Archive for the ‘Fed’ Category

Notes From Underground: A Podcast for the Road

June 10, 2020

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.

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Notes From Underground: “Hoist With His Own Petard”

June 9, 2020

This quote from Shakespeare explains the position that the Jerome Powell-led Federal Reserve has created for itself. The U.S. central bank has been captured by its massive monetary stimulus in addition to its willingness of aiding and abetting the Mnuchin Treasury by purchasing of hundreds of billions of Treasuries. The FED has maintained that its dual mandate provides the theoretical and practical approach to keeping interest rates lower for longer.

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Notes From Underground: Policy Trumps Data

June 6, 2020

The MISS by the economic analysts of Friday’s unemployment data has rendered all data as tertiary relative to the policy that has been enacted to counteract the malicious effects of the Covid-19 shutdown. Global stock markets have rallied as if normalization has occurred and UNEMPLOYMENT has returned to its historic lows of 3.5%.

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Notes From Underground: The Economic Consequences of President Trump

May 17, 2020

(NOTE: The following post is not political in any sense, but just a criticism of a major ill-conceived POLICY.)

This is a story of two pivots.

The first is Federal Reserve Chairman Jerome Powell in January 2019. The second is President Donald Trump in May 2020.

Powell’s pivot away from interest rate increases and balance sheet shrinking created a significant rally in equity and asset prices. Trump’s pivot on the DOLLAR will have disastrous results that are manifested in the GLOBAL DEFLATION that central banks have been trying to prevent. What is the reasoning behind the President’s recent shift away from a weak dollar to promoting the positive outcomes of a strong currency?

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Notes From Underground: Myopic Gibberish

May 12, 2020

The Tweeter-in-Chief on Tuesday was pushing on a string as he called for NEGATIVE INTEREST RATES (again). The Federal Reserve is also debating in public the idea of negative interest rates and seemed to believe there are better tools to be utilizing than rates below zero.

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Notes From Underground: May Day or Mayday Mayday Mayday?

May 3, 2020

On Friday the world “celebrated” May Day, when the red flags of the world’s workers united in solidarity are traditionally unfurled. The fall of the Berlin Wall unleashed the rush for economic development and a plethora of workers in search of capital to lift its productivity. And for the past 30 years have capital and wages have been elevated for the emerging economies yet stagnant for the developed region. It has been capital that has been the recipient of increased profits as global capital went to the lowest wage regions.

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Notes From Underground: Tomorrow the Fed, Then the ECB

April 28, 2020

On Monday, the Bank of Japan promised to buy all the bonds (or as much as necessary). On Wednesday, the FEDERAL RESERVE will offer little as they will be following Dr. Fauci’s lead and proclaim to know little about the end of Covid-19, as Chairman Jerome Powell should. But the key will be the market’s search for a timeline in response to a turn in the economy. Wall Street is looking for forward guidance as to when the Powell Fed will PIVOT from the massive liquidity injections. Will it be an inflation target, employment condition or a return to positive GDP? Powell will use DON’T KNOW and will be patient in removing stimulus as wanting to see any secondary effects.

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Notes From Underground: Whatever Happened to the Taylor Rule?

April 27, 2020

First off, I’d like to thank everyone who contributed to the Santa Mike/Covid relief at St. Vincent de Paul, a long-standing charity that gives every penny to those seeking help for hunger, clothing and medical assistance. Thanks to you, we have contributed more than $30,000 and for that Santa Mike is very grateful. As Mike keeps telling me, “Do you know how much $30,000 dollars of food is when bought in BULK?” This truly makes a difference for those struggling to get by in these extremely difficult times. SO THANK YOU ALL SO MUCH. Every donation matters and there are multiples because Peter at St. Vincent de Paul has procured some donors who are doing matches. That only makes NOTES FROM UNDERGROUND worth doing in even bigger ways.

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Notes From Underground: There’s a Hole In Daddy’s Arm Where All the Money Goes

April 19, 2020

The headline is from one of my favorite John Prine songs. The great wordsmith died due to complications related to COVID-19, so in a tribute to one of his great songs , “Sam Stone” (about a Vietnam wet who comes home a heroin addict), I use this to define the recent work of the FED and the U.S. Treasury.

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Notes From Underground: Just a Song Before I Go

April 5, 2020

At this time of great chaos in the world I am going to take a 10 day hiatus to sit back and reflect as it is the time of Passover and Easter. These holidays will take on special significance this year as the Covid-19 impacts our plans.

So as I retrench I put forward the words of the Prophet Micah for something to contemplate: “To Act Justly, and to LOVE MERCY and to walk HUMBLY with YOUR GOD.” Wishing all my readers a meaningful period of the holidays before us. I may post a podcast I recorded this morning with Anthony Crudele but that will be it, although I will respond to all questions in an effort to stay alert to critical issues in a rapidly changing global environment. Now to the issues before us.

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