• Category Archives Fiscal Policies
  • The Last Time Economic Data Disappointed This Much, Bernanke Unleashed Operation Twist

    For the 13th straight week, US economic data disappointed (already downgraded) expectations, sending Citi’s US Macro Surprise Index to its weakest since August 2011 (crashing at a pace only beaten by the periods surrounding Lehman and the US ratings downgrade). The last time, Us economic data disappointed this much, Ben Bernanke immediately unleashed Operation Twist… but this time Janet Yellen is hiking rates and unwinding the balance sheet?

    As Citi notes, breaking down this move, we can see that the recent data
    disappointments have been driven by a steady fall in the underlying
    data, rather than overly exuberant expectations. In other words, economists have been adjusting expectations downwards, but the data has been falling at a faster rate.

    This post was published at Zero Hedge on Jun 16, 2017.


  • Trader: “The Downside Doesn’t Get Interesting Until S&P Hits 2,400…”

    “Keep It Simple Stupid,” is the key lesson from Bloomberg’s Richard Breslow note this morning as he conjures doves, snakes, hawks and starfish to make his point. Simply put, don’t panic… yet. Here are the assets he’s watching and levels to trade…
    Sometimes when you just can’t keep the story simple, it’s best to do so in your trading. The world is a complicated place and there’s great risk in trying to reduce all causality to one factor. There’s a tug of war going on and the rope resembles a starfish not a snake. Although I’d have to admit, a lot of what we’re witnessing has a distinctly reptilian aura about it.
    So what are some of the things we need to factor in?
    Chair Yellen was hawkish. Why various assets responded to her in the way they did is a story about them. And well worth considering. But it doesn’t change the underlying fact. Bonds being bid doesn’t mean they don’t believe her or we’re watching a different press conference than precious metals traders.

    This post was published at Zero Hedge on Jun 15, 2017.


  • Despite Bank Of Canada Hubris, Existing Home Sales Crash In May

    The Bank of Canada is stuck between the rock of a housing bubble (textbook-based trickle-down confidence-inspiration) and a hard place of a housing bubble (total lack of affordability) as it proclaimed this week that it may withdraw stimulus because, paraphrasing, everything was awesome. Well, today’s existing home sales collapse may change that tune quickly…
    Bloomberg reports that in a speech she’s delivering in Winnipeg, Manitoba, Senior Deputy Governor Carolyn Wilkins highlighted how the nation’s recovery is broadening across regions and sectors, giving policy makers ‘reason to be encouraged.’
    ‘As growth continues and, ideally, broadens further, Governing Council will be assessing whether all of the considerable monetary policy stimulus presently in place is still required,’ Wilkins said in the text of a speech she’s giving Monday.
    ‘At present, there is significant monetary policy stimulus in the system.’

    This post was published at Zero Hedge on Jun 15, 2017.


  • Mario Draghi Explains The ECB’s Dovish-Hawk Statement – Live Feed

    What Mario taketh (removed lower rate guidance), he also giveth (keeps “well past” QE language) as Citi notes The ECB came in just about exactly where the market expected it to be leaving EURUSD slightly lower. The question is now whether the ECB have something left in the locker for Draghi’s press conference? If it stays like this, Citi expects EUR to go lower.
    The ECB dropped the easing bias, and reiterated that rates are to stay at present or lower levels past QE horizon, sees QE running until end of December or beyond if needed… and EUR is leaking…

    This post was published at Zero Hedge on Jun 8, 2017.


  • All You Need To Know How To Trade This “Market” In Five Words

    Remember when buoyed by the ever present specter of QE, stocks would levitate no matter what happened, because “good news was good, but bad news was better”? Well, according to BofA, we are right back where we started.
    ***
    From BofA:
    All news is good news. May’s jobs report – with lower than expected headline jobs growth of 147K, negative revisions of -66K and downward revisions to wages – represents another piece in a string of disappointing hard economic data. Impressively, even though stocks initially struggled eventually they turned around and closed up 0.37% on the day. Clearly, equities continue to respond well to both positive and negative economic data, as the latter leads to a more dovish monetary policy stance.

    This post was published at Zero Hedge on Jun 5, 2017.


  • Gold Miners in 2017 Whipsaw

    Ever since 2012’s failure of the ‘QE 3 rally’ in the precious metals it has not been fruitful to micro manage the gold sector, because that failure jump started a savage bear market that would need time to work out the excesses both in the sector’s investor base and in its mining businesses, which had become bloated and inefficient. That’s what bear markets do; they clean out the landscape to make it inhabitable for new investors one day. Here is a weekly chart showing the bear’s kickoff. HUI’s 55 week EMA then became the ball and chain that kept its fate sealed (red arrows) until January of 2016.

    This post was published at GoldSeek on 4 June 2017.


  • Stocks and Precious Metals Charts – Between the Crosses, Row By Row

    “One of the common failings among honorable people is a failure to appreciate how thoroughly dishonorable some other people can be, and how dangerous it is to trust them.”
    Thomas Sowell
    Today was an option expiration, and we had an additional pop in stocks in order to complete the routing of the bears who piled on to the ‘Trump dump.’
    The putative reason for today’s rally was a statement by the Fed’s Bullard about the role that additional QE may play. I am not sure if this was ‘real’ or just another reasons to wash and rinse the public.
    Next week will be the June option expiration for precious metals on the Comex.
    Stocks are at a bit of a crossroads here. The SP 500 futures and big cap tech in the NDX, for example, have retraced approximately fifty percent of the recent drop, and are both at the midpoint of their respective bull trend channels.

    This post was published at Jesses Crossroads Cafe on 19 MAY 2017.


  • MAY 5/USA ISSUES A FAIRY TALE JOBS REPORT/HUGE BANK RUNS IN ITALY AS ITS TARGET 2 IMBALANCES BALLOON/RUSSIA, IRAN AND TURKEY BAN USA FLIGHTS OVER SAFE ZONES IN SYRIA/NEW YORK FED LOWERS ITS ESTIM…

    Gold: $1226.60 UP $.10
    Silver: $16.28 UP 4 cent(s)
    Closing access prices:
    Gold $1228.50
    silver: $16.34!!!
    XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
    SHANGHAI GOLD FIX: FIRST FIX 10 15 PM EST (2:15 SHANGHAI LOCAL TIME)
    SECOND FIX: 2:15 AM EST (6:15 SHANGHAI LOCAL TIME)
    SHANGHAI FIRST GOLD FIX: $1238.24 DOLLARS PER OZ
    NY PRICE OF GOLD AT EXACT SAME TIME: 1228.35
    PREMIUM FIRST FIX: $9.83

    This post was published at Harvey Organ Blog on May 5, 2017.


  • Hey Bartender! U.S. Job Gains Rebound as Unemployment Falls to 2007 Levels (Hourly Earnings Slow To Levels Seen At End Of Great Recession)

    This is a syndicated repost courtesy of Confounded Interest. To view original, click here. Reposted with permission.
    Another good news and bad news jobs report from the Bureau of Labor Statistics.

    First, the good news. 211k jobs were added in April. And the U-3 unemployment rate fell to 4,4%, the lowest since May 2007. Since The Fed so heavily leans on the U-3 unemployment rate to guide their rate hike decision, this should be compelling information for the next FOMC meeting.

    This post was published at Wall Street Examiner by Anthony B Sanders ‘ May 5, 2017.


  • April Payrolls Preview: “It Better Be Good”

    After the abysmal March labor report, all we – and the Fed – can say is that April better be good, or else Yellen’s claim of “transitory weakness” will simply be the latest nail in the coffin of Fed credibility. Here is the consensus for the key numbers the BLS will report at 8:30am ET on Friday morning.
    March Nonfarm Payrolls Exp. 185K, (Prey. 98K, Feb. 235K) US Unemployment Rate (Mar) M/M Exp. 4.6% (Prey. 4.5%, Feb. 4.7%) Average Hourly Earnings Exp. 0.30% (Prey. 0.20%, Feb. 0.20%) Payrolls Expectation by Bank:
    Barclays: 225K, Bank of America: 170K, Goldman Sachs: 200K, SocGen: 165K, UBS: 210K, Wells Fargo: 178K, Big Picture: Friday’s non-farm payrolls release follows Wednesday’s FOMC meeting where the Fed, as expected, kept rates on hold with all eyes now on June’s decision. One key takeaway from this week’s decision was the Fed noting the labour market conditions continuing to strengthen as growth slowed, as it deemed that job gains had been solid despite March’s softer than expected labor market report and quasi-recessionary Q1 GDP. The Fed’s statement was devoid of any real negatives and has led to Fed Fund futures pricing in a near 80% chance of a 25bps hike at its June meeting.

    This post was published at Zero Hedge on May 5, 2017.


  • Gold-Futures Shorting Attacks

    Gold has suffered a sharp pullback over the past couple weeks, stoking much bearish sentiment. While a variety of factors fed this selloff, the precipitating catalyst was a gold-futures shorting attack. These are relatively-rare episodes of extreme selling specifically timed and executed to manipulate gold prices lower rapidly. Traders need to understand these events, which are inherently self-limiting and soon bullish.
    Gold-futures shorting attacks are very real, with telltale volume and price signatures unlike anything else. I’ve studied them for many years now, and have written extensively about them in our newsletters as they occur. But it’s critical to realize these rare events are only responsible for a tiny fraction of all gold selling. The vast majority of the time gold selloffs are driven by other far-more-normal factors, not shorting attacks.
    These isolated anomalous episodes are often cited as proof the gold price is actively manipulated. But whether that’s true or not, gold-futures shorting attacks can only explain tiny sporadic swaths of gold-price behavior. When they occur their impacts can definitely be outsized, but these are always short-lived. That’s because the huge selling necessary to execute a shorting attack is far too extreme to be sustained.
    Gold-futures shorting attacks are naturally a subset of gold-futures trading, which dominates short-term gold prices. Gold-futures speculators enjoy a wildly-disproportional impact on gold levels for a couple of key reasons. The American-gold-futures-derived gold price is the world’s reference price. So whatever the futures speculators as a herd are doing greatly affects popular psychology among gold traders globally.

    This post was published at ZEAL LLC on May 5, 2017.


  • It’s Turning Into A Very Interesting Week

    Authored by Mark St. Cyr,
    Back in days of yore (circa January 2017) I dared make the assertion that all that was ‘unicorn infatuation’ in the Valley was much more akin to ‘the old gray mare ain’t what it used to be.’
    In the article ‘Is 2017 The Year Silicon Valley Experiences The Dark Side Of ‘It’s Different This Time?’’ I posed the following. To wit:
    ‘Here’s the equation I believe will not only send shock waves, but will bring down many a valuation edifice within ‘The Valley’ in 2017. And here it is: ‘First: The Fed. And Second: Rate hikes.
    Two very short sentences containing nothing more than two words each but their implications could have exponentially explosive results. For what they portend is that ‘It’s different this time’ may indeed be exactly that.
    What I hoped you may have noticed during this discussion is the one thing myself and very few others pointed out would happen if the hypothesis we’ve been articulating over the last few years was correct. That hypothesis has always been ‘Without the Fed. pumping in unlimited funds via the QE programs, and a ‘death-grip’ to the zero bound (aka ZIRP) the first ones to show how much of a facade these ‘markets’ where would be seen directly in the ‘tech’ space.’

    This post was published at Zero Hedge on May 4, 2017.


  • Volatility: A Misleading Measure Of Risk

    Authored by 720Global’s Michael Lebowitz via RealInvestmentAdvice.com,
    ‘History has not dealt kindly with the aftermath of protracted periods of low risk premiums’ – Alan Greenspan The ability to see beyond the observable and the probable is the most important and under-appreciated characteristic of successful investors. For example, visualize a single domino standing upright. With this limited perspective, one can establish what the domino is doing in the present and form expectations around what might happen if the domino falls. However, by expanding one’s viewpoint, you may discover the domino is just one in a long line of dominoes standing equidistant from each other. The potential chain of events caused by the first domino falling now offers a vastly different outcome. Many investors myopically focus on the trends of the day and fail to notice the line of dominoes, or what is technically known as multiple-order effects.
    Since the Great Financial Crisis of 2008, maintaining animal spirits has been a primary goal of the world’s central banks. The crisis proved a brutal reminder that, in this new era of significant leverage, a loss of investor confidence can result in violent reactions that ripple throughout the financial markets and the global economy. By employing extraordinary policies and optimistic narratives, the central banks have persuaded the public to believe that all is well. They have successfully focused the investor on one domino.

    This post was published at Zero Hedge on May 4, 2017.


  • The Day the Malls Went Silent

    This is a syndicated repost courtesy of The Daily Reckoning. To view original, click here. Reposted with permission.
    The Federal Reserve is in denial.
    Yesterday the Fed wrapped up two days of meetings and issued its customary every-six-weeks policy statement. To no one’s surprise, the Fed left interest rates alone this time. Also to no one’s surprise, the Fed continued to signal the likelihood of an increase in six more weeks.
    The only mystery was how the Fed would justify it in the face of the latest economic numbers – which, by and large, are weak. The Fed opted to declare the weak numbers are temporary.
    The Fed seemed especially keen to squelch the notion that the mighty American consumer is withering under the load of accumulating debt – as suggested in numbers we shared here both Friday and Monday. ‘Household spending rose only modestly,’ said the Fed statement, ‘but the fundamentals underpinning the continued growth of consumption remained solid.’

    This post was published at Wall Street Examiner by Dave Gonigam ‘ May 4, 2017.


  • New Risk for Investors: Fed Considers Jacking Up Inflation Target

    Investors are under-estimating inflation risk. As a consequence, they are under-pricing inflation protecting assets including precious metals.
    The Federal Reserve has given itself the objective of engineering an inflation rate of around 2%. However, there are many ways in which real-world inflation can potentially outpace the Fed’s 2% target.
    Firstly, the Fed’s preferred inflation gauges are flawed. The so-called ‘core’ rate of consumer price inflation strips out food and energy costs. The core Personal Consumption Expenditures (PCE) index has also been criticized for underweighting housing and medical costs.
    The PCE number for March, which came out on May 1st, shows the Fed’s favored inflation gauge running at 1.6% year over year. That’s down slightly from the previous month’s reading of 1.8% (2.1% for the headline unadjusted PCE).
    Since 2012, the core inflation rate has been running below the Fed’s 2% target. That has caused investors to grow complacent toward inflation risk. They seem to be operating under the assumption that 2% is a ceiling.
    That is a dangerous assumption – not only because of food and energy inflation not being properly accounted for, but also because even the official ‘core’ number could rise well above target for extended periods.

    This post was published at GoldSeek on 4 May 2017.


  • US Territory of Puerto Rico Files for Bankruptcy

    The US territory of Puerto Rico is the oldest colony in the world. Part of the United States since 1898, the Caribbean island with a predominantly Spanish-speaking population of over 3.7 million has often been promoted as a candidate to become the nation’s 51st state.
    But May 3, 2017 marked the beginning of a new era for the island, coming over 523 years after being discovered by Christopher Columbus during his second expedition to the New World, as Puerto Rico’s territorial government filed for bankruptcy, just over one year after it first defaulted on paying its debts, and nearly 10 months after it began defaulting on its constitutionally guaranteed debt. Reuters describes the magnitude of the event and what finally touched it off:
    Puerto Rico announced a historic restructuring of its public debt on Wednesday, touching off what may be the biggest bankruptcy ever in the $3.8 trillion US municipal bond market.
    While it was not immediately clear just how much of Puerto Rico’s $70 billion of debt would be included in the bankruptcy filing, the case is sure to dwarf Detroit’s insolvency in 2013.
    The move comes a day after several major creditors sued Puerto Rico over defaults [of] its bonds.

    This post was published at FinancialSense on 05/04/2017.


  • Trump Flirting With the Idea of a Federal Gasoline Tax Increase

    US President Donald Trump flirted with raising the federal gasoline tax this week, raising eyebrows by showing an openness to tackle a problem that has scared away politicians from both parties for years.
    Everyone seems to want to fix, rebuild or build new infrastructure in the United States. Politicians often make large infrastructure promises, framed the issue as a way to both boost the economy and create jobs. But building roads, bridges, dams, ports and the like requires money, something that has been increasingly scarce in recent years.
    The funding stream for infrastructure comes largely from the Highway Trust Fund, which receives money from federal fuel taxes. Those taxes have been stuck 18.4 cents per gallon for gasoline and 24.4 cents per gallon for diesel since 1993. But infrastructure needs have exploded over the past quarter century while the revenue mechanism has remained unchanged, putting an ever-growing strain on the budget for new projects. Inflation has eroded the value of the tax over time, while construction costs have climbed.
    The inadequacy of the gasoline tax is especially true because gasoline demand has remained flat for a decade, save for the one-off bump over the past few years because of the crash in oil prices. Not only did the long-term rise in vehicle-miles traveled slow down after the 2008 financial crisis, but the vehicle fleet has become more efficient over time. Hybrid and electric vehicles promise to cut into gasoline demand in the years ahead as well, taking a deeper bite out of the Highway Trust Fund. The Congressional Budget Office projects the Highway Trust Fund will run out of money in 2021.

    This post was published at FinancialSense on 05/04/2017.


  • Just a quick reminder of who’s really in charge

    Today the world of banking and finance waited with baited breath for the Federal Reserve in the United States to hike… or not to hike… interest rates.
    This happens several times each year as the central bank’s Federal Open Market Committee gathers to set monetary policy in the Land of the Free.
    To be clear, there is no greater power over a nation than having control of its money supply and interest rates.
    Think about it: interest rates influence just about EVERYTHING in the economy.
    Changes in interest rates influence housing prices, company stock prices, retail sales, food prices, oil prices, and major business purchases.
    Interest rates have a significant impact over employment, business investment, inflation, and the currency’s international exchange rate.
    Increases in the interest rate even have the power to bring a government to its knees.

    This post was published at Sovereign Man on May 3, 2017.