Today, in an act of major disfunctionality, St.Louis Fed President James Bullard called out CNBC‘s Jim Cramer about his continual call to keep rates at zero. Mr. Bullard called Cramer’s continued push for the FED to remain as easy as possible “unsavory.” The fact that Jim Bullard went into Cramer’s den to state his case is unsavory. If the Fed is so concerned about the pressure emanating from the CNBC airwaves, why would you lend them more credibility by appearing on Squawk Box? Fed Presidents and Governors are always making themselves available to the electronic media in an effort to “enlighten” the public. Can the FED really be concerned about the daily discussions about policy and the pressure it might provide to keep equity markets elevated? Please bring back Volcker and restore some dignity to the world’s central bank.
Besides the Bullard discussion, me and Rick discussed the possible reasons behind the FED‘s decision to hold rates at the zero bound and for Chair Yellen to deliver a very dovish press conference. The bottom line was that something is unnerving the FED and other central banks. I cited the possibility of the growth of global debt as reported in February in a McKinsey report. When in doubt look to the debt/credit markets.
Besides my hit with Rick, I advise watching Rick’s solo hit an hour later in which he lays out the data in the McKinsey report. The report, “Debt and [not much] Deleveraging,” details out that the global stock of outstanding debt increased $57 trillion since the second quarter of 2007, growing from $142 Trillion to $199 Trillion. If GDP growth is slower than debt accumulation then the global debt pile will have problems being serviced. This MAY be the key to the Fed’s trepidation about raising rates. What we will be watching is what this will mean for possible trades going forward. Enjoy the hits (they’re linked in the text above) and be back Thursday.