Posts Tagged ‘Fed’

Notes From Underground: Trump Delivers on Using the Dollar as a Policy Tool

April 12, 2017

In an interview with the Wall Street Journal, the tweeter-in-chief was reported to have said, “The DOLLAR IS GETTING TOO STRONG.” As some pundits discussed, instead of Trump calling China a currency manipulator it seems he wants to use the dollar as a cudgel to pressure others into not embarking on policies to weaken their currencies. As I wrote on April 2:

“The Trump Administration’s efforts to curb the U.S. trade deficit may see the executive branch try to depreciate the U.S. dollar if Secretary Mnuchin and Secretary Ross fail to persuade certain global actors to embark upon policies to adjust their current account and trade surpluses. The Fed’s recent tightening has not rallied the dollar–it actually closed lower on the quarter–so if the political status quo is sustained in Europe and no new political crisis emerges, the DOLLAR will become a barometer of Trump’s policies on trade.”

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Notes From Underground: Nothing Focuses the Mind Like a Hanging

April 5, 2017

First things first, let’s talk about the gorilla in the room, former Richmond Fed President Jeffrey Lacker leaked confidential information and the entire FED has had its reputation tarnished (stifle your laughter). The bigger question is how much is being covered up. Who else was involved in discussing matters of great sensitivity? As my readers know I have raised the issue of the G-30 and Davos being convocations for the exchange of very privileged information. Just google the G-30 and look to see its membership. The dissemination of potentially sensitive market-moving information to highly paid analysts raises serious questions of impropriety. In an effort to the level the playing field (and yes, I was most probably harmed by the leaks to Medley), the FED should not release its speeches or market information to any journalists covering the Federal Reserve.

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Notes From Underground: The Second Quarter Begins

April 2, 2017

First, let me apologize to my readers. I erred when I said Marine Le Pen made it to the second round of the 2012 French presidential election. Reader Al 13 corrected me. It was her father Jean-Marie Le Pen who made it to the second round in 2002 and got trounced, garnering 18% of the vote to Jacque Chirac’s 82%. But read Al 13’s comment on the previous post because he notes that if the second round were to be a choice between Le Pen and one of the two far-left candidates–Melenchon or Hamon–the impact would be highly volatile for European markets.

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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.”

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Notes From Underground: What Was Learned From Draghi and Yellen

March 20, 2017

In reviewing the March 9 ECB and March 15 FOMC meetings, the press conferences emceed by President Mario Draghi and Chair Yellen revealed little but raised questions about serious issues confronting the world’s two key central banks. The ECB maintained its current policy and will scale pack monthly QE activity to 60 billion euros starting April 1 while keeping its deposit rate at NEGATIVE 40 basis points. Draghi bowed deep and heaped praise upon himself and his fellow board members by proclaiming that they saved the EU and the euro. Draghi said “without a single currency there could not be a single market.” It was Draghi’s July 2012 speech of “we will do whatever it takes” to preserve the euro, which saved the currency and logically means the ECB saved the EU.

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Notes From Underground: Just a Song Before I Go

February 14, 2017

We had to get back home

And when we opened up the door

 I had to be alone
Notes From Underground will be taking a short break. I will be relaxing unless something major breaks, in which I will chime in with commentary. I will also be reissuing previous blogs related to Greece and the IMF from these dates:
July 20, 2011
November 9, 2011
November 26, 2012
May 26, 2015
Every now and then I like to revisit the 1,200 or so blogs I have written since December 2009 and take a measure of their relevance in today’s world. WordPress has a high quality archive so my readers can scroll back and look to see where we have traveled since the inception of Notes From Underground.
Now, let’s look at Tuesday’s testimony from Fed Chair Janet Yellen before the Senate Banking Committee, as well as other news tidbits.

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Notes From Underground: A Financial Repression Authority (FRA) Podcast With Peter Boockvar

February 12, 2017

It is a great honor to feature another podcast with Peter Boockvar for The Financial Repression Authority. Peter is certainly one of the regular commentators that I watch with great interest whenever he is on Bloomberg, Fox Business or CNBC. I think we cover much of the global financial landscape. While it may run long, it is a lot easier than reading a 20,000-word blog post. Pour the scotch and give it a listen.

CLICK HERE TO LISTEN TO THE PODCAST EPISODE!

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Notes From Underground: After the FOMC, Do Payrolls Mean Anything?

February 2, 2017

This week has presented us with THREE central bank meetings. The results of the BOJ, FED and BOE meetings were no change to the current policies. So, with inflation on the rise and equity markets close to all-time highs for the U.S. and multi-year highs for Europe, the overseers of credit feel no need to tighten monetary conditions. Chair Yellen and her fellow decision makers are evidently comfortable that the wheels of legislation grind slowly and will wait until there is some evidence of fiscal stimulus and tax reform before applying the brakes to a possibly overstimulated economy. The BOJ was cautious ahead of Prime Minister Abe’s meeting with President Trump. To understand the domestic politics of Abe’s possible bilateral deal with the U.S. I am linking to an article from the Asian edition of the Wall Street Journal by Tobias Harris (my progeny).

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Notes From Underground: FOMC Decision Day Is Upon Us

January 31, 2017

Janet Yellen and the FED take center stage tomorrow and the consensus is for NO CHANGE. The market believes the FED will be on hold until March. BUT I OFFER THIS: If I was the FED chair I WOULD RAISE RATES 50 BASIS POINTS to take some of the risk out of the U.S. equity markets. The S&Ps are virtually unchanged since the December FOMC meeting but the market’s enthusiasm for anticipated tax cuts, regulatory relief, and possible currency intervention means the FED cannot wait to let the economy run “hotter for longer,” especially because of the 4.7% U3 unemployment level. If Chair Yellen wishes to burst the TRUMP exuberance it is time to move aggressively to stem the rise of a potential inflationary threat.

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Notes From Underground: Financial Repression Authority Podcast With Peter Boockvar

January 8, 2017

Yes, the talk of the weekend has been the 0.4% increase in the average hourly earnings embedded in the jobs data. The Fed had three members speak after the data release and all noted that the wage gains may mean that we are at full employment. Jeffrey Lacker was the most concerned about the FED being behind the proverbial curve. My analysis will be later in the week but first I wanted to share the FRA podcast as it includes the wisdom of Peter Boockvar of the Lindsey Group. Enjoy and I look forward to your comments as they will be answered and hopefully provide substance for an upcoming post.

Click here to listen to the podcast.