Archive - Sep 2015 - Story

"The room to ease policy further, i.e., to adopt counter-cyclical policies, is now much more limited than in the past. To the contrary, in some cases monetary tightening may be needed (despite weaker real business cycles) in order to continue to attract foreign capital, anchor domestic currencies and preserve the integrity of the respective inflation targeting frameworks. Hence, we may soon enter a period of weaker FX and higher policy and market rates: i.e., market dynamics that would resemble more the 1997 Asian Financial Crisis."

The most incredible aspect of Hillary’s e-mail scandal is the media’s total dismissal of a simple fact — Hillary DID NOT use the government’s e-mail system — she used her own. She claimed she was unaware that you could have two e-mails on one phone. That alone shows that she is not qualified to be president.

Should the Fed decide to raise interest rates, it will be the first Fed hike since June 29th 2006. In the 110 months that have since past, global central banks have cut interest rates 697 times, central banks have bought $15 trillion of financial assets, zero interest rates policies have been adopted in the US, Europe & Japan. And, following the Great Financial Crisis of 2008, both stocks and corporate bonds have soared to all-time highs thanks in great part to this extraordinary monetary regime.  A rate hike with a stroke ends this era.

"Time will tell who is right. But remember that we live in an era where computer trading dominates the American stock market. The "robots" that are making a lot of trading calls aren't sitting around pondering China's economy. They are paying attention to whether stocks fall below key levels. What are those levels? No one knows exactly. But these two metrics are worth watching. If these thresholds are crossed, both computer and human traders will consider it a game-changer point."

Sunday night looms...

We can look at official statistics to get a sense of inflation, but these numbers are totally meaningless. When I was a kid, my father earned enough money to support his family with a single salary. We had a house, a car, an occasional vacation, and we never missed a meal. All on one income. But those days are long gone. Now it’s almost obligatory to live in a dual-income household just to make ends meet. The official statistics never paint this picture.

In yet another somewhat surreal twist in The Donald's path to The White House, Fox Business reports the long, sometimes contentious relationship between Donald Trump and Steve Wynn has taken another turn, with the Las Vegas casino magnate serving as an unofficial adviser to Trump’s presidential campaign. Having known each other for 30 years, Fox's Gasparino notes that they have clashed in the past (Wynn on Turmp in 1998 "He's a fool," and Trump on Wynn "he's a very strange guy.") but in recent years both have been critical of the leftward tilt of the Democratic Party and president Obama.

Things were already bad enough for emerging markets going into August. Persistently low commodity prices, slumping demand from China, depressed global trade, and a “diminutive” septuagenarian waving around a loaded rate hike pistol in the Eccles Building had served to put an enormous amount of pressure on the world’s emerging economies. And then, the unthinkable happened.

For most of us, the image of a serial number on a forearm conjures up indelible images of 1940s Germany, but it seems this is not the case for the Czech police, who adopted the controversial practice earlier this week.

Early last month, we noted the irony inherent in the fact that Saudi Arabia, whose effort to bankrupt the US shale space has been complicated by the Fed's ZIRP, was set to opportunistically tap the debt market in an effort to offset a painful petrodollar reserve burn. As Bloomberg reports, Qatar is now doing the same, "raising money from local banks as the slump in oil prices buffets the finances of the Middle East’s largest oil and gas exporters."

The characteristic feeling of the post-2008 world has been one of anxiety. Occasionally, that anxiety breaks out into fear as it did in the last two weeks when stock markets around the world swooned and middle class and wealthy investors had a sudden visitation from Pan, the god from whose name we get the word "panic." Pan's appearance is yet another reminder that the relative stability of the globe from the end of World War II right up until 2008 is over. We are in uncharted waters. The relentless, if zigzag, rise in financial markets for the past 150 years has been sustained by cheap fossil fuels and a benign climate. We cannot count on either from here on out...

After 6 straight weeks of rig count increases, last week saw a 13 rig drop - the most since May. This leave the rig count at its lowest since July 24th. WTI Crude jumped 60c on the news and is holding gains...