Analysis Topic: Interest Rates and the Bond MarketThe analysis published under this topic are as follows.
Friday, October 24, 2014
QE Failure & Folly Of Paper Mache, Treasury Bond Integrated Lifeline Patches / Interest-Rates / Quantitative Easing
The Quantitative Easing initiatives have been declared as stimulus and successful in sustaining the US financial system. While having been able to continue the debt floats, the many market props, providing coverage for USGovt debt securities and mortgage backed securities which nobody wants, the initiative is hardly stimulus. The hyper monetary inflation does what we always learned it did, as in from school for 50 years, dole out its powerful corrosive effect. The inflation lifts the cost structure, leads to elimination of profit margins, and forces businesses to shut down, thus taking equipment out of service. The Jackass prefers to call the QE effect as killing capital, forcing retired capital, putting equipment on mothballs, often liquidated. Neither the USFed nor the Wall Street partners ever refer to the capital destruction effect, because it contradicts their stimulus argument and false message. Theirs is pure propaganda in keeping with the urgent directive to save the banks that are too big to fail. These are the financial crime centers of America.Read full article... Read full article...
Thursday, October 23, 2014
The best way to delever is to immediately pay off any existing debt, right? So, how can the global economy do that?
There’s a great new study out from Geneva Reports on the World Economy 16 (ICMB — International Center for Monetary and Banking Studies) called Deleveraging? What Deleveraging?Read full article... Read full article...
Wednesday, October 22, 2014
International Monetary Fund chief Christine Lagarde says the global economy is facing “the risk of a new mediocre, where growth is low and uneven.”… Lagarde said Europe's 18-nation bloc that uses the euro currency – collectively the world's biggest economy – is facing the "not insignificant" risk of falling back into a recession. (VOA News)Read full article... Read full article...
Monday, October 20, 2014
Nicolás Cachanosky writes: Scotland’s vote for independence resulted in a negative. There won’t be, for now, further discussions about what Scotland should do with its monetary institutions. Still, there is one more issue that I would like to discuss, because it transcends the particular case of Scotland, had independence been the result of the vote.Read full article... Read full article...
Monday, October 20, 2014
It wasn't too long ago that the stock market was busy celebrating a "great" September jobs report. There were 248k net new jobs created and the unemployment rate dropped to 5.9 percent. Janet Yellen, Ben Bernanke and the rest of Washington D.C.'s central planners deemed it a great time to take a Keynesian victory lap, basking in the delusion that they now have proved you actually can print and borrow your way to prosperity.
And, because of their success, the Fed would be able to raise interest rates without any damage to the economy.Read full article... Read full article...
Thursday, October 16, 2014
James Bullard, President of the St. Louis Federal Reserve Bank, told Bloomberg Television's economics editor Michael McKee today that the Fed should consider delaying the end of QE.
Bullard said, "I also think that inflation expectations are dropping in the U.S. And that is something that a central bank cannot abide. We have to make sure that inflation and inflation expectations remain near our target. And for that reason I think a reasonable response of the Fed in this situation would be to invoke the clause on the taper that said that the taper was data dependent. And we could go on pause on the taper at this juncture and wait until we see how the data shakes out into December. So...continue with QE at a very low level as we have it right now. And then assess our options going forward."Read full article... Read full article...
Wednesday, October 15, 2014
Comparing One Dimension of the Policy Responses of the ECB and the Federal Reserve / Interest-Rates / Central Banks
Here is a chart comparing the Balance Sheet Assets of the Fed and the European Central Bank.
It is important to recall that the Fed has been providing extensive funding to non-US, largely European, multinational Banks through their US subsidiaries.Read full article... Read full article...
Tuesday, October 14, 2014
I’ve been touting the ongoing bull market in T-Bonds as one of the best investment opportunities of our lifetime – a no-brainer, as far, as I can recommend. About the only way this bet can lose is if inflation returns with a vengeance. This has never been much of a worry for me, since, on the inspiration of C.V. Myers’ prescient 1976 book, I’ve been writing about the threat of deflation for more than 20 years. As Myers noted, every penny of very debt must eventually be paid – if not by the borrower, then by the lender. So far, lenders have hung tough on their terms, and although a recklessly expansive monetary policy has cut mortgage debtors in particular some slack, there is no reason to think private lenders will let homeowners skip free when the second stage of the housing collapse that began in 2007 begins anew. Deflation-wise, this is where the rubber will meet the road, drawing irresistible power from the inevitable implosion of the quadrillion dollar Ponzi scheme popularly known as “derivatives.”Read full article... Read full article...
Sunday, October 12, 2014
The Federal Reserve tried to fix the U.S. economy by Quantifornication - stimulus measures.
Investors reacted to the Fed's unconventional efforts. Since the U.S. dollar is the world's reserve currency and precious metals are priced in dollars they bought gold and silver to protect their wealth against currency devaluation and inflation.
Gold catapulted to a record in 2011 as investors wagered on higher inflation and a weakening dollar.Read full article... Read full article...
Sunday, October 12, 2014
The 5–Year U.S. Treasury Bond is Emblematic of Careless Risk Taking in Bond Markets / Interest-Rates / US Bonds
Dovishness Begets Excessive Risk Taking by Speculators
The Fed minutes came out this past week and they mentioned the strong dollar and less than stellar growth out of Europe, basically more over the top dovishness which just encouraged more unwise risk taking in the bond markets. This week Dallas Fed's Fisher said that they have identified areas of risk in markets, and James Bullard has said on several occasions that the markets are even behind the most dovish participants at the Federal Reserve regarding the forecasts for rate hikes, and the actual market actions of participants.Read full article... Read full article...
Friday, October 10, 2014
The Fed Risk - Upside Down and Backwards: Here We Go Again / Interest-Rates / US Federal Reserve Bank
"There are some ideas so wrong that only a very intelligent person could believe in them." -George Orwell
In a recent widely distributed associated press article, Bond Market Bubble is Looking
Fragile, Bernard Cohen correctly (remarkably) identifies the financial bottleneck threatening to once again freeze credit markets a la The Lehman Crisis.
Cohen paints the portrait of a bond market panic; the very sort that could easily trigger the type of crash that could "get away" from policy makers and morph into a full blown currency crisis.Read full article... Read full article...
Saturday, October 04, 2014
Friday, October 03, 2014
If you have been paying close attention to the stock market, market internals/breadth, and bonds for the past three months, you’ve likely come to the same conclusion that I have.
The US stock market is showing signs of severe weakness with the market breadth and leading indicators pointing to a sharp correction for stock prices.
With fewer stocks trading above their 50 and 200 day moving averages each week, while the broad market S&P 500 index continues to rising, this bearish divergence is a red flag for long term investors.Read full article... Read full article...
Thursday, October 02, 2014
There looks to be a solid opportunity arising to get involved on the long side here. Let's investigate taking a top down approach beginning with the yearly chart.Read full article... Read full article...
Wednesday, October 01, 2014
“Back Door” Method For The Government To Pay Down The Federal Debt Using Private Savings? / Interest-Rates / US Debt
The United States government is currently about $17.5 trillion in debt. To place this number in perspective: if we assume that only the above-poverty line households will be making net contributions towards paying this enormous debt, this means that the national debt equals about $180,000 for each "able to pay" household in the US.
With traditional financial planning, the most common way of dealing with this problem – is to completely ignore its existence. Rather than try to incorporate the effects of this massive debt that could transform interest rates, economic growth and rates of return for decades – most investment plans for individuals simply pretend it doesn't exist.Read full article... Read full article...