The inmates are running the asylum as policy makers are busy putting out old prairie fires. The European Central Bank’s move on Thursday was a final curtain call for President Draghi as he sought to cement his legacy as the man that would do whatever it takes to “preserve the Euro” and would have no taboos in his efforts. But it seems like the opposition to both the rate cut and new QE was far greater than the magician of Frankfurt let on at his final obfuscation. It is amazing how the dissidents find their voice the day after. Oh well, so it goes in the world of consensus-driven outcomes.
Posts Tagged ‘Gold’
Notes From Underground: “Where Did I Find This Guy Jerome?”
September 8, 2019Of 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.
Notes From Underground: Another Fine Mess You Got Us Into, Olli Rehn
August 18, 2019The Federal Reserve just won’t admit that President Trump and the European Central Bank are holding its policy designs captive. Trump ramps up talk of tariffs in an effort to keep the financial markets uncertain while the ECB wishes to pursue an ever expanding balance sheet in an effort to reach an ambivalent inflation target. There is no doubt that REAL YIELDS throughout the European Union are NEGATIVE. Even the Italian 10-year is trading around 1.35%, which is below the inflation level however dubious it is calculated.
Notes From Underground: It’s a Drag For Draghi Getting Old
July 24, 2019On Thursday morning we will hear from the ECB about its desires to raise inflation to its self-imposed 2% target. But on Wednesday we received more tepid economic data from the EU. Then couple that with the ascent of Boris Johnson to the position of British Prime Minister. The rise of Boris Johnson is a problem for Draghi as the possibility of a HARD BREXIT increases dramatically. The market and its DAVOS media sycophants have sold the narrative of a hard Brexit as being devastating for the U.K. economy, the British GILTS, the British pound and the Footsie 100. President Draghi has to be careful that a severe rally in the EUR/GBP cross doesn’t damage the European exporters, especially Germany, who runs a 50 billion-plus surplus with Britain.
Notes From Underground: When a Slower Fool, Always Look on the Bright Side of Life
June 30, 2019First things first: There were no surprises out of the G-20, at least for those who read Notes From Underground and listened to the discussion that took place in the Whitewave Trading room. The most significant outcome was that President Trump held off from installing additional tariffs while President Xi confirmed that China would be buying more U.S. production, especially in the agricultural sector. In Thursday’s podcast with the Whitewave participants I advised that with the current weather problems in the U.S. heartland the Chinese would have to be vigilant about the cost of global grain prices rising as supply was hampered by poor planting conditions.
Notes From Underground: Lighthizer, Always At the Ramparts Of Trade Battles
April 8, 2019As the second quarter begins, the financial markets seem fixated on China/U.S. trade frictions, or lack thereof. This narrative is old and stale. For those new to the realm of international relations, be aware that China will slow-walk these negotiations. There will be many attempts to “agree to disagree.” For example, in Monday morning’s SOUTH CHINA MORNING POST, there was an article titled, “China Refuses to Give Up ‘Developing Country’ Status At WTO Despite US Demands,” about China’s “privileged position” at the World Trade Organization. In the simplest terms, the WTO allows for countries to self-define as developing country status. This brings certain rights that allow for longer transition periods before they have to be in full compliance with WTO rules and regulations. This is described as “Special and Differential Treatment.”
Notes From Underground: Quick Note on Friday’s Jobs Report
April 4, 2019On Friday we have U.S. and Canadian employment. The Canadian report is important because Canada is an important trading partner of the U.S. so any slowing in Canadian employment may reflect of slowing cross-border trade. The consensus is for Canada to have a DECLINE of 10,000 jobs with the unemployment rate holding at 5.8 percent. From a global perspective, Canada is a good look at the continuing narrative about slowing global economy, which is significant as the New Zealand, Australian, European and Japanese central banks have used the slowing global economy as the reason for maintaining their current accommodative monetary policies. The Canadian dollar has been weak versus many of the key currencies so weak jobs should put more pressure on the Canadian dollar.
Notes From Underground: When Doves Coo
March 20, 2019Wednesday’s FOMC statement and press conference was as dovish as we have heard in many moons. More importantly, the VOTE WAS UNANIMOUS. Even Kansas City Fed President Esther George voted with the group. Why was this dovish?
Notes From Underground: It’s a Drag Listening to Draghi Get Old
March 7, 2019ECB President Mario Draghi’s press conference was, once again, another act of flim-flam as he PIVOTED away from any tightening for the next [FILL IN THE YEAR]. There was NO SURPRISE as the TLTRO was well telegraphed various news outlets in recent weeks. What’s amazing is that the currency markets were surprised by Draghi’s press conference as the U.S. DOLLAR staged a sizable rally, reaching its highest level in more than three months. The YEN was stronger as the weak stock markets provided a sense of Japanese repatriation of invested capital, while GOLD performed dismally.
Notes From Underground: A Podcast With Ronald-Peter Stoeferle
January 8, 2019A couple of weeks ago I had the pleasure of recording a Financial Repression Authority (FRA) podcast–hosted by Richard Bonugli–with one of the world’s foremost Austrian economic analysts, Ronald-Peter Stoeferle. Mr. Stoeferle had just returned from a GOLD conference in China so he was bringing a fresh perspective on the global demand for precious metals. This podcast provides the view from Asia, a region from which we don’t receive enough information. Enjoy and I will return in full next week.
