Last week, the leaders of the world’s central banks were attempting to regain their souls. FEDERAL RESERVE Chair Jerome Powell told tales of woe as workers were suffering as inflation rose. Crush the evil inflation out of the system is the battle cry in an effort to recreate the melodrama of Andrew Mellon in 1931: liquidate, liquidate, liquidate in an effort to Calvinize the evil from the economy by crushing demand. Powell did note that housing had weakened SIGNIFICANTLY and financial conditions HAVE TIGHTENED CONSIDERABLY but will have to be patient because monetary policy acts with a lag.
Posts Tagged ‘ECB’
Notes From Underground: ‘Twas the Week Before Christmas
December 18, 2022Notes From Underground: Cui Bono? (Who Stands to Gain?)
November 28, 2022When it comes to making sense of the global financial system I always have to ask the question who is benefitting from monetary policy? The recent podcasts from the Financial Repression Authority has provided a good backdrop to understanding the importance of debt markets — and by default the significance of the US DOLLAR as the bulwark of the financial system. The mobility of money or what serves the process of globalization has revealed many of the fragilities of the DOLLAR as a funding vehicle because of the FEDERAL RESERVE’S policies, which allowed all the other world’s central banks to sustain a prolonged period of zero and even NEGATIVE NOMINAL RATES.
Notes From Underground: Returning to the Turmoil
October 20, 2022After a period of personal introspection it’s time to return to the turmoil of the world. What better way to reenter than with a couple of podcasts.
Notes From Underground: Get Smart
March 13, 2022There are so many things to consider when trading in the current climate. First and foremost, CAUTION is the key word, not FEAR. As Billy Joel would say, “We didn’t start the fire,” but as traders and investors we have to dance on the embers. The trading environment is dangerous because the algo-driven trading shops are being bombarded with an endless flow of headlines and outlets fighting to be the first to report any news story. Let the speed merchants draw markets to levels where risk can be measured rather than trading just to trade.
Notes From Underground: A Quick Hit On the State of Chaos
March 6, 2022First, our hearts go out to all suffering in the world of insanity brought on by senseless wars that diplomacy OUGHT to have been able to prevent. The world always returns to the insanity that brought us to World War I when nobody could stop the trains once set in motion. As Phil Ochs sang, “It’s always the old who lead us off to war, it’s always to fall, look at all we won with the saber and the gun, tell me is it worth it all?” But here we are and as always the world continues to focus on the minutiae of life, including the financial outcomes responding to the high-speed headlines driven by algorithmic speed machines. There is no context to any news just manufactured volatility fabricators of the latest musings of some “news” outlets’ favorite expert. But as Hyman Roth said so clearly: “Michael this is the profession we have chosen.”
Notes From Underground: The Soft Bias of Low Expectations
February 3, 2022Tomorrow is the first Friday of the month so it is known on trading desks as UNEMPLOYMENT Friday — or Unenjoyment Day for some — as volatility will reign in the early part of the trading day. As we have discussed ad nauseum volatility is the predominant theme as all the world’s central banks discuss the removal of QE, as well as raising the cost of money through returning nominal rates from a steep NEGATIVE REAL YIELD to some normal zero or hopefully a POSITIVE REAL YIELD. But headline inflation reveals that all central banks have a great task ahead in an effort to reach what POWELL and others refer to as normalcy.
Notes From Underground: The Week That Was
December 19, 2021This past week has been the most challenging to recap because at least 20 central banks released statements about their monetary forecasts and outlooks. The most significant banks that we were watching — the FED, SNB, BOE, ECB and BOJ — performed as expected as the FED, ECB and BOJ announced the expected outcomes.
The Bank of England raised its overnight lending rate by 15 basis points as they had already ended asset purchases so a minimal rate increase was all they had to give in order to slow the rise in headline inflation. The Powell FED took the most DOVISH route possible in an effort to placate the Biden White House and its effort to stem the narrative of headline inflation and election outcomes. We at NOTES FROM UNDERGROUND had contemplated a complete end to QE but Powell (in his efforts to do something) merely doubled the pace of tapering laying the outcome to a finality in March rather than June. This is only important if the FED maintains its “forward guidance” of no rate hikes until the U.S. central bank’s BOND PURCHASES have concluded.
Notes From Underground: It’s Hard to Believe
December 8, 2021A Note From Notes
On December 7, 2009, NOTES FROM UNDERGROUND published its first post and we’ve shared a few thousand thoughts since then (all archived at WordPress and for those on CQG they available thanks to the great efforts of Stan Yabroff). In sifting through this treasure trove I am proud to say this has been an arduous but rewarding endeavor. The amount of work is great especially because so many of these musings have been time sensitive.
Then in the last five years, I’ve been fortunate enough to work with the Financial Repression Authority to elevate the discussion surrounding these thoughts with some of the greatest minds in the business — Felix Zulauf, Marc Faber, Jim Bianco, Peter Boockvar, Lacy Hunt, David Rosenberg, Louis Gave and so many others.
So as I scroll through the voluminous posts, podcasts and CNBC appearances, I’m in awe of how we’ve attempted to open up the world of financial markets to deep analytical exegesis of important investment ideas on a time scale from one hour to years depending upon the amount of leverage involved in the trade. As Louis Gave once said, “I am not paid to forecast for my clients but to adapt,” that sums up the endeavor of this blog. Over the past 12 years I have hoped to get my readers to adopt to the illogical exigencies of the geo-political world. The rationalists do not read NOTES FROM UNDERGROUND because they know where prices OUGHT to be.
But, where do we go from here? This is where you come in, dear readers. I’d be interested in understanding how you best consume this information. Maybe it’s a 15-minute daily chat with FRA’s Richard Bonugli and other guests. Either way, we’re going to try and monetize this wealth of information, and offer up my wisdom to large traders, sovereign wealth funds and family wealth offices and the like. It’s been so enriching interacting with many minds around the world. I am beyond grateful to experience, teach and, most importantly, learn from the likes of Dave Richards, Mike Temple, Big Man, Professor Waspi and many more.
In that vein, I am posting a podcast that was recorded about two weeks ago, a roundtable of sorts featuring Jim Bianco and Peter Boockvar. This may be one of the best ways to advance NOTES FROM UNDERGROUND.
Many Thanks,
Yra
Notes From Underground: Odious, Indeed
November 21, 2021We at Notes From Underground on Oct. 31 wrote a post titled, “The Odious Designs of ECB Policy.” It noted that during the ECB post-meeting press conference President Christine Lagarde said — in response to a question of whether the ECB would coordinate TAPERING with the world’s other central bank — “comparisons, for good reason are ODIOUS, simply because we are not thinking about the same economies.”
Notes From Underground: The Odious Designs of ECB Policy
October 31, 2021I’m posting this week’s podcast with the highly respected Peter Boockvar. This is one of the best interviews we’ve done with Richard Bonugli as we get into foreign currency, yield curves, energy policy surrounding nuclear power plants, and as usual, an in-depth discussion on precious metals.
The podcast was recorded Tuesday, prior to the interest rate decisions from the Bank of Canada, the Bank of Japan and the European Central Bank.