Notes From Underground: Will It Be An Inflated Jobs Report?

September 2, 2021

After FEDERAL RESERVE Chairman Jerome Powell’s Jackson Hole speech, the jobs data may have taken on added significance. Inflation was not a concern for Powell as that is considered transitory within the bowels of the FOMC. The failure of the employment situation to enable all who lost jobs due to COVID “through no fault of their own” has regained paramount importance.

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Notes From Underground: Powell’s Pathetic Political Posturing

August 29, 2021

First of all, my offer of any part of a $10,000 bet with 10-1 odds against Jerome Powell being renominated as FED CHAIR is OFFICIALLY RESCINDED. The Fed Chair’s speech was so pathetic that it can only be explained by his desire to be renamed central bank head. Powell’s speech would be called DOVISH on any given week but there were six FED presidents speaking out in favor of moving up the schedule for tapering QE to counterpunch. It was not only the increased hawkish stances of previous UBER DOVES, which provided cover for Powell but the highly esteemed Mohammed El-Erian and Larry Summers also called for the FED Chair to be bold at Jackson Hole.

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Notes From Underground: For What It’s Worth

August 24, 2021

There is a wonderful song from the tumultuous 1960s by the band Buffalo Springfield that is so apropos for the financial markets over the last two weeks (staying away from Kabul). The lyrics for the first two verses describe the situation for investors as we approach the tectonic plates of monetary policy that have provided the Kansas City Fed Symposium at Jackson Hole with its heightened significance. Several keynote speeches revealing policy changes have been delivered to this August group.

“There’s something happening here ,But what it is ain’t exactly clear
there’s a man with a printing press over there, telling me I got to beware
“There’s battle lines being drawn,nobody’s right if everybody’s wrong
Young people speaking there minds,Getting so much resistance from behind”

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Notes From Underground: Before I Break

August 15, 2021

On Sunday, we acknowledge the 50-year anniversary of Richard Nixon’s decision to close the GOLD EXCHANGE WINDOW and put an end to the post-World War monetary system known as Bretton Woods. I can say exactly where I was: A bus station in Afula, Israel buying ice cream in dollars and the price rose as it was the day after the announcement. The proprietor told us prices increased because the dollar bought less. I truly had no idea but just remember that it happened in real time and proved not to be a transitory event. Much is being written about the anniversary and the implications for the global economy.T he Nixon strategy was summed up in his supposed statement of “We ARE ALL KEYNESIAN’S NOW.”

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Notes From Underground: The Dog Days of Summer

August 12, 2021

The doldrums of August are upon us … though not really. There is the ongoing debate about inflation prompting the FEDERAL RESERVE to accelerate the pace of its asset purchase tapering — when it begins — while it is the elevated levels of minority unemployment that will likely force the FED to maintain its lower-for-longer policy.

The chatter remains about REAL INFLATION being above the FED‘s 2% mandate, a self-imposed threshold, while JANET YELLEN/JEROME POWELL discuss REAL UNEMPLOYMENT being above its mandate of maximum full employment. The central bank has promoted both mandates at times so it is difficult to deem what is REAL. It is of great interest that in the last few days KNOWN FED DOVES have taken a decidedly more “hawkish” posture. Atlanta Fed President Rafael Bostic, St. Louis Fed President James Bullard, and in Thursday’s Financial Times, San Francisco Fed President Mary Daly all raised the issue of reducing stimulus as soon as this year.

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Notes From Underground: Bye Bye, Jerome Powell

August 8, 2021

Early last week Senator Elizabeth Warren made her case against Chair Jerome Powell. In a Financial Times article, the senator blasted Powell for his light regulatory touch while praising the efforts of Governor Lael Brainard. Yet many believe Powell is a shoe-in to be reappointed Fed Chair (as much as an 85% chance at some sites).

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Notes From Underground: The Fed As G-30 Proxy?

August 1, 2021

Last week’s FOMC meeting went as expected but the press conference actually provided some solid questions as the media put some pressure on Chair Jerome Powell. NPR actually received an answer to what TRANSITORY means to the Fed chair: Prices will stay but the process of inflation will stop or slow dramatically. Hmm, the continued use of the LUMBER and AUTO markets did not reflect that definition at all. It seemed that the authorities were pursuing the concept of roll back.

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Notes From Underground: Wow Unto Chair Powell

July 27, 2021
The previous blog post about President Lagarde painting the FEDERAL RESERVE into a corner OUGHT to be revealed tomorrow as there is expected to be no change in FED policy and I believe that Chair Jerome Powell will do his best to pose as dovish as possible. If there is a CHANGE it will be in the mix of the QE as the SOMA will be moved to cut MBS purchases and replace mortgages with longer-term treasuries.

Notes From Underground: Trade Complications (The Power of the Nation-State)

July 25, 2021

That headline is courtesy of Whitewave Trading, an interactive chat room in which high-powered analysis for traders generates some great trades and uses NOTES FROM UNDERGROUND to add a fundamental view. Monday’s Whitwave has this advice: “When and if they ever taper, I’ll turn over the trading card.”

For those never on the trading floor this is in reference to going from the BLUE buy side to the RED sell side. In a follow up to last week’s blog post this makes perfect sense for as it seems that a critical indicator to an equity correction in the U.S. would begin with the FED actually moving to a real TAPERING or in Peter Boockvar’s words, A QUANTITATIVE TIGHTENING.

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Notes From Underground: What A Week (Or Was It a Month)

July 22, 2021

At the beginning of the week, the COVID DELTA VARIANT was the major concern as the weekend brought news of a widespread increase. It seemed world financial markets were in the throes of concern of another pandemic lockdown with the Olympics being cancelled. We at NOTES FROM UNDERGROUND offered context and stressed that the zero interest-rate markets would provide a far different backdrop than what occurred in March 2020. We did learn that zero interest rates lowered inflation concerns and the Olympics are still taking place, although to empty stadiums. SO THE BULL MARKET MUST GO ON.

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