Posts Tagged ‘Federal Reserve’

Notes From Underground: The Sins of Wages

July 17, 2018

Tuesday was the first round of the Federal Reserve Chairman Jerome Powell’s semi-annual testimony to Congress. The Senate Banking Committee questioned Powell about recent Fed decisions and looked for some guidance as to how the FOMC viewed the current state of the domestic and global economy. There were many questions about the impact on the economy from the Trump tariffs, which the Fed chairman adroitly evaded and put the onus on Congress, where it rightly belongs.

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Notes From Underground: Why All the Noise From Friday’s Unemployment Data?

April 6, 2014

Friday’s jobs data was almost as the pundits had predicted. Why was there so much activity when the nonfarm payrolls and average hourly earnings and length of work week were basically the right on the consensus predictions? Yes, I’m aware that the “whisper number” was 250,000-plus due to the removal of harsh weather conditions. However, if that was the case, the dollar should have weakened and the short-end of the U.S. yield curve OUGHT to have outperformed the long end resulting in a STEEPENING of the 2/10 (none of which occurred). The 2/10 curve actually flattened as the U.S. stock markets began selling off, a drop initiated by the Nasdaq 100’s key momentum stocks. The weekly charts of the S&P and the Nasdaq took different turns as the SPOOs closed higher on the week and the Nasdaq closed lower, an indication of some reallocation from the momentum-oriented stocks to the more solid large-cap, earnings-based equities.

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Notes From Underground: Some Things to Ponder For the Second Quarter

March 31, 2014

As I was reading Zbigniew Brzezinski’s book, The Grand Chessboard (1997), this insight into the Russian desire to resurrect its political stature struck me for its prescience about the significance of present developments in the Eurasian heartland. Brzezinski writes, “However, if Moscow regains control over Ukraine, with its 52 million people and major resources as well as its access to the Black sea, Russia automatically again regains the wherewithal to become a powerful imperial state, spanning Europe and Asia. Ukraine’s loss of independence would have immediate consequences for Central Europe, transforming Poland into the geopolitical pivot on the eastern frontier of a united Europe.”

It is important to understand that the moves by Vladimir Putin have deeper meaning and importance the superficial analysis offered up on the network and financial news channels. This situation is going to be with the markets for a long while and its possible impact on the global financial scene should not be undervalued by the daily movements in the world’s equity markets. Putin seems to be timing his adventure on the basis of a U.S. president who has little desire to entangle itself in any foreign adventures and a Europe so is militarily weak and financially fragile. It seems that Putin has picked a propitious time to test the waters of global fortitude against Russian designs for a resurrection of its influence in the mapping out the future of the Eurasian land mass. Oh, by the way, the Russian rouble closed much stronger for the month after making all-time lows at 36.85 roubles to the dollar on March 3. The rouble ended the day at 35.03 to the dollar. Just putting perspective to overcome much of the noise.

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Notes From Underground: Dear Senate Republicans & Banking Committee, STFU

November 13, 2013

Ladies and Gentlemen of the Senate: Just put forward the candidacy of Janet Yellen by acclimation because it is a done deal. It cannot be stopped and so any posturing for the voters back home and any potential donors is a waste of time and energy. Also, don’t provide the idiot talking heads with any “red meat” to keep their empty heads talking. This afternoon’s release of Yellen’s testimony proves that Vice Chairwoman Yellen is a very intuitive politician. HERE IS THE MOST ASTUTE POLITICAL PIECE OF THE STATEMENT (in my opinion):

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Notes From Underground: Jackson Hole is Running On Empty (September 3 REISSUE)

May 14, 2013

Notes From Underground will resume Thursday night. I wanted to issue an old piece from the day after the Jackson Hole Symposium of August 2012. It refreshes where were then and looking at the world now. Yes, we’ve reissued this piece before, but once you reread, you’ll see it’s still wildly relevant.

I also want to remind my readers: Bernard Connolly will be on with Rick Santelli this Thursday morning on the Santelli Exchange. It takes place between 10-10:30AM CST. Enjoy (and click on link below to read the post)

 

Notes From Underground: Jackson Hole is Running on Empty

Notes From Underground: U.S. to be the Top Energy Producer (Then Fiscal Compromise is a No Brainer)

November 12, 2012

The Financial Times headline played up the report from the International Energy Agency (IEA) that by 2017 the U.S. will become the world’s largest energy producer. The use of fracking and other newly developed technologies has enabled the exploitation of previously uneconomic carbon deposits. In 1974 I sat in an economic geography class in which the professor claimed that the U.S. was full on shale oil and gas and its development was merely a matter of price. Being a know-it-all about the Club of Rome studies on the limits of growth, I entered into a lively debate with the prof about why he was wrong and the effects of the energy crisis was going to lead to the demise of Kapitalism. If I could remember his name I would send an appropriate apology.

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Notes From Underground: BIDEN GOES TO CHINA–“YOUR MONEY IS SAFE WITH US”

August 17, 2011

(and I Thought Madoff Was In Jail)

It seems that Vice President Biden used some of his miles to head to China for his summer vacation. The Chinese have been vocal critics of the U.S. and its profligate ways. As the largest foreign holder of U.S. Treasury debt, the Chinese have more than a passing concern in the outcome of U.S. economic and fiscal policy. The Chinese are not the single largest holder of U.S. debt as that award goes to the FEDERAL RESERVE. The Obama administration sent BIDEN to reassure the Chinese that the U.S. still maintains a FICO score more than 720.

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Notes From Underground: The Greek Parliament Shows Its Confidence … Will the Markets Do the Same?

June 21, 2011

In a widely predicted outcome, the Greek Parliament voted 155-144 to sustain the government of George Papandreou and allow for next week’s vote on the new austerity budget–and the release of another round of bailout funds. The global equity markets and the EURO sustained a second day of rally as investors were willing buyers of risk in the HOPE of a respite from the turmoil of European sovereign debt. Tomorrow’s Financial Times has an article about Greek citizens cashing in their EUROS for GOLD.

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Notes From Underground: Budget Battle 2012/Presidential Election Year

April 13, 2011

Today’s headline in the Financial Times, “U.S. LACKS CREDIBILITY ON DEBT-SAY IMF.” I rarely agree with the IMF but on this issue as the readers of NOTES are aware, I can find common ground with the economists at the world’s commentator on global economics. It is easy to say the U.S. lacks credibility when the world is observing the budgetary circus that has visited Washington, D.C. for the past two weeks. The CREDIBILITY issue is not solely with the president and the legislature but also with the FEDERAL RESERVE. If the FED errs in its aggressive monetary easing it will be a horrendous blow to the U.S. and the global financial system. The FED has so much at stake because it has more than $2 trillion of DEBT INSTRUMENTS on its balance sheet and if the U.S. is deemed to be an unworthy borrower just what will the value of those assets be on the market.

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Notes From Underground: The Irish “AYES” lead to “NOES” for FIANNA FAIL

March 1, 2011

The elections in Ireland went as expected but not as some hoped. A coalition will have to be formed as the FINE GAEL failed to win an outright majority. It appears as if FINE GAEL will have to coalesce with the Labor Party. What remains to be determined will be the effort to renegotiate the borrowing rates previously established with the European Fianancial Stability Facility (EFSF). Fianna Fail was so badly trounced from its economic policies and its bending to the desires of the large European Banks.

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