Posts Tagged ‘Debt’

Notes From Underground: We Are All Part of the Same Hypocrisy, Senator

November 29, 2016

The world is all abuzz with the good feelings radiating from the aftermath of the Trump victory. However, no matter how long the U.S. equity market rallies, be certain that Trump is not draining the swamp of Washington, D.C. He is proving to be a caretaker. Today’s pick of Elaine Chao for Transportation Secretary is just more of the same. Ms. Chao is certainly qualified. After all, she has an MBA from Harvard, but being a past member of the Bush Cabinet means we are using old, worn-out tires. The Transportation Secretary will be overseer of many of the INFRASTRUCTURE PROJECTS the Donald has promised to deliver. The pork barrel these projects will be dipped in will be beyond lucrative and the wife of Mitch McConnell ought not to have been given this role.

(more…)

Notes From Underground: Oh, When Will They Ever Learn?

November 28, 2016

This is a tough POST to write  for I will criticize a newspaper I have read every day for at least 30 years. (In fact, I still have it delivered on my doorstep and read most of it online in the evening before the hard copy arrives.) The London Financial Times had a front page story, “Troubled Italian Banks Face Fresh Risk of Failing If Renzi Loses Vote.” This is a deplorable headline for it harkens back to the days of the mainstream media warning of dire consequences if Brexit passed and the Trump was elected president. THIS IS SCARE MONGERING. It raises the question: When will the Davos crowd EVER LEARN?

(more…)

Notes From Underground: We Were At It Again

November 22, 2016

Tonight I am posting today’s Santelli and Harris exchange (click on the image at the end of the post). (It is with gratitude that I thank Rick and his wonderful producer Lesley McKeigue for they keep providing me a with a platform to express views that are based on almost 40 of trading experience.) The Santelli Exchange has allowed me to meet and share views with some of the most respected minds in the financial community: Art Cashin, Jim Bianco and the list continues to go on and grow. Thank you my readers for allowing me time to deal in dialectic exchange and be challenged in a constructive method to enhance my knowledge. Remember, it is not validation but dialectic that I strive for in Notes From Underground.

(more…)

Notes From Underground: Old Friends

November 20, 2016

Time it was

and what a time it was, it was

a time of innocence

a time of confidences

long ago it must be

i have a photograph

preserve your memories

they’re all that’s left you [Simon & Garfunkel]

(more…)

Notes From Underground: The Loudest Sound In the Universe Is a Habit Breaking

October 6, 2016

The markets have been in a lock-step since easy central banks have been pushing bond yields lower and equity prices higher. (Currencies are a mixed bag depending on safe haven status, high yields or commodity-tied.) The correlation is still in play as now previously profitable trades are hearing the clarion call of higher yields leading to lower precious metals, lower bond futures, some softening in commodity prices (oil excluded), a rally in the U.S. dollar and stable equity prices. Those shifting out of some long-held bonds are searching for returns in high quality stocks with a reasonable dividend. Earlier this week, global equity markets were sold as a ridiculous rumor ran through the markets that the ECB was contemplating tapering its QE program, a la the Bernanke Fed. Today, ECB Board member Vitor Constancio ( and vice president from Portugal) denied that the ECB had any inclination to curb its QE program. This led to an immediate rally in equity markets and brought the bond yields lower. Of course a Portuguese central banker on the ECB would be opposed to any tapering of QE as Portuguese 10-year note yields are at 3.51%, a significant premium to the other European sovereign debt markets (except Greece).

(more…)

Notes From Underground: The Basel Accord Gets Watered Down. What Are The Potential Impacts?

January 8, 2013

In the most significant news over the weekend, the Basel Committee announced that it was backing off from the implementation of the 2015 enhanced capital requirements for banks. Under the original Basel III requirements, global banks were going to have to have enough LIQUID ASSETS to be able to sustain a possible financial crisis of 30 days. The ability to sell assets to meet a possible run meant that banks would be forced to hold a larger amount of high quality, easily sellable assets. European banks have been clamoring for relief from the new capital rules for fear that the new standards would create less bank lending as banks rushed to shore up their balance sheets. U.S. banks were supporting the lobbying efforts by the European banks and thus the Basel Committee showed forbearance and lessened the possible impact by extending full compliance with the new regs out until 2019.

(more…)

Notes From Underground: Policy Should Set Stock Prices. Imagine That

December 27, 2012

The ideas CNBC is spreading about the FISCAL CLIFF is just absurd. The addiction to higher stock prices has meant that a failure to get the equity market to rally due to falling off the “CLIFF” prevents quality policy from being attained. Going over the “CLIFF” will at least put spending front and center for we are all sure that taxes are going higher so the discussion must get to a genuine discussion about spending, and yes, that means serious cuts in the bloated defense sector. The FED‘s policy means that monetary policy will support the economy into the medium term and alleviate some of the pain from government spending cuts. It’s not drastic austerity but a realistic plan for dealing with rampant profligacy.

(more…)

Notes From Underground: Question of the Day–Which 2-Year Note Yields More, Germany or Japan?

April 10, 2012

The world spins and investors get dizzy. Today the German 2-year note is yielding less than the Japanese two-year! Think about that for a moment as an indicator of the insanity that has enveloped the world. The Germans may well be the best credit in Europe but at this moment the German people are on the hook for a great deal of European DEBT so the SCHATZ is trading at a level that is devoid of reality. The reason for the SCHATZ BID may be a result of the need for high quality collateral to secure REPO borrowing or it may be a signal that citizens of the DEBT-STRESSED PERIPHERIES have grown tired of their domestic banks and are parking huge amounts of money in GERMAN SOVEREIGNS … another example of GRESHAM’s LAW.

(more…)

Notes From Underground: Bernanke, Housing Fails to Provide Economic Foundation

January 11, 2012

In a BLOOMBERG article published today, “Bernanke Doubling Down on Housing Bet Asks Government to Help,” it appears that the Obama administration and the FED are in sync that something needs to be done to lift the moribund residential real estate market. This is certainly not a new development but it shows how the FED is at a loss to explain how the ultra-low interest rate policy for the last three years has FAILED to stem the decline in housing prices and ultimately foreclosures. The FED and others don’t want to admit that this IS A BALANCE SHEET RECESSION.

(more…)

Notes From Underground: Unemployment, No Surprises

January 8, 2012

The unemployment data released on Friday revealed no great surprises as the nonfarm payrolls were right in line with consensus. The markets also offered up no real divergences from the norm as the S&Ps rallied but by day’s end the U.S. equities closed basically unchanged (although the NASDAQ continued to outperform all other indices.) The EURO currency dropped further and wound up losing 1.7% for the week even while the S&Ps gained 1.7%.

(more…)