This is a question that plagues NOTES FROM UNDERGROUND, where we believe 2+2=5 is a beautiful thing. The objective force created by markets has always perplexed us? U.S. Treasury Secretary Janet Yellen keeps sounding the alarm that currency values must be established by markets. This is meant to be a threat to nations that attempt to intervene through selling their currencies in the open markets in an effort to keep downward pressure on currency values to support their economies.
Archive for the ‘RBA’ Category
Notes From Underground: What Constitutes Market Forces?
February 2, 2021Notes From Underground: Central Bank Policy Peeks
June 2, 2020On Monday night, the Reserve Bank of Australia issued its policy decision and as expected, there was no change in overnight rates at 0.25%. More importantly, the RBA is targeting three-year Aussie government bonds at 0.25%, keeping the yield curve flat or inverted out to that point.
Notes From Underground: A Microscopic Germ Packs a Wallop
March 2, 2020There is no doubt little organisms can wreak havoc in ways that blowhards could never imagine. People are trying to assess the financial impact by looking at previous pandemics. This is flawed analysis because each pandemic is different depending on the global circumstances and the morass for incubation. During the Cold War people did not move freely so political containment acted as a drag on the spread of disease.
Notes From Underground: I Am Not Your Beast of Burden
October 29, 2019In the global financial system, the central banks are indeed the are system’s beasts of burden. With the November FED FUNDS contract pricing in 93% chance of a rate cut, Federal Reserve Chairman Jerome Powell will attach himself to the plow and till the soil, spreading more fertilizer for equity purchases and further financial repression of creditors. As we discussed Monday, the week is filled with central bank meetings of importance and further impacted by unemployment and GDP data. But there is so much more in the political realm that we haven’t even entertained:
Notes From Underground: If You Don’t 2+2=5, Then Read No Further
August 6, 2019The tagline of this blog has always been “where 2+2=5 is also a wonderful thing.” If you believe that the world is balanced and rational in all things financial then this BLOG is not for you. Unlike Fyodor Dostoyevsky’s character, I am not a sick man, nor a spiteful man. I use my deep knowledge of political and economic history to analyze financial markets from myriad angles. This allows for a belief that context is supreme. In this context I posit that President Trump’s decision Monday to name China a “currency manipulator” is a way out for the U.S. from the dissension that has arisen within Trump’s team of advisers as reported over the weekend. If Bob Lighthizer was opposed then indeed President Trump is in a more difficult position than previously thought.
Notes From Underground: Another FRA Podcast
May 1, 2018While waiting for the FOMC‘s rate decision on Wednesday, I am posting a new PODCAST in which I discuss the global macro situation with a woman who whose work I had not been familiar. Nomi Prins has written a new book called Collusion, in which she investigates the role of central banks in its current predicament. I thoroughly enjoyed the 51-minute podcast as Richard Bonugli does a fine job of allowing the guests to discuss in deep detail. I will certainly be buying the book (it was released Tuesday) as it explains in detail what the central banks have accomplished in destroying the signalling mechanisms of capitalism and markets. The Financial Repression Authority has been an important platform for allowing deep discussion on matters of global investment concerns. Enjoy the discussion as I await my readers feedback on the issues we covered and hope it will lead to profitable trade opportunities.
Notes From Underground: William Dudley Starts Goodbye With a “Dud” Speech
November 6, 2017As reported over the weekend, New York Fed President William Dudley is turning in his keys to the printing press and leaving the Fed in mid-2018 to spend more time with his family (Goldman Sachs). In a speech delivered to the Economic Club of New York, the reigning king of the New York Fed praised the central bank for its effort to prevent a collapse of the global financial system. He laid blame for the crisis on all the familiar miscreants but mostly stressed that “the safeguards put in place in response to the crisis are fully appreciated and respected.” President Dudley maintains that the global financial crisis was a result of lacking the tools to regulate the entire financial system and sums up his analysis: “We had woefully inadequate regulatory regime in place,and while it is much better now, there is still work to do.”
Notes From Underground: Clearing Up Some Odds and Ends
August 1, 2016This week brings Prime Minister Abe’s fiscal plan, the Reserve Bank of Australia’s rate decision, the Bank of England’s monetary results and U.S. nonfarm payrolls on Friday. So let’s put some perspective to tonight’s main events. The RBA will announce its overnight interest rate and consensus is calling for a 25 basis point CUT to 1.5%. Analysts believe that the weakness in the natural resource sector is aiding the reduction in capital expenditure. Also, Aussie inflation is at the bottom of the RBA‘s target range, which provides rationale for the RBA. I am not so sure of a CUT for this is coming at the end of Governor Stevens’s term at the RBA. Dr. Phillip Lowe will take over September 16 so this is the penultimate meeting for Mr. Stevens.
Notes From Underground: A Question of Imbalance
May 3, 2016Yesterday, it was the issue of imbalances and the need for currency manipulation as seen through the eyes of a hegemon in decline. Today there was more criticism of German intransigence as Mario Draghi was pushing back against criticisms from Wolfgang Schaeuble that ECB policy was igniting the fire of the radical right. President Draghi said the ECB was correct in its policies, and current and trade surplus nations were at fault for the continued economic malaise for not embarking on large fiscal stimulus programs. Mario Draghi is lashing out against the German passion for fiscal austerity and labor restructuring, but the ECB President seems to forget the golden rule: He who has the gold makes the rules. I ASK MY READERS TO PONDER THE QUESTION (AGAIN): Who guarantees the balance sheet of the European Central Bank?
Notes From Underground: The FED … Unsafe at Any Ultra-Low Rate
November 30, 2015Last week, in the middle of gorging our material senses, Janet Yellen was responding to a letter from Ralph Nader, a well known consumer advocate who took the Bernanke and Yellen to task for keeping interest rates too low, resulting in asset inflation for Wall Street and the very wealthy while MAIN STREET was “rewarded” with zero interest rates and almost NO returns on passive, low-risk credit channels. Yellen repeated her third grade teacher tutorial about how savers have indirectly have benefited because of the bounty of jobs available for them and their children and grandchildren and they should stop complaining because home prices have increased to pre-crisis levels in many parts of the country–all because of the wonderful work of the FED and its QE programs. (Even as Carmen Reinhart and other top-level economists have criticized the FED for prolonging FINANCIAL REPRESSION in order to insure against inflation staying below the FED‘s self-imposed mandate of 2 percent.)