Posts Tagged ‘rate hikes’
February 2, 2023
It was the week that was as three main central bank interest rate decisions from the FEDERAL RESERVE, BANK OF ENGLAND and EUROPEAN CENTRAL BANK rocked the markets. There is more to follow Friday morning as the vaunted employment data will be released. The market is expecting 190,000 jobs created, a 3.6% unemployment rate, a 34.4-hour workweek and a 0.3% gain in average hourly earnings. After all of the central bank-induced volatility that last data point carries little weight unless it shocks to the robust economic upside.
If the unemployment rate fell too much — to say, 3.3% — or AHE soared above 0.7% it would send bond yields much higher, reversing the recent sizable rally in global bond prices triggered by central banks preparing to “pause.”
(more…)
Tags:Bank of England, Christine Lagarde, European Central Bank, Federal Reserve, inflation, Jerome Powell, nonfarm payrolls, rate hikes
Posted in BOE, Debt Market, ECB, Fed | 4 Comments »
December 18, 2022
Last week, the leaders of the world’s central banks were attempting to regain their souls. FEDERAL RESERVE Chair Jerome Powell told tales of woe as workers were suffering as inflation rose. Crush the evil inflation out of the system is the battle cry in an effort to recreate the melodrama of Andrew Mellon in 1931: liquidate, liquidate, liquidate in an effort to Calvinize the evil from the economy by crushing demand. Powell did note that housing had weakened SIGNIFICANTLY and financial conditions HAVE TIGHTENED CONSIDERABLY but will have to be patient because monetary policy acts with a lag.
(more…)
Tags:BOE, Christine Lagarde, ECB, Fed, Federal Reserve, fragmentation, Jerome Powell, rate hikes, short-term rates, SNB, Thomas Jordan, US deficits, yield curves
Posted in BOE, Debt Market, ECB, Fed, SNB | 6 Comments »
November 20, 2022
The day after the FED meeting I sat down with the FINANCIAL REPRESSION AUTHORITY and did a podcast with David Rosenberg and Peter Boockvar. The discussion is still relevant as it speaks a great deal about bond, equity and, in particular, currency valuations. Then on Monday, November 7 Richard Bonugli hosted an hourlong discussion with Brent Johnson and myself, which was also about currency valuations and the precarious global situation of massive debt overhang. Finally, I recorded a third podcast with FRA and Eric Peters about crypto and the possible fallout from the collapse of FTX. There’s lots to digest here but as always I remind readers that the only relevance for traders/investors is to find meaningful trades or investments. Otherwise we are just talking to hear ourselves talk, which is in the very real sense meaningless. Also, it is not always what you make through relevant ideas but the capital preserved by not following the herd.
Click to listen to the Nov. 4 podcast with David Rosenberg and Peter Boockvar.
Click to listen to the Nov. 7 podcast with Brent Johnson.
Click to listen to the latest podcast with Eric Peters.
(more…)
Tags:central banks, Federal Reserve, Jerome Powell, QE, QT, quantitative tightening, rate hikes, US dollar, yield curves
Posted in Currency, Debt Market, Fed, United States | 9 Comments »
May 3, 2022
Yes, Wednesday is FED day and the markets are expecting a 50 basis point increase in the FED FUNDS RATE to a range of 0.75% to 1%. The most important issue will be the size of the balance sheet unwind and whether Chair Jerome Powell is good to his heightened concerns about headline inflation means a full throttle on balance sheet shrinkage, reaching the full $95 billion a month at a quick pace. So Jerome, let’s have at it and let the markets decide the impact on myriad asset classes. In 2018, this double shotgun of QT and interest rate hikes proved too much for the highly leveraged global markets. Now that the Fed’s balance sheet is twice as large let’s see how it will affect the leverage in the global system.
(more…)
Tags:balance sheet unwind, Fed Funds Rate, Federal Reserve, inflation, Jerome Powell, QT, rate hikes, U.S. Dollar
Posted in Fed, United States | 10 Comments »
March 6, 2022
First, our hearts go out to all suffering in the world of insanity brought on by senseless wars that diplomacy OUGHT to have been able to prevent. The world always returns to the insanity that brought us to World War I when nobody could stop the trains once set in motion. As Phil Ochs sang, “It’s always the old who lead us off to war, it’s always to fall, look at all we won with the saber and the gun, tell me is it worth it all?” But here we are and as always the world continues to focus on the minutiae of life, including the financial outcomes responding to the high-speed headlines driven by algorithmic speed machines. There is no context to any news just manufactured volatility fabricators of the latest musings of some “news” outlets’ favorite expert. But as Hyman Roth said so clearly: “Michael this is the profession we have chosen.”
(more…)
Tags:asset purchases, Christine Lagarde, ECB, Federal Reserve, inflation, Jerome Powell, oil, Putin, rate hikes, Russia, sanctions, U.S. Dollar, Ukraine, wheat
Posted in Commodities, Currency, ECB, Fed, Russia, United States | 17 Comments »
February 10, 2022
On Tuesday, I sat down with the Financial Repression Authority’s Richard Bonugli and Marc Faber. The last time Dr. Faber and I spoke, there were several profitable investments that evolved from our deep discussion about the global political economy. Give it a listen as we discuss the global central banks and potential profitable areas of investment. Marc has fabulous insights on the global economy and NOTHING is out of bounds. This is a man who finds great opportunities during times of chaos.
Click here to listen to the podcast.
(more…)
Tags:CPI, fed funds futures, Federal Reserve, inflation, James Bullard, Marc Faber, quantitative tightening, rate hikes, real yields
Posted in data, Fed, United States | 15 Comments »
June 13, 2017
The FED has painted itself into the proverbial corner by pre-announcing a rate hike. The market will be listening to Chair Janet Yellen’s press conference, which takes place at 1:30 CDT, a half hour after the Fed releases its statement and summary of economic projections. The market is expecting some discussion Fed’s balance sheet unwind, but Yellen will be cautious as she won’t want to cause a large selloff in the Treasuries led by the algo-driven headline readers. Tomorrow morning the Bureau of Labor Statistics releases the CPI data, alongside the Census Bureau’s retail sales data. Market consensus is for tepid numbers on both releases.
(more…)
Tags:2/10 yield curve, Fed, FOMC, Gold, Janet Yellen, rate hikes, SPS, U.S. Dollar
Posted in Currency, Debt Market, Fed | 16 Comments »
January 26, 2016
The market is in disarray as it anticipates tomorrow’s FOMC statement. Will it lean dovish? The turmoil in global markets is having negative impacts on capex and the wealth effect as global equity markets have dropped considerably since the December 16 rate increase. Do I believe that the 25 basis point rise is the catalyst for the destruction of household wealth? NO. But the FED is confronted with a worsening condition in terms of TOO MUCH DEBT IN A DECLINING PROFIT ENVIRONMENT. As Michael Pettis, Felix Zulauf and others have postulated for a very long time, too much debt on a balance only matters when the debt can’t be serviced. Zulauf and Jeffrey Gundlach have voiced concerns about the FED being irresponsible for raising rates as the global economy slows. Art Cashin, the great voice of reason and stability, has been on record for weeks predicting the FED will lower rates to ZERO before the market ever sees ONE PERCENT.
(more…)
Tags:dot plot, Fed, FOMC, Janet Yellen, rate hikes, Stanley Fischer
Posted in Fed | 11 Comments »