Posts Tagged ‘Federal Reserve’

Notes From Underground: Was Trump Addressing Mnuchin or Powell?

November 19, 2019

On Monday, Treasury Secretary Steven Muchin and Federal Reserve Chairman Jerome Powell met with President Trump at the White House where the duo “advised” and “forecasted” the economy to the president as 2020 election posturing is in full swing. NOTES FROM UNDERGROUND has maintained that Trump used the tariff threat to cajole Jerome Powell into lowering interest rates, weaken the DOLLAR and end the balance sheet runoff that the administration believed has held back the U.S. economy. What was Powell buying insurance against?

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Notes From Underground: So Many Insights

November 5, 2019

On October 31, I had the pleasure of the recording a discussion with Anthony Crudele and the always insightful Jim Bianco. These spots with Futures Television provide context to many things discussed in NOTES FROM UNDERGROUND. I have been fortunate to have been chosen to appear with many high level global macro analysts.

Then on Sunday, I spoke with FRA’s Richard Bonugli and Dr. Marc Faber, one of the most heralded analysts in the global macro world. We covered the important issues for fifty-five minutes. It is my pleasure to share both of these conversations with you all.

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Notes From Underground: Symmetric Inflation Targeting?

November 3, 2019

Yes, the leaves have shed, frost is certainly on the pumpkin and there’s even six inches of snow in Chicago. The news has been clogged with positive results from the recent phone calls between Lighthizer/Mnuchin and their Chinese negotiating partners. Even Commerce Secretary Wilbur Ross was aglow with positive news from his ASEAN meeting in Bangkok, Thailand. President Trump was tweeting about a possible signing ceremony in Iowa.

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Notes From Underground: I Am Not Your Beast of Burden

October 29, 2019

In the global financial system, the central banks are indeed the are system’s beasts of burden. With the November FED FUNDS contract pricing in 93% chance of a rate cut, Federal Reserve Chairman Jerome Powell will attach himself to the plow and till the soil, spreading more fertilizer for equity purchases and further financial repression of creditors. As we discussed Monday, the week is filled with central bank meetings of importance and further impacted by unemployment and GDP data. But there is so much more in the political realm that we haven’t even entertained:

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Notes From Underground: The Sounds Of Silence, as Sung by Hyman Minsky

October 28, 2019

Equity markets on Monday sustained their global rally as markets across Asia, Europe and the United States powered higher, even as the political backdrop continues to foment greater uncertainty. This week brings three key central bank meetings: The Bank of Canada, the Federal Reserve and the Bank of Japan. (more…)

Notes From Underground: Walking Through the Valley of the Shadow of Death

September 22, 2019

There is no question that the world’s central banks are all living under the shadow of doubt as investors and financial markets are questioning the efficacy of the zero lower bound. The sense of always doing more in an effort to attain a self-conjured 2% level of inflation has led to the continued downward slide in interest rates.

On this note, last week we saw the Powell Fed lower the target range for the fed funds rate by 25 basis points — and its interest on excess reserves rate by 30 basis points — as congestion in the financial plumbing sent overnight rates soaring. (For those who are interested in the nuances, I am linking to one of many splendid pieces from Bloomberg reporters Liz McCormick and Alexandra Harris detailing out the repo market mess.)

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Notes From Underground: “Where Did I Find This Guy Jerome?”

September 8, 2019

Of all the U.S. president’s tweets (and believe he has a lot), Friday’s tweet about Federal Reserve Chairman was one of the best. Unfortunately, there probably should’ve been a comma between “guy” and “Jerome” since one could ask the question about any member of Trump’s economic team. President Trump could be asking the Fed chairman about Secretary Steven Mnuchin, or Commerce Secretary Wilbur Ross, and certainly of Larry Kudlow or Peter Navarro. NOTES FROM UNDERGROUND has been asking that for many months. In my opinion, the only Trump pick that inspires confidence is Robert Lighthizer.

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Notes From Underground: Dudley Do Right Gives the Markets Snidely Whiplash

August 29, 2019

Ok, I couldn’t resist the obvious joke. It seems that former New York Fed President Bill Dudley penned an op-ed for Bloomberg in which he elevated the Fed into an actor in the U.S. political process. The message that Dudley initially tried to convey is one that NOTES has actually expressed concerns: That President Trump has trapped Chair Powell by using TARIFFS as a mechanism to bludgeon the FOMC into lowering rates to counter any of the negative impact from trade frictions unleashed on the global economy. Dudley admonished Powell to play the role of Bartleby the Scrivner in Melville’s short story, that when it comes to cutting rates in response to financial implications of the China/U.S. trade war, simply say “I choose not to.”

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Notes From Underground: The August of Our Discontent

August 7, 2019

When August rolls in the markets thin as Europe heads to the beaches and New Yorkers head to the Hamptons before Labor Day. This means every tweet President Trump is amplified by the LACK of market liquidity. On Wednesday, the president was back in full confrontation with Federal Reserve Chairman Jerome Powell because three central banks CUT interest rates last night: India,Thailand, and, most importantly, the Reserve Bank of New Zealand, which surprised most market analysts by cutting 50 basis points instead of 25.

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Notes From Underground: We Got Our Answer

July 31, 2019

In Sunday’s blog post I asked whether the tariffs trumped U.S. economic data. Well, we got our answer on Wednesday and it’s a resounding YES. Federal Reserve Chairman Jerome Powell’s press conference Wednesday suggested that he has been sucked into the vortex of President Trump’s media manipulation of the tariff narrative. CNBC’s Steve Likesman asked whether the interest rate cut was an insurance cut instead of a DATA cut. Powell cited these reasons for the Fed’s decision: To insure against global risks /trade tensions, which is unusual as there is not much history of monetary policy responding to economic consequences of trade friction; and the cover all of the world’s largest central banks, which is the need for a faster return to inflation.

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