Posts Tagged ‘Jerome Powell’

Notes From Underground: No Moore. No Kudlow. No MMT

March 31, 2019

In the previous blog post, I suggested that if the FED was afraid of flat yield curves then they OUGHT to CUT overnight rates immediately by 50 basis points in an effort to steepen the curves to a more NORMAL slope. On Friday, in a nod to Notes From Underground, President Trump’s latest Fed nominee Steve Moore and White House advisor Larry Kudlow said that the central bank should slash interest rates by 50 basis points. Unlike my suggestion, the avid supply-siders offered no context for the rate cuts. There was no discussion of yield curves, dollar strength or the problems confronting global growth.

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Notes From Underground: Is The FED Afraid of Inversion?

March 26, 2019

Last week, NOTES FROM UNDERGROUND left off asking, WHAT IS THE FED AFRAID OF? The most ostensible fears are of a global slowdown coupled with a potentially too strong DOLLAR, which would create the possibility of a new global financial crisis. The world has borrowed heavily in dollars because of the FED‘s zero interest rate policy. Rates were too low for too long.

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Notes From Underground: When Doves Coo

March 20, 2019

Wednesday’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?

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Notes From Underground: The Jobs Report Was Not Data Dependent

March 10, 2019

Wow! That was a serious miss by the forecasters on job growth as only 20,000 new jobs were added. The huge miss will prove to be an aberration but doesn’t matter at all. As I pointed out in Thursday’s blog — as well as on the PODCAST Peter Boockvar and I recorded with Richard Bonugli from FRA, the ECB’s pivot toward liquidity addition via cheap bank loans has forced the FED into a policy of “watchful waiting.” And Chairman Jerome Powell reiterated that stance in his speech Friday night as he stressed the need for caution in the search for normalization on rates and the balance sheet.

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Notes From Underground: It’s a Drag Listening to Draghi Get Old

March 7, 2019

ECB 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.

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Notes From Underground: MMT Is Gaining Velocity

March 5, 2019

We at NOTES FROM UNDERGROUND have discussed the issue of MODERN MONETARY THEORY. Now, the battle lines are drawn over the possibilities of a benign outcome to the practical basis of the so-called printing press. Yes, the simplification of MMT bothers its disciples, but the printing press is in essence what the theory purports to avow: Don’t worry about debt, because enough money flooding the system will not push interest rates higher but rather lower as banks take on massive reserves to put out the bid that’s pushing interest rates persistently lower.

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Notes From Underground: The Politics of Money

March 3, 2019

Over the weekend, President Trump blasted a high note from the Conservative Political Action Conference. Again, the president put pressure on the Federal Reserve as he pointed his finger at Powell. He said, “I want a dollar that does great for our country, but not a dollar that’s so strong that it makes it prohibitive for us to do business with other nations and take their business.” He didn’t mention Powell by name but added noted that the U.S. has “a gentleman that likes raising interest rates in the Fed, we have a gentleman that loves quantitative tightening in the Fed, we have a gentleman that likes a very strong dollar in the Fed.”

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Notes From Underground: Chatting With Bill Laggner of Bearing Asset Management

February 4, 2019

On Jan. 30, I had the pleasure of sitting in with Bill Laggner and Richard Bonugli for another Financial Repression Authority podcast. These discussions provide a forum to discuss pertinent issues regarding the efforts of policy makers that impact the creation of wealth, as well as its distribution. I refer to this as POLITICAL ECONOMY. The podcast was recorded four hours before the release of the FOMC statement and Chairman Jerome Powell’s press conference. The FED chairman provided further insight into the walk-back of “automatic pilot” as he addressed concerns about the headwinds building in the global economy.

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Notes From Underground: Hello, 2019

January 6, 2019

“I am a sick man. I am a wicked man.”

So opens the Dostoyevsky novella Notes from Underground. Sometimes I seem to be caught in a similar existential trap as I analyze the global macro data and fundamentals. I am sick because I continue to pursue the opportunities that explode before me. I have taken a turn for the worse and become sick because of the constant flow of manipulated headlines crafted to purposely activate the trading algorithms. Tweets and headlines with no context have become the coin of the realm, especially for high frequency trading operations. But their role in the market jungle does little to dissuade meĀ  from honing my craft. The bottom line: Greater preparation and more patience is needed.

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Notes From Underground: And To All a Good Year

December 23, 2018

We are heading into the last trading week of the year and it’s setting up to be volatile, to say the least. The FED is in motion. Equity investors are harvesting profits from a long-run bull market. Bond markets are uncertain as how to react to the end of QE since the central banks are now beginning to shrink global reserves (at least the Fed is). Commodity prices are struggling due to the fear of a global economic slowdown. And the political backdrop adds great uncertainty as the Trump administration never misses an opportunity to open its mouth and detract from any policy success it may experience. China, Russia, Turkey, Iran and even Saudi Arabia are watching the Western Democracies to see how they respond to Trump’s efforts to disrupt the current trading system and, more importantly, the rollback of PAX AMERICANA.

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