Archive for the ‘Fed’ Category

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: Plus ça Change, Plus C’est La Même Chose (An Ode to Jerome)

June 21, 2021

As promised, here is the podcast I recorded with Anthony Crudele. There is a great deal expressed in 52 minutes following the June 16 FOMC meeting. The fact that Chair Jerome Powell kept on keeping-on with full blown asset purchases leaves me in the camp of very little change regardless of the DOT PLOTS. As Powell said about the FED (and Wall Street economists), not a very good record of forecasting.

Click here to listen to the podcast.

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Notes From Underground: From Tweets to Tweaks

June 20, 2021

Happy father’s day to all who are one and have had one. Just nine months ago the markets were experiencing convulsions as the then-U.S. president would unleash tweet after tweet at all hours. We certainly don’t miss the key-word-driven algos creating volatility with the tip of their finger. The markets got a jolt last Wednesday when the Fed tweaked its administered rates — interest on excess reserves and the offering yield on its reverse repo facility — by 5 basis points in an effort to prevent short-term rates such as TREASURY BILLS from pushing into negative territory on a SUSTAINED basis as cash continues to flood the market, a consequence of the central bank’s ongoing QE ($120 billion a month). Adding to the deluge is the U.S. TREASURY, which has been running down its cash balance from an all-time high of $1.8 trillion.

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Notes From Underground: Schauble Pivots, Brainard Postulates

June 6, 2021

The unemployment data was not as robust as expected but not bad since hourly wages rose above consensus, the work week remained elevated and the jobless rate dropped to 5.8%. The headlines are always subject to severe review doing these tumultuous times. The question remains: Why did the BOND market experience a sizable rally even as the DATA was well within range of expectations. There is a great deal of pressure on the U.S. overnight market as vast amounts of liquidity searches for a home.

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Notes From Underground: A Global Macro Podcast for Memorial Day

May 27, 2021

Just in time for the Memorial Day weekend: A fresh podcast well moderated by the Financial Repression Authority’s Richard Bonugli. This was a conversation with South African Piet Viljoen and we go around the world. It is a pleasure to share thoughts with those outside the U.S. Nothing bothers me more than the arrogance of CNBC’s tagline of “Live From the Most Powerful City in the World.” That’s so irritating, especially when many mornings the most market-moving news is coming from Beijing. Well, pour a stiff libation, perhaps Scotch or a Japanese whiskey, and keep the questions and comments coming.

Click here to listen to the podcast.

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Notes From Underground: To Russia With Love (Or Blinken Blinked)

May 23, 2021

Ten days ago, we published a blog post titled, “Sanctions Are Sanctimonious.” And lo and behold, this past week the U.S. moved to remove sanctions on the completion of the NORDSTREAM 2 pipeline, allowing Russian gas to flow freely and readily into Germany without paying the massive transit fees to the Ukraine. This is the culmination of the project promoted by previous German Chancellor Gerhard Schroeder.This story is huge for it shows that the world is — as NOTES portrays it — far more dynamic than the static analysts would have us believe.

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Notes From Underground: Is the Fed In a War?

May 16, 2021

I pose this question as a challenge to all of those traders and investors, and a call to action. There is so much discussion about the onset of inflation but do the inflationists have the fortitude to attack the FED where it hurts: the long end of the yield curve? The primary focus of the FED has been on the part of the QE purchases has been the shorter end as 80% of the FED‘s balance sheet is five years or less. If the inflation concern is of the magnitude suggested by the mainstream media then market participants OUGHT to be selling the longer duration Treasuries because as we know the Wall Street mantra is DON’T FIGHT THE FED.

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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: How To Deal With Transitory Data

March 18, 2021

First, thank you to all  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: 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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