Posts Tagged ‘inflation’

Notes From Underground: Will It Be An Inflated Jobs Report?

September 2, 2021

After FEDERAL RESERVE Chairman Jerome Powell’s Jackson Hole speech, the jobs data may have taken on added significance. Inflation was not a concern for Powell as that is considered transitory within the bowels of the FOMC. The failure of the employment situation to enable all who lost jobs due to COVID “through no fault of their own” has regained paramount importance.

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Notes From Underground: Powell’s Pathetic Political Posturing

August 29, 2021

First of all, my offer of any part of a $10,000 bet with 10-1 odds against Jerome Powell being renominated as FED CHAIR is OFFICIALLY RESCINDED. The Fed Chair’s speech was so pathetic that it can only be explained by his desire to be renamed central bank head. Powell’s speech would be called DOVISH on any given week but there were six FED presidents speaking out in favor of moving up the schedule for tapering QE to counterpunch. It was not only the increased hawkish stances of previous UBER DOVES, which provided cover for Powell but the highly esteemed Mohammed El-Erian and Larry Summers also called for the FED Chair to be bold at Jackson Hole.

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Notes From Underground: The Dog Days of Summer

August 12, 2021

The doldrums of August are upon us … though not really. There is the ongoing debate about inflation prompting the FEDERAL RESERVE to accelerate the pace of its asset purchase tapering — when it begins — while it is the elevated levels of minority unemployment that will likely force the FED to maintain its lower-for-longer policy.

The chatter remains about REAL INFLATION being above the FED‘s 2% mandate, a self-imposed threshold, while JANET YELLEN/JEROME POWELL discuss REAL UNEMPLOYMENT being above its mandate of maximum full employment. The central bank has promoted both mandates at times so it is difficult to deem what is REAL. It is of great interest that in the last few days KNOWN FED DOVES have taken a decidedly more “hawkish” posture. Atlanta Fed President Rafael Bostic, St. Louis Fed President James Bullard, and in Thursday’s Financial Times, San Francisco Fed President Mary Daly all raised the issue of reducing stimulus as soon as this year.

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Notes From Underground: The Fed As G-30 Proxy?

August 1, 2021

Last week’s FOMC meeting went as expected but the press conference actually provided some solid questions as the media put some pressure on Chair Jerome Powell. NPR actually received an answer to what TRANSITORY means to the Fed chair: Prices will stay but the process of inflation will stop or slow dramatically. Hmm, the continued use of the LUMBER and AUTO markets did not reflect that definition at all. It seemed that the authorities were pursuing the concept of roll back.

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Notes From Underground: A Question to Ponder

July 5, 2021

Do China and Russia have state authorities investing in the markets?

If the answer is yes then global investors have many issues to consider. The use of massive amounts of leverage (perfectly legal) utilized by Sovereign Wealth Funds and national pension funds have the power to distort prices as much as the involvement by the FED, ECB and BOJ to cause major distortions in the credit markets. Add in the Bank of Canada, Reserve Bank of Australia, the RBNZ and the price of credit is as overvalued as COPPER during the onset of the pandemic.

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Notes From Underground: Plus ça Change, Plus C’est La Même Chose (An Ode to Jerome)

June 21, 2021

As promised, here is the podcast I recorded with Anthony Crudele. There is a great deal expressed in 52 minutes following the June 16 FOMC meeting. The fact that Chair Jerome Powell kept on keeping-on with full blown asset purchases leaves me in the camp of very little change regardless of the DOT PLOTS. As Powell said about the FED (and Wall Street economists), not a very good record of forecasting.

Click here to listen to the podcast.

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Notes From Underground: Schauble Pivots, Brainard Postulates

June 6, 2021

The unemployment data was not as robust as expected but not bad since hourly wages rose above consensus, the work week remained elevated and the jobless rate dropped to 5.8%. The headlines are always subject to severe review doing these tumultuous times. The question remains: Why did the BOND market experience a sizable rally even as the DATA was well within range of expectations. There is a great deal of pressure on the U.S. overnight market as vast amounts of liquidity searches for a home.

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Notes From Underground: Is the Fed In a War?

May 16, 2021

I pose this question as a challenge to all of those traders and investors, and a call to action. There is so much discussion about the onset of inflation but do the inflationists have the fortitude to attack the FED where it hurts: the long end of the yield curve? The primary focus of the FED has been on the part of the QE purchases has been the shorter end as 80% of the FED‘s balance sheet is five years or less. If the inflation concern is of the magnitude suggested by the mainstream media then market participants OUGHT to be selling the longer duration Treasuries because as we know the Wall Street mantra is DON’T FIGHT THE FED.

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Notes From Underground: SIN or WIN, It’s a Generational Thing

May 10, 2021

In 1976, when I was beginning my long march toward acquiring knowledge to analyze markets Gerald Ford was running for reelection. Inflation was gaining strength so the FORD campaign was bent on making America believe that he had the fortitude to break the inflation spiral threatening the Middle Class. Campaign buttons said W.I.N. (whip inflation now). Getting inflation under control was seen as the paramount issue.

When I was wandering through a flea market in New York in 2007, I found an original WIN button that I bought for $1.25. See? Paul Volcker did whip inflation. (I gave the button to the best financial plumber, James Aitken, as a token of appreciation for all the knowledge he imbued in me about the plumbing of the short-term funding markets.)

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Notes From Underground: Sanctions Are Sanctimonious

May 2, 2021

In today’s world of DOLLAR domination it is easy for the U.S. Treasury — under the guidance of the president — to place sanctions on many different global actors as they strive to use the conduit of SWIFT and other banking facilities to move money around the globe. The U.S. likes to beat its chest and proclaim that it is operating in a rules-based system and therefore sanctions are an appropriate tool in response to the malevolent actions of autocratic-oriented nationalistic actors. But whose rules? And the invocation of sanctions leads to those subject to the whims of U.S. policy to find ways to operate in international grey areas of commerce.

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