There were no surprises from the FEDERAL RESERVE on Wednesday. There was no discussion of yield curve control but there was plenty of confirmation about the FED‘s concern surrounding the damage done to the lowest on the employment ladder.
The U.S. central bank will pursue LOWER FOR LONGER IN PURSUIT OF A MODICUM OF SOCIAL JUSTICE FOR LAST HIRED, FIRST FIRED, which impacts minorities far more than those in the higher levels of education. As Chairman Jerome Powell explained, “They didn’t do anything wrong.”
For the record, as a citizen I agree with the assessment but I question this policy position for the chairman. (Please do not turn this into a political discussion. We are all about policy here.)
Enjoy the PODCAST as it represents what I am trying to achieve in the weeks, months and years ahead.
Click here to listen to the podcast featuring myself and Peter Boockvar.
Tags: Federal Reserve, Jerome Powell
June 12, 2020 at 9:17 am |
Did anyone hear David Rosenberg on CNBC this AM? He made a strong case for long bonds partially based on the historical deflation that follows pandemics and the experience in Japan. I know Yra hates long bonds now and rejects that we are turning Japanese That said the long bond has had a great return the last year. Rosenberg sees the 30 yr going to 0.5% which would represent a 36% increase in value Interested in the thoughts of others.
June 12, 2020 at 10:20 am |
Bigman–his case became stronger after the Curve failed to steepen following the DOVISH POWELL—-it is a trade for me and not an investment buying the long end—certainly it is a reactionary instrument so trade it with the feet of Nureyev
June 13, 2020 at 6:13 pm |
https://youtu.be/jpMLDc2I_N4
Conversation with Charles Dumas
Thought you would enjoy 👍
June 14, 2020 at 6:28 pm |
Pierre —have read much of his work over the years
June 15, 2020 at 4:40 pm
His latest book, Populism and economics is very timely for what’s going on today
Btw, it was the Danish “no” vote to the ratification of the Maastricht treaty that initially pricked the ERM bubble.
Now, the Finnish parliament is questioning the legality of the bailouts in Europe.
https://wtaq.com/news/articles/2020/jun/12/finlands-parliament-questions-legality-of-eu-recovery-plan/1028694/?refer-section=business
June 17, 2020 at 8:59 am |
Hey remember the “temporary” repo crisis- nothing to see here move along. Well here may be the real story. looks like Blackrock has supplanted Goldman-Sachs as the BFF of the Fed:
https://wallstreetonparade.com/2020/06/blackrock-authored-the-bailout-plan-before-there-was-a-crisis-now-its-been-hired-by-three-central-banks-to-implement-the-plan/
June 18, 2020 at 2:04 pm |
Bigman–one day we will have a coffee—-the fact they hired Blackrock a further stain on the shroud of the FED Chairman
July 5, 2020 at 12:52 pm |
https://www.amazon.com/You-Always-Hurt-One-Love-ebook/dp/B085L4GYGX/ref=sr_1_1?dchild=1&keywords=Bernard+Connolly+you+always+hurt+the+ones+you+love&qid=1593975040&s=digital-text&sr=1-1
Bernard Connolly latest book, soon to be released
July 6, 2020 at 12:49 pm |
Pierre—been waiting on this —thanks for posting it—-Yra
July 5, 2020 at 12:54 pm |
https://www.amazon.com/You-Always-Hurt-One-Love-ebook/dp/B085L4GYGX/ref=sr_1_1?dchild=1&keywords=Bernard+Connolly+you+always+hurt+the+ones+you+love&qid=1593975040&s=digital-text&sr=1-1
Connally’s latest book, soon to be released
On Wed, Jun 10, 2020 at 8:29 PM Notes From Underground wrote:
> Yra posted: “There were no surprises from the FEDERAL RESERVE on > Wednesday. There was no discussion of yield curve control but there was > plenty of confirmation about the FED’s concern surrounding the damage done > to the lowest on the employment ladder. The U.S. ” >
July 14, 2020 at 6:33 pm |
“Yield Curve Control” – Brainard.
July 21, 2020 at 8:58 am |
Well o wise one looks like you are going to get your eurobonds after all. Chances all countries will vote aye on this one? will the first eurobonds yield a negative interest rate?
July 22, 2020 at 5:52 am |
Bigman—it appears so and let the games begin as wecan see the impact
July 22, 2020 at 6:19 am
Who is the guarantor for these EuroBonds? The Germans have agreed to this?
July 22, 2020 at 8:56 am |
Don’t look now but spot silver is in backwardation with the Sept futures contract. Kitco selling Eagles for $30/ounce. Can you say physical shortage Next stop spot at $28
August 5, 2020 at 11:26 am |
Bigman–those are probably cheap as of now—you were early.Hope you are healthy and strong—
July 27, 2020 at 9:14 am |
is yra blogging anymore?
July 27, 2020 at 6:12 pm |
where have you gone joe dimaggio…
August 6, 2020 at 6:23 am |
Hey Yra I’m well Thx for asking and assume you are as well. Hate to say it but we need this blog more than ever. Miss Mike Temple Chicken and all the others. Based on their incredibly low death rates compared to US, EU and Latin America(poor Mexico can’t catch a break) I have started to invest in Asia x Japan. You are right I was too early on silver- about 10 years too early. Question the knock against gold was always that it had no yield so is that now the knock against the euro USD yen et al? The only difference I see is that there is a limited amount of gold the others evidently are limitless. FWIW from the peanut gallery. TBM
August 11, 2020 at 3:37 am |
Glad to see people are still posting some.
Yra, I think I have found the answer to your question of what will the Fed do in case of high unemployment and high inflation.(at least this will be their response)
https://www.federalreserve.gov/monetarypolicy/files/FOMC_LongerRunGoals.pdf
Also, I am earning a return (IN gold and silver) ON my gold and silver at Monetary Metals.
When I get a chance I will post a picture of one of my statements,
https://monetary-metals.com/
August 11, 2020 at 6:57 am |
Pierre I am a follower of the Monetary Metals analysis but have been unsure about their yield for PM program. It seems to me to be the same as leasing gold and introducing third party risk. What is the guarantee that the borrower of the gold can return it and pay the interest in metal? Thx TBM
August 11, 2020 at 5:34 pm |
Hi Bigman
First I will post the link for Yra, that disappeared:
:https://www.federalreserve.gov/monetarypolicy/files/FOMC_LongerRunGoals.pdf
As far as Monetary Metals, I: will do my best to break it down. MM leases out gold to companies that use gold. Such as Jewelers, bullion dealers.
My metals stay in storage, at no costs to me, until I sign a leasing agreement. Than I am in control of how much metal I want to, if any, to allocate to such lease. Leases last from 6 months to one year, not more. Interest rates have been from 2% to 4% for more riskier leases.
When a potential lease comes up, I receive a detailed report that includes. What the business is using the gold for, the risks involved and how those risks have been mitigated by MM. For example, through insurance,gold not on counter party balance sheet, able to visit the vault, etc..: (too many to list here).I can also dig further on my own if I wish.
Basically, my gold provides collateral for a business that uses gold. This mitigates the dollar risk of the gold price for the business. IE: they know in advance how many ounces of gold they will have to repay.
Here’s the free market aspect to it. Lessors and lessees have to agree on an interest rate to make the deal happen. And,like Keith says, since no one will lend out their gold for a negative interest rate, how real money is suppose to work,.(I would just take mine home and bury it.) no deal is made if the parties cant agree on a rate.
I believe that MM has sample lease examples on their website.
I hope this helps
August 12, 2020 at 12:10 am |
After your leasing agreement, if your gold is collateral for 3rd party business loans, wouldn’t it be the case that your gold is now a guarantor and secondly the loan issuer now by law have first rights to your gold in event of default regardless of how safe it sits in your vault. Basically somebody’s terms and conditions have overriden yours in another legal paper which you have no perview?
Is this the correct layman understanding as i am no expert?
August 12, 2020 at 6:18 pm
Redoctober
I’m not a lawyer and cannot specifically answer your question.
I don’t believe it’s a “loan”. As all businesses need a line of credit to operate the gold acts as collateral for the credit.
Yes, there are risks involved that is why you earn a return. Steps have been put in place to mitigate those risks and due diligence has been performed. Pros and cons have been weighed.
Who said: “six percent interest can draw gold from the moon,”
August 13, 2020 at 9:15 am |
Nice ongoing discussion as I am preparing to restart the writing—-many podcasts to post and doing one tomorrow night with richard Duncan
August 14, 2020 at 8:00 am |
Good news!