First, to all of those in the NOTES community who celebrate the Jewish New Year, I wish you a year of health, peace and prosperity. To those who celebrate other spiritual endeavors I offer you a wish for health, peace and prosperity. Now, to the markets. In the past month I have spent time putting issues we’ve been discussing for the last nine years into perspective. Lately, the airwaves are filled with the accolades laid upon the policy makers who SAVED CAPITALISM. Listening to Paulson, Geithner and Bernanke pontificate on how they acted to save the system is enough to send me into fits of rage as the culprits who failed to act to halt the housing bubble praise themselves for the “Courage To Act.”
Posts Tagged ‘Yellen’
Notes From Underground: More Perspective In the Time Of Reflection
September 12, 2018Notes From Underground: Lions and Tigers and Bears, Oh My!
September 11, 2016The Wizard of Oz provides so many appropriate metaphors for dealing with global central bank policy. The failure of the wisdom of those who meet behind the “curtain” enthrall the members of the elite media who genuflect on the altar of access. Provide the necessary backdrop of equations and the media believes everything. It reinforces the sentiment of the Greenspan era: “If you think you understood what I said, I must have misspoken.” The idea of an “all-knowing Fed” is beginning to lose its luster as markets begin to understand that FED policy is not rocket science. There is no predictable outcome for the global experiment of negative interest rates or zero interest rates. Even the growth of supersized central bank sheets is causing doubts among the blind followers of free money forever.
Notes From Underground: Alfred E. Neuman or Arthur Fonzarelli? Pick Your Poison
June 9, 2016Since I’m 62 years old, my references of social icons goes back to a more simple time. Alfred E. Neuman of Mad Magazine fame would ask, “What, Me Worry?” The other side of the equation would be Arthur Fonzarelli from the television show, “Happy Days.” who would stutter before ever admitting that he was WRONG. The world’s central banks are a reflection of these two icons. It seems that Yellen, Draghi and Kuroda all suffer from both views. They have nothing to worry about and they certainly cannot admit to being wrong. The central banks are under attack from investors and traders for pursuing quantitative easing and negative yields even though the efficacy of such programs is certainly in doubt.
Notes From Underground: We Have Seen the Four Horsemen of the Apocalypse
April 7, 2016The four living Fed chairmen have gathered in New York for a panel discussion for International House. News Flash: The discussion was disappointing as the moderator had too much censoring power at his discretion about who would answer the audience questions. Paul Volcker had a great response regarding concerns about the Chinese yuan replacing the dollar as the world’s key reserve currency. Volcker said if the U.S. would qualitatively deal with its responsibilities it was not a concern but would probably represent the Chinese becoming a real open economy. Also, Greenspan let it be known that the dual mandate is a nice talking point but the reality is that the FED does not make decisions in a vacuum. After Greenspan’s answer Yellen basically agreed. The moderator should have allowed Yellen to answer first since she is the sitting Fed Chair. Allowing Greenspan to answer first diminished Yellen’s response. Overall, the discussion was … meh.
Notes From Underground: Unemployment Data In the Time of Janet’s Fed
March 31, 2016It is the end of the first quarter and it was an amazing time to be a volatility fabricator in the land of algo-driven headline readers. This quarter has seen a great deal of ebbing and flowing for the global equity markets as China, the Fed, the ECB and BOJ have created fear and greed in copious amounts. But as the SPOOS have ended 0.8% higher (after being up 11% in February), the world is well for U.S. domestic investors. The remainder of the developed world equity markets have not fared as well even as its central banks have been very involved in creating new rounds of liquidity and driving their lending rates into negative territory. The DAX and Japanese equity markets seem to be trapped by anemic growth, as well as appreciating currencies. The recent noise from the FED seems to have caused a REVERSAL IN LONG DOLLAR POSITIONS as the short dollar trade was every major investment bank’s favorite trade for 2016. So it goes.
Notes From Underground: Mother Dove Commands Respect From the Baby Chicks
March 29, 2016Today was the proof positive that the FOMC is under the command and control of Chair Yellen. As they said about Maggie Thatcher, “This lady is not for turning.” Yellen is a lonesome dove–if we bother to listen to the chirping from the baby hawks (EYAS in the bird world). It is these EYAS who ultimately say YES to everything the Mother Dove asks. There have been very hawkish speeches from FED governors and presidents during the last six weeks but still the vote at the MARCH FOMC was 9-1. There may be many EYAS but Yellen rules the roost. If Stanley Fischer had any sense he would resign and head back to academia where he carries far more weight.
Notes From Underground: From the Santelli Exchange, February 1
February 11, 2016Given the dizzying moves in the market during the past couple of days/weeks, I felt that it would be better to link back to my February 1 appearance with Rick Santelli on CNBC.
As I was watching Fed Chair Yellen testify before Congress for the past two days, I saw the shine of the all-knowing Fed Chair fade. Yellen was extremely uncomfortable as she bore the brunt of Congress’s slings and arrows. The anger of Main Street has manifested in victories for Trump and Sanders, which has sent the ineffective “leaders” in Washington searching for culprits to blame. Chair Yellen was tied to the whipping post, especially in the House of Representatives.
Notes From Underground: Reissue, April 24, 2014
August 13, 2015Almost 18 months ago I wrote a blog in response to an Ambrose Evans-Pritchard piece in the London Telegraph. I think readers of NOTES will find it more than a passing interest. More importantly, Mr. Evans-Pritchard wrote a new piece in yesterday’s London Telegraph, “China Cannot Risk the Global Chaos of Currency Devaluation.” Evans-Pritchard stresses the deflationary shock from a significant Chinese yuan devaluation in response to the Chinese plague of overcapacity from an excess of capital investment for a Chinese effort to increase exports to ease the burden of excess production would weight heavily on an over indebted world struggling with falling prices.
This is the greatest fear for the world ‘s central bankers and why I always referred to Bernanke and Yellen as the ultimate 1937ers for Bernanke promised Milton Friedman that the FED would not repeat the errors of 1937 and allow deflation to become the major dynamic in the world economy and certainly not the U.S. Evans-Pritchard is hopeful that the recent weakness of the YUAN is not really a new policy:
“The slowdown in China is not yet serious enough to justify such a risk. True, the trade-weighted exchange rate has soared 22% since-mid-2012,the result of being strapped to a rocketing dollar at the wrong moment.The YUAN is up 60% against the Japanese Yen.”
Read the article and be aware that the Chinese are not targeting the dollar but are very concerned about the YUAN strength versus the rest of the world.
Notes From Underground: A Quick Note On Tomorrow’s Unemployment
June 5, 2014Post-ECB the U.S. employment report will be of minimal importance. The market is expecting a 210,000 increase in nonfarm payrolls (NFP), a modest rise after April’s larger than expected 288,000 increase. The unemployment rate is guesstimated to rise to 6.4% from 6.3%. More importantly, the average hourly earnings is estimated to rise 0.2% after last month’s flat number. The wage gains are now the most important piece of data as the Yellen Fed has more than hinted that stagnant wages have been a perennial drag of consumer demand. It is better for wages to rise than demand to remain tepid. If wages were to outpace inflation it would act to stimulate domestic consumption.
Notes From Underground: If Everybody Is Talking Who Is Listening
May 20, 2014Presented with comment:
Yesterday, the airwaves were filled with global financial speakers singing from the hymnal of disinflation. His eminence, MR. 250 GRAND, was wowing the private speakers circuit with his opinion on stock market valuations and economic growth. Mr. Bernanke, please do not follow in the footsteps of Sir Alan Greenspan, who in his post-chairman life proved that he had very little understanding of the economy he was trying control. Only in the world of access journalism do the anointed powers pretend to be all-knowing oracles. As Bernanke hits the lecture circuit and speaks freely without the Fed backdrop it puts the current Fed Chair Janet Yellen into a very difficult position.T he media is in search of a story and a hero to worship, which propagates the idea of Fed decisions being based on rocket science with Fed policy a certainty. Again, theory and practice (praxis) do not produce hard facts in the world economics. In further support of the Fed’s “uncertainty principle,” yesterday the Wall Street Journal ran a Jon Hilsenrath interview with Boston Fed President Eric Rosengren. The interview is based on the operational techniques the Fed plans to utilize to “Raise Short-Term Interest Rates.”