Fed and every other half-assed regulator with a pen was formulating new regulations many of which were not understood or made no sense in the first place. Said the banker, "You want me to take more risk in this environment?" I leave out the assault on individual institutions by The Leader's Justice Department and Attorneys General from God knows how many states who found standing probably on the basis of having written a check at one point in their lives. You wonder why the economy is sluggish and credit is tough? Then again, you can always go to the shadow banking system. Now there's a testing risk management idea.
The fact is this country would be far better off…as would the Fed…without the dual mandate. After yesterday, I don't see how one can pretend to argue against this as the head of the institution just told you she has no idea what the future is going to bring. I mean, like, you gotta have a plan, dude, like go with the flow doesn't quite make it. Or does it? Maybe she was sending a message. Or maybe she found reality and just didn't recognize it. Or maybe it was all of the above but she's just going to carry on because……because she likes it that way. Makes one long for the days of Mr. Greenspan when everything was crystal clear, doesn't it?
Got to see the quacks tomorrow. They want to poke and prod, so this ends the week. Big road trip next week. Tell you all about it on Monday. The Ohio State University lost to Dayton in the first round. Talk about financial disasters! 75% of the pools are blown up.
The answer is who cares. What Ms. Yellen did yesterday about which no one is speaking is lay bare the entire nonsense of this bank and its operations of the past 10 years. Remembering the targeting of the employment rate to tightening? She scrapped it. Now everyone knows that the employment figures are crap; you couldn't have gotten a bet before the 2012 that the unemployment rate wouldn't not fall below 7%. Everyone knew it would. Everyone knows today that the unemployment rate isn't 6.7% or whatever the hell it is. Nobody cares. And when nobody cares it's effect is meaningless. But when the Fed targets monetary policy, which does have an effect in the real world to a nonsensical target, then people care, especially FOMC who winds up with it's butt in a crack and nasty options on how to try to get it out.
So what Janet told the world yesterday--not that she wanted to mind you--was that they hadn't a clue as to forward guidance and were just going to wing it. THAT was the rookie mistake. She told what in fact is the truth.
The guys at risk figured this out. The yield curve flattened out to the Long Bond which never moved. The risk is short term and everybody knows it. The 10 year gapped out from 2.62% two days ago to 2.77% as I write, down from 2.83%. What will come will come and hopefully, a lot of people will start preparing for it now which may mean leaving some profit on the table for the sake of better positioning which will really not be a bad thing.
What I hope, however, is that the realization of what has occurred over the past 10-15 years will become obvious. The Fed has been a disaster. Aside from creating one liquidity bubble after another, upon the abandonment of any cogent fiscal or economic policy in Washington, the Fed has, without hesitation lept into their so-called second mandate and tried to run everything, and most of it in the midst of a financial crisis--that they missed--that lingers until today. This economy stinks; just like the employment rate it is fooling no one. and what have wee see from the Fed. Well, first, in order to stem the rout, they pour liquidity into the banks up promptly turn around and put it right back into the Fed. Why? Well why not? The Fed is paying interest on those "free reserves." Why the hell are you paying interest. Huuuum, good question. If you have a positive carry with absolutely no risk during a time when no one is really looking for earning gains, it's a no-brainer.
But haven't things changed? Sure, but the Fed was way out front in crafting that catastrophe known as Dodd/Frank, whose primary result was to discourage risk while at the same time the Fed and every other half-assed regulator with a pen was formulating new regulations many of which were not understood or made no sense in the first place. Said the banker, "You want me to take more risk in this environment?" I leave out the assault on individual institutions by The Leader's Justice Department and Attorneys General from God knows how many states who found standing probably on the basis of having written a check at one point in their lives. You wonder why the economy is sluggish and credit is tough? Then again, you can always go to the shadow banking system. Now there's a testing risk management idea.
The fact is this country would be far better off…as would the Fed…without the dual mandate. After yesterday, I don't see how one can pretend to argue against this as the head of the institution just told you she has no idea what the future is going to bring. I mean, like, you gotta have a plan, dude, like go with the flow doesn't quite make it. Or does it? Maybe she was sending a message. Or maybe she found reality and just didn't recognize it. Or maybe it was all of the above but she's just going to carry on because……because she likes it that way. Makes one long for the days of Mr. Greenspan when everything was crystal clear, doesn't it?
Got to see the quacks tomorrow. They want to poke and prod, so this ends the week. Big road trip next week. Tell you all about it on Monday. The Ohio State University lost to Dayton in the first round. Talk about financial disasters! 75% of the pools are blown up.
Tuesday, February 11, 2014
AYE! EINE YIDDISHE MAMA!
Janet Yellen made her first appearance before congress today as the first woman ever to chair the Federal Reserve. Not quite a triumph, but everyone heard exactly what they wanted to hear despite confirmation of the old adage that You Can Take the Girl Out of Brooklyn but You Can't take Brooklyn Out of the Girl. It was wonderful to hear but Claire Bloom she's not. I'm told her chicken soap is better, tho, and it was served in copious amounts.
If anything, the lady is as good if not better that her predecessor once removed, Alan Greenspan. She speaks, says very little and you believe you are in good hands. One would hope so. The two things that everyone seems to have taken away from today's event was that
1. The Fed will remain as accommodating as possible (or as needed), and
2. The Fed will continue to scale back it's purchases of securities.
Of the first no surprise, but of the second I guess I was wrong again…except I didn't hear the real conviction that everyone else did. No matter, it's what's believed that counts. I also heard positive sounds relating to the economy but these were distinctly muted--not to the extent of Mr. Bernanke's last chat but far from any cheerleader mode either. As expected, the equity boys deemed this to be salvation and the DOW powered ahead to an almost 200 point gain at the close. Interestingly enough, the 10 year was all over the place all day finally settling at 2.72%, Go find someone who understands that, I don't.
All of this, of course was in the face of far from strong numbers either on the economy of in corporate earnings, continued bad news in emerging markets and troubling events in Europe. It is really quite amusing how the markets can turn on and off regarding emerging always having the same final idea that we in the U.S. are pretty much insulated from their effects…until we're not. Except for China, and increasing concern is being expressed over the economic/credit situation in terms of "this is really important," whereas I don't have very much concern at all except in a macro sense as to the worldwide response to a slowdown in economic activity. But credit? Nah. That's the wonderful thing about a totalitarian state. Nobody dies unless the bosses say so.
But why should any of us care about any of these thing when we have The Greatest Show on Earth playing right now on the shores of the Potomac and the Rappahanock. Welcome ladies and gentlemen to the Barry and Frankie show, two Presidents with their approval ratings in the tank finding one another amid the complete lack of interest on the part of anybody else in the world! It would be better of course if The Leader could pronounce Frankie's name properly and if he (or, perhaps, she) didn't have an idiot working for him/her that plans a state dinner in a tent in the middle of February in Washington (forecast: 14 F. and windy) but hey, we're friends again. Lafayette, nous Somme ici! Dear God you can't make this up.
If anything, the lady is as good if not better that her predecessor once removed, Alan Greenspan. She speaks, says very little and you believe you are in good hands. One would hope so. The two things that everyone seems to have taken away from today's event was that
1. The Fed will remain as accommodating as possible (or as needed), and
2. The Fed will continue to scale back it's purchases of securities.
Of the first no surprise, but of the second I guess I was wrong again…except I didn't hear the real conviction that everyone else did. No matter, it's what's believed that counts. I also heard positive sounds relating to the economy but these were distinctly muted--not to the extent of Mr. Bernanke's last chat but far from any cheerleader mode either. As expected, the equity boys deemed this to be salvation and the DOW powered ahead to an almost 200 point gain at the close. Interestingly enough, the 10 year was all over the place all day finally settling at 2.72%, Go find someone who understands that, I don't.
All of this, of course was in the face of far from strong numbers either on the economy of in corporate earnings, continued bad news in emerging markets and troubling events in Europe. It is really quite amusing how the markets can turn on and off regarding emerging always having the same final idea that we in the U.S. are pretty much insulated from their effects…until we're not. Except for China, and increasing concern is being expressed over the economic/credit situation in terms of "this is really important," whereas I don't have very much concern at all except in a macro sense as to the worldwide response to a slowdown in economic activity. But credit? Nah. That's the wonderful thing about a totalitarian state. Nobody dies unless the bosses say so.
But why should any of us care about any of these thing when we have The Greatest Show on Earth playing right now on the shores of the Potomac and the Rappahanock. Welcome ladies and gentlemen to the Barry and Frankie show, two Presidents with their approval ratings in the tank finding one another amid the complete lack of interest on the part of anybody else in the world! It would be better of course if The Leader could pronounce Frankie's name properly and if he (or, perhaps, she) didn't have an idiot working for him/her that plans a state dinner in a tent in the middle of February in Washington (forecast: 14 F. and windy) but hey, we're friends again. Lafayette, nous Somme ici! Dear God you can't make this up.
Wednesday, November 20, 2013
ALWAYS THE FED
Sorry about the past few days. I had a bit of an eye problem related to drops during an exam and couldn't see a damn. Over Here, the political scene is dominated by ObamaCare…oops, The Leader has mandated that it can no longer be called that as of course he had nothing to do with it so all comments are to be referred to as the Affordable Care Act or, "ACA," which is morphing into Less Affordable Care by the minute. On the financial front, the Red continues to excite.
As expected, Ms. Yellen's confirmation as Chairman is now a certainty as she received the endorsement today of a key Republican Senator--as it should be I might add as there is certainly nothing in her record which cries out for a rejection. Having settled that, all other things about this organization remain a mystery.
One might remember that when nominated, Mr. Bernanke promised a far more transparent Fed which at the time I expressed a belief that that may not necessarily be a good thing. Whether it is or not the transparency issue seems to have transformed itself into the belief that any governor can say any thing about anything whether it in concordance with stated policy or not which causes a God-awful confusion among the self-involved resulting in all sorts of weird and wonderful reactions in the capital markets. For example…
Last week, Ms Yellen made it quite clear that QE III was not a target for tapering any time soon and that the easy money policy would continue for a while…or so ever one thought. The markets swooned and this wonderful piece of good news. On Monday, however, Mr. Bernanke modified that a bit by being not so firm on the lack of future tapering but continued to express the almost certainty of easy money. The markets stopped to think for a brief moment but deciding that "easy" was the operative word, continued onward. Then came today with the release of the latest minutes along with a couple of Fed interviewees that indicated tapering might just be around the corner given the strength of the economy which could well be followed by a rise in interest rates in 2014. WELL! Smack me upside the head why don't cha! The DOW dropped like a stone and interest rates moved quickly upward. It would all be a lot easier if this gang locked itself away in a room somewhere in a real-life city other than Washington and decided who was going to be their spokesman, but it looks like the paste is truly out of the tube and there's a real chance that there will be fist fights as to who gets in front of the cameras first---Memo to Govs: if Chuck Schumer is in the same room don't try it. Bodily harm could result.
Lost of course is the real conversation behind all of this like why in the hell should we have QE (pick a number) at all, as three years it has proved to be all but useless as an economic tool although it does buy paper that for a long time nobody else would touch with a stick, but what is now perhaps the catalyst to another near-catastrophe as once-ended, the market will expect the Fed to turn from a $4 trillion whatever into something resembling sanity overnight. As for me…well, I can see again even if what is out there is pretty ugly.
As expected, Ms. Yellen's confirmation as Chairman is now a certainty as she received the endorsement today of a key Republican Senator--as it should be I might add as there is certainly nothing in her record which cries out for a rejection. Having settled that, all other things about this organization remain a mystery.
One might remember that when nominated, Mr. Bernanke promised a far more transparent Fed which at the time I expressed a belief that that may not necessarily be a good thing. Whether it is or not the transparency issue seems to have transformed itself into the belief that any governor can say any thing about anything whether it in concordance with stated policy or not which causes a God-awful confusion among the self-involved resulting in all sorts of weird and wonderful reactions in the capital markets. For example…
Last week, Ms Yellen made it quite clear that QE III was not a target for tapering any time soon and that the easy money policy would continue for a while…or so ever one thought. The markets swooned and this wonderful piece of good news. On Monday, however, Mr. Bernanke modified that a bit by being not so firm on the lack of future tapering but continued to express the almost certainty of easy money. The markets stopped to think for a brief moment but deciding that "easy" was the operative word, continued onward. Then came today with the release of the latest minutes along with a couple of Fed interviewees that indicated tapering might just be around the corner given the strength of the economy which could well be followed by a rise in interest rates in 2014. WELL! Smack me upside the head why don't cha! The DOW dropped like a stone and interest rates moved quickly upward. It would all be a lot easier if this gang locked itself away in a room somewhere in a real-life city other than Washington and decided who was going to be their spokesman, but it looks like the paste is truly out of the tube and there's a real chance that there will be fist fights as to who gets in front of the cameras first---Memo to Govs: if Chuck Schumer is in the same room don't try it. Bodily harm could result.
Lost of course is the real conversation behind all of this like why in the hell should we have QE (pick a number) at all, as three years it has proved to be all but useless as an economic tool although it does buy paper that for a long time nobody else would touch with a stick, but what is now perhaps the catalyst to another near-catastrophe as once-ended, the market will expect the Fed to turn from a $4 trillion whatever into something resembling sanity overnight. As for me…well, I can see again even if what is out there is pretty ugly.
Monday, November 11, 2013
A DELIBERATE OVERSIGHT
I should have written something on Friday after the jobs number came out but I didn't. On purpose. Didn't know what to make of it. Still don't. Anyway, the number was up 200,000+ but in a break to the pattern the percentage of jobless rose to 7.4%. The headline number got all the play but after a close and sober look it appeared that the Quality of the jobs created was low. We are now at the point where any number gets parsed and cut 5 ways to Sunday, but at the end of the day markets are still looking at the Fed and it is the Fed that is going to determine future economic and market actions.
Ms. Yellen spoke today and it is even more clear in my mind that that the days of creating money are still with us and will be well into next year. The Fed, whomsoever is running it and the ECB are on the same page. Japan is certainly into the "Take it, it's free!" camp and the UK remains on board although there are more than just stirrings in light of an economy that seems to be doing far better than anyone had hoped (which is another thing I don't understand). If the pressure to raise rates rises to the point where the Bank of England must act, there will be absolutely hell to pay in the Euro zone. S'truth, I can't see that happening either. Much easier to blame Germany for all the troubles on the continent although with economic growth at less than 1%, one wonders what the Germans are doing to deserve all the heat except operating in a monetary union that at this stage of it's development (or demise…take your pick) favors the efficient producer in a common market…hey, catchy phrase that; wonder if it has ever been used?
Over Here, The Leader seems consumed with deflecting public opinion on ObamaCare to the point where very little is happening. I don't have a dog in this fight except to note that there appears to be more trouble lurking on the horizon that first believed. The end of this week will come the promised first report on the number of sign-ups (or not, as the case may be) and the expiration of half of the time for the promise of the fixing of the web site. More and more it appears that this effort will result in failure. If this is the case and the sign-up effort collapses, some feel that the political pressures in a coming election year will result in wholesale abandonment of The Leader by vulnerable Democrats giving Republicans effective control of both houses. I don't believe it but if that occurs, the effect upon economic activity due to the uncertainty could be devastating. I realize that most readers already understand this but for those of you outside of our boundaries, probably covered by a single payer system of health care, this is a really big deal. Stay tuned.
Ms. Yellen spoke today and it is even more clear in my mind that that the days of creating money are still with us and will be well into next year. The Fed, whomsoever is running it and the ECB are on the same page. Japan is certainly into the "Take it, it's free!" camp and the UK remains on board although there are more than just stirrings in light of an economy that seems to be doing far better than anyone had hoped (which is another thing I don't understand). If the pressure to raise rates rises to the point where the Bank of England must act, there will be absolutely hell to pay in the Euro zone. S'truth, I can't see that happening either. Much easier to blame Germany for all the troubles on the continent although with economic growth at less than 1%, one wonders what the Germans are doing to deserve all the heat except operating in a monetary union that at this stage of it's development (or demise…take your pick) favors the efficient producer in a common market…hey, catchy phrase that; wonder if it has ever been used?
Over Here, The Leader seems consumed with deflecting public opinion on ObamaCare to the point where very little is happening. I don't have a dog in this fight except to note that there appears to be more trouble lurking on the horizon that first believed. The end of this week will come the promised first report on the number of sign-ups (or not, as the case may be) and the expiration of half of the time for the promise of the fixing of the web site. More and more it appears that this effort will result in failure. If this is the case and the sign-up effort collapses, some feel that the political pressures in a coming election year will result in wholesale abandonment of The Leader by vulnerable Democrats giving Republicans effective control of both houses. I don't believe it but if that occurs, the effect upon economic activity due to the uncertainty could be devastating. I realize that most readers already understand this but for those of you outside of our boundaries, probably covered by a single payer system of health care, this is a really big deal. Stay tuned.
Wednesday, October 9, 2013
AFORE WE GO
"This is one of the most important nominations I can make..." The Leader, September, 2013.
Naturally, he lets Crazy Lizzy and the California babes make it for him. And so Janet Yellen, economist, wife of Nobel economist but most importantly a woman, has been nominated for the Fed Chairman as predicted here and on 10,000 other sites. Back up the trucks boys, here comes the cash...and the rich get richer and the wealth gap widens.
Leadership. God! I love it so!
Naturally, he lets Crazy Lizzy and the California babes make it for him. And so Janet Yellen, economist, wife of Nobel economist but most importantly a woman, has been nominated for the Fed Chairman as predicted here and on 10,000 other sites. Back up the trucks boys, here comes the cash...and the rich get richer and the wealth gap widens.
Leadership. God! I love it so!
Wednesday, September 25, 2013
THIS IS HARD, MAN
I will not write about politics, I simply will not except to the extent they affect global finance. But that's all that's out there; Syria, Iran, Obamacare, debt ceiling battles. Even the Who Runs the Fed argument if off the front pages. It's funny, everyone expresses to know the outcome of all these events so one would think that it would be business as usual, but the equities Over Here have traded down for six days in a row and the ten year, just a week ago flirting with a 3 handle closed today at 2.71,...that's 30b.p. in a week! The reason given? Political uncertainty.
There can be humor in all of this. Some clown from the IMF speaking from Bogota expressed relief on the part of Latin America that the long awaited tightening by the Fed did not occur because the prospect of higher U.S. yields would have pulled money out of Latin America needed for investment. Say what? Ever try to keep inflation at the door in an emerging market economy when the biggest money printing machine in the world keeps churning it out and it all seems to wind up with YOU, not for investment but for yield? And this is the mob that tells people how to do what is right. Most countries in L.A. would breath a huge sign of relief of tapering began today but it will not. An interesting development over the past week has been that people are beginning to look much more closely at Janet Yellen, Central Banker, rather than Janet Yellen, feminist dream and discovering that
1. She's not quite as universally loved as believed, and
2. If anything she's more "Brace yourself Bridgett, here comes more liquidity" than all, save for Little Paulie Krugman.
But, it looks more and more as if she is the choice as The Leader will soon tell us when he gets over the butt-kicking he's received over the past few weeks by various foreign scuz-buckets and his home town constituency. He wants to get this one exactly right. He wont of course, but a proclamation of victory is good enough these days.
Another thing that has been going on out there are the questions being raised as to whether J.P. Morgan is really a collection of bad guys or whether it is just a convenient whipping boy on the part of politicians and regulators who can develop great street creds without accomplishing a damn thing. Nice to see that someone is reading the blog.
There can be humor in all of this. Some clown from the IMF speaking from Bogota expressed relief on the part of Latin America that the long awaited tightening by the Fed did not occur because the prospect of higher U.S. yields would have pulled money out of Latin America needed for investment. Say what? Ever try to keep inflation at the door in an emerging market economy when the biggest money printing machine in the world keeps churning it out and it all seems to wind up with YOU, not for investment but for yield? And this is the mob that tells people how to do what is right. Most countries in L.A. would breath a huge sign of relief of tapering began today but it will not. An interesting development over the past week has been that people are beginning to look much more closely at Janet Yellen, Central Banker, rather than Janet Yellen, feminist dream and discovering that
1. She's not quite as universally loved as believed, and
2. If anything she's more "Brace yourself Bridgett, here comes more liquidity" than all, save for Little Paulie Krugman.
But, it looks more and more as if she is the choice as The Leader will soon tell us when he gets over the butt-kicking he's received over the past few weeks by various foreign scuz-buckets and his home town constituency. He wants to get this one exactly right. He wont of course, but a proclamation of victory is good enough these days.
Another thing that has been going on out there are the questions being raised as to whether J.P. Morgan is really a collection of bad guys or whether it is just a convenient whipping boy on the part of politicians and regulators who can develop great street creds without accomplishing a damn thing. Nice to see that someone is reading the blog.
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