Notes From Underground: SIN or WIN, It’s a Generational Thing

May 10, 2021

In 1976, when I was beginning my long march toward acquiring knowledge to analyze markets Gerald Ford was running for reelection. Inflation was gaining strength so the FORD campaign was bent on making America believe that he had the fortitude to break the inflation spiral threatening the Middle Class. Campaign buttons said W.I.N. (whip inflation now). Getting inflation under control was seen as the paramount issue.

When I was wandering through a flea market in New York in 2007, I found an original WIN button that I bought for $1.25. See? Paul Volcker did whip inflation. (I gave the button to the best financial plumber, James Aitken, as a token of appreciation for all the knowledge he imbued in me about the plumbing of the short-term funding markets.)

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Notes From Underground: Another Day in the Dark With Dr. Faber

May 9, 2021

Dr. Marc Faber and I had a 65-minute discussion with Richard Bonugli and the Financial Repression Authority. It was about eight months ago since we last discussed the global macro world and while it does not have the pizzaz of CNBC, those who listen to the discourse in 2020 would’ve been rewarded as many of the issues we discussed proved to be highly profitable investments. The themes remain similar although the rapid rise in mining and ag stocks have me leaning on the cautious side even as ADM, BG, FCX, Glencore and certainly KSU power forward to new highs.

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Notes From Underground: Sanctions Are Sanctimonious

May 2, 2021

In today’s world of DOLLAR domination it is easy for the U.S. Treasury — under the guidance of the president — to place sanctions on many different global actors as they strive to use the conduit of SWIFT and other banking facilities to move money around the globe. The U.S. likes to beat its chest and proclaim that it is operating in a rules-based system and therefore sanctions are an appropriate tool in response to the malevolent actions of autocratic-oriented nationalistic actors. But whose rules? And the invocation of sanctions leads to those subject to the whims of U.S. policy to find ways to operate in international grey areas of commerce.

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Notes From Underground: The Arrogance of Janet Yellen

April 8, 2021

Since I last wrote, it has been a time for thought, contemplation and discussion. This week I recorded an FRA podcast with Richard Bonugli and Larry McDonald. It was the equivalent of the “Wide World of Sports” as we traveled around the world looking at profitable investment ideas. Enjoy the best 60 minutes in financial global macro analysis.

Click here to listen to the podcast.

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Notes From Underground: How To Deal With Transitory Data

March 18, 2021

First, thank you to allĀ  who filled in for me as I spent nine full days packing up my life in Chicago. Raising four children and being the repository for many of my loved ones “stuff” resulted in a drowning in memories as well as material possessions that raised questions about what the HELL was that for and why? Our last post was March 1 but I am proud to point out that there were about 74 comments on that entry, all but mine being extremely valuable. Thank you to all for the way you raised the bar for discourse even higher.

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Notes From Underground: Bonds Talking Trash To the Central Banks

February 28, 2021

Last week the world’s bond markets experienced an assault propagated by the MISERABLE U.S. five-year Treasury note auction on Wednesday followed by a more dismal seven-year sale on Thursday. Also, the Australian and KIWI 10-year notes suffered massive bouts of volatility even as the RBA and RBNZ intervened with more QE to stem the rise on the long end. We at Notes From Underground have warned that the markets were attacking the FORWARD GUIDANCE motivations of the world’s monetary authorities by attacking the long end of the yield curve as the area of least resistance because central bank asset purchases around the world have been targeted at debt instruments of much shorter duration.

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Notes From Underground: Was It the Fool On the Hill?

February 23, 2021

On Tuesday, Federal Reserve Chairman Jerome Powell testified before the Senate Finance Committee in the semi-annual Humphrey-Hawkins Testimony and Report to Congress, in which the Fed has to answer as to how the U.S. economy is performing in relation to its dual mandate. Senator Sherrod Brown, the chair of the finance committee, is very knowledgeable and in similar fashion provided strong leadership but unfortunately he cannot censor stupid questions as politicians use the microphone for political posturing. There were many types of “when did you stop beating your wife” questions as if the Senators wished to trap Powell instead of an honest assessment.

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Notes From Underground: Does the Market Care About Forward Guidance?

February 21, 2021

Forward guidance is a key tool in the Federal Reserve’s arsenal, promoted in a speech long ago by Columbia University professor Michael Woodford at the Jackson Hole Symposium. In a previous communication, the central bank said, “Forward guidance is a tool that central banks use to provide communication to the public about the likely course of monetary policy.”

This tool allows the FED to establish a time-directed path for interest rates so that the MARKET does not suffer shocks from an upward surprise move in rates.

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Notes From Underground: Central Banks Driving Us to Drink

February 18, 2021

Last week I chatted with Richard Bonugli and Europeans Godfrey Bloom and Claudio Grass. It is worth a listen — with your favorite libation, of course — as we moved from politics to the macro global picture in full. There was a great deal of discussion about the SNB with Claudio Grass and that is enough for all of us to drink.

Click here to listen to the podcast.

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Notes From Underground: Extra! Extra! Read All About It

February 11, 2021

On Wednesday, FEDERAL RESERVE Chairman Jerome Powell emphasized, yet again, that he and the FOMC believe UNEMPLOYMENT in real terms using its broad measure is about 10%. The recent release of labor statistics revealed a 6.3% unemployment rate but Powell stressed in his Q&A at Economic Club of New York that “the statistic doesn’t capture the full extent of labor market slack.” Bloomberg’s Craig Torres finally gave credence to the idea that Jerome Powell is focused on ending the present disparity between minority and white employment as Powell used FED data to clarify the black unemployment rate was 9.2% versus 5.7%.

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