Archive for the ‘SNB’ Category

Notes From Underground: James Gorman Gets Duped, So He Dupes the Nation

June 15, 2017

It seems that Morgan Stanley Chairman/CEO James Gorman was duped by an e-mail hacker. So in measure for measure the Morgan Stanley chief tried to dupe the world with his op-ed in the Financial Times on Wednesday. In an opinion piece titled, “The Last Thing Banks need Is Yet More Rules.” Gorman said in response to the idea of a reinstatement of Glass-Steagall:

“More than  80 years ago, the U.S. enacted the Glass-Steagall legislation that separated traditional commercial banking from investment banking. Over the ensuing seven decades, as global trade and finance expanded,the divide between commercial and investment banking broke down. Recognising that global companies needed full-service banks, the U.S. embraced a system adopted by most other countries, including Germany, Japan, Canada, the U.K. and Australia. Ending Glass-Steagall [the law was repealed in 1999] had nothing to do with the financial crisis, and there is no reason to return to it.”

(more…)

Notes From Underground: Warren Knocks Out Mnuchin

May 18, 2017

In Thursday’s testimony before the Senate Banking Committee, Treasury Secretary Steven Mnuchin took a beating from Senator Elizabeth Warren over the issue of Glass-Steagall. There are many policy issues in which I disagree with Senator Warren but when it comes to Wall Street regulation, she is one of the most knowledgeable people in the Senate and far beyond those walls. During the Great Financial Crisis she appeared regularly on CNBC and Bloomberg television networks. While merely a Harvard law professor, she offered great insights and understood the depths of the problems that caused the crisis. If Jamie Dimon had not blocked her appointment as head of the Consumer Finance Protection Bureau (a wild conjecture on my part), she would not be a U.S. Senator. After president Obama caved in to Wall Street pressure, Warren ran for the Senate in Massachusetts in 2012, defeating Scott Brown.

(more…)

Notes From Underground: Au Revoir, Marine Le Pen

May 8, 2017

Now we can finally put the French elections behind us as its citizens maintained the status quo and elected Emmanuel Macron to a five-year term. Parliamentary elections follow in June but the two main parties, Socialists and Republicans, aren’t expected to face challenges. But, if the more conservative Republicans gain control of the Parliament and the prime minister post it will force Macron to move further to the right-center. If Macron moves away from the Hollande Socialist camp it will result in political protests from the Left. Macron will experience a difficult presidential term if the government is gridlocked by continual demonstrations. The German chancellor is going to ask a great deal from Macron: fiscal austerity, as well as a restructuring of the French domestic economy.

(more…)

Notes From Underground: A Quick Take On Today’s Key Points

March 23, 2017

The vote on the Trump health care plan is important only from the perspective of what the Freedom Caucus was promised in return for acquiescing to the desires of the White House. President Trump is desirous of a win, any win and the Freedom Caucus seems to know they have great leverage in the current political scrum. Whatever the House passes the Senate will have home field advantage and last bat so the initial Trump victory will Pyrrhic at best. What was compromised to assuage the conservative wing of the Republican party? How far will Trump have bent to bring this deal to fruition? The strident nature of the Freedom Caucus has been elevated and what value was extracted?

(more…)

Notes From Underground: Switzerland Was Named The Fourth-Happiest Country

March 22, 2017

In an inane study of the world’s countries by the U.N. and released on World Happiness Day (what an absurd concept) the land locked nation with its active printing press was heralded as ranking FOURTH while the U.S. fell to 14th. To paraphrase Tolstoy: Happy countries are all alike; every unhappy country is unhappy in its own way. On March 17 Bloomberg ran a story, “Swiss National Bank (SNB) Foreign Reserves Soar, Signaling Interventions.” In February the SNB’s reserves increased by 3.8% to 668.2 billion francs, “the biggest increase since December 2014.”

(more…)

Notes From Underground: Chinese Economic Policy Is Modeled on Kelly’s Heroes Paradigm of Sgt Oddball

May 4, 2016

It is time to invoke one of the great war movies of the anti-war decade, Kelly’s Heroes. The theme is relevant in two ways. First, a ragtag group is trying to steal a hoard of German gold from a heavily guarded town and divide it up among themselves as booty from the war (similar to Chinese desire for Western-owned gold). Secondly, one of the key characters is Sargent Oddball, a tank commander played by Donald Sutherland,who will not tolerate the negative waves of people who doubt the success of the “mission.” Today, Nasdaq ran the article, “China Warns Economists to Brighten Outlooks.” Through various sources the Chinese authorities said, “Securities regulators, media censors and other government officials have issued verbal warnings to commentators whose public remarks on the economy are out of step with government upbeat statements …” The formal policy is “zhengnengliang,” translated as POSITIVE ENERGY or as Oddball would command, “don’t give me any negative waves.”

(more…)

Notes From Underground: “A Single Spark Can Start A Prairie Fire” (Mao, 1930)

January 11, 2016

You don’t have to be a weather man to know which way the wind is blowing, or so says Bob Dylan. As long as all things are emanating out of China it may be the time to dust off the sayings of Mao for as the talking heads are reminding us daily: “The East Wind Is Prevailing Over the West” in all things financial. THE PROBLEM FOR ME IS I DON’T ACCEPT THAT VIEW AND AM IN THE CAMP OF FORMER DALLAS FED PRESIDENT RICHARD FISHER that all roads lead to the FED and certainly the European Union for providing the tinder for a financial prairie fire. There has been so much volatility during the first six trading days of the year it is difficult to get a handle on what is  algo-driven non-fundamental and what may be the commencement of a change in previous momentum trades. Today I will go through a list of POTENTIAL SPARKS TO IGNITE THE  FLAMES OF A FINANCIAL FIRE so that we can be aware of what constitutes  a genuine change in momentum:

(more…)

Notes From Underground: Before a Short Hiatus …

December 10, 2015

I will be taking a few days of “unwind” before next Wednesday’s Fed meeting and Chair Yellen press conference. Last Friday, Rick Santelli and I talked about the ECB and I am posting that but the last few Christmas Eves Rick has had me on and we discuss predictions about the coming year. There are no safe predictions from this blogger as I will venture far from shore but always try to put my best thoughts forward.

(more…)

Notes From Underground: As We Await the Day of Judgement

September 10, 2015

This Sunday begins the Jewish Holiday of Rosh Hashanah, which brings on a very solemn 10-day period of deep introspection as God judges the entire world for the coming year. So a very happy, healthy and prosperous year for all readers of Notes From Underground. Following the Monday and Tuesday’s days of reflection we come to the financial market’s judgement day, the Fed’s decision on interest rates. Let’s be as patient in reacting as the FED has been in raising interest rates. Will the FED act to raise rates and disregard all its fears of market turmoil? The FED has a poor history of making firm decisions in the face of creating violent market reactions. The Bernanke Fed failed miserably in an attempt to end QE, cowering in the face of the “taper tantrum.”

(more…)

Notes From Underground: Is Tomorrow’s Number a Meaningless Statement?

February 5, 2015

Yes, except if the nonfarm payroll numbers comes in above 300,000 jobs created and/or average hourly earnings rise above 0.4%, reversing last month’s -0.2 %. Consensus is for payrolls to grow by 235,000 but that is in line with the average of the last six months so it will have to be a strong number to give some substance to the more hawkish voices on the FOMC Board. More importantly for Chair Yellen will be the wage growth for if wages lag job growth the Fed will be reticent to raise rates, especially in the face of a strong dollar or the euphemism of” international developments.” In my humble opinion, global financial conditions in the light of European instability will play a larger role in the Fed’s decision to raise rates, which is why I maintain it will take a large number to give voice to those Fed voters wishing to raise rates.

(more…)