Central Banks

America's New Impossible Trinity: You Can't Have Higher Wages, Steady Inflation And High Profits At The Same Time

America’s ongoing labour productivity slump has created a new impossible trinity – policymakers can only choose two of the following three desirable outcomes: higher nominal wage growth, steady inflation and high corporate profits. The theory behind this new ‘impossible trinity’ is intuitively simple. If workers’ wages rise faster than their productivity, the companies paying those higher wages face two choices. They can either pass on the extra costs to customers, thereby leading to higher overall prices and rising inflation, or they can absorb the extra costs resulting in lower profit margins.

SocGen: "Now We Know Why The Fed Desperately Wants To Avoid A Drop In Equity Markets"

"The catalyst for a balance sheet crisis is rarely the affordability of interest rates, so a 25bp rise in Fed rates is neither here nor there. Credit market risk is about assessing the likelihood of getting your money back. As such asset prices (i.e. equity markets) and asset price risk (i.e. equity volatility) are far bigger concerns. So all you need for a balance sheet crisis is declining equity markets, a phenomenon the Fed appears desperate to avoid. Now we know why."

Chart Of The Day - Wall Street Vs. Main Street

For those of us who recall how the mainstream media, compromised pundits and Wall Street welfare babies “sold” us on the unconscionable banker bailouts, we vividly remember a constant repetition of the invented and preposterous mantra that “helping Wall Street in turn helps Main Street.” This fantastical idea that the fortunes of Wall Street and Main Street are inextricably linked is, of course, total garbage and always has been.

Indirect Bidders Surge In Strong 3 Year Auction

One month ago, when the Treasury sold 3 Year paper the reception was rather lukewarm when ahead of the March FOMC there was some concern that the Fed may actually hike. Now that any speculation of a rate hike has been shelved indefinitely, there was no problem for the US Treasury to sell this month's batch of 3 Year paper. With the WI trading at 0.894% at 1pm, the high yield printed 0.890%, stopping 0.4 bps through the When Issued.

Active Managers Defeated... Globally... Again

One would think that active managers would eventually outperform somewhere after the negative press that ensued a year ago.  And now that 2015 performance data has been properly audited and tabulated, we can see what the new results are... (spoiler alert - not good).

Former IMF Chief Economist Admits Japan's "Endgame" Scenario Is Now In Play

Japan is heading for a full-blown solvency crisis as the country runs out of local investors and may ultimately be forced to inflate away its debt in a desperate end-game, one of the world’s most influential economists has warned.  "One day the BoJ may well get a call from the finance ministry saying please think about us – it is a life or death question - and keep rates at zero for a bit longer."

"Credit-Dollars" - The Fatal Flaw In The System

Something isn’t working. Not for Janet Yellen nor for any of her delusional central banker buddies around the world. Their tricks no longer work. They just make the tidal wave higher.

For 6th Year Running, Economists' Growth Expectations Collapse

With The Atlanta Fed's slashing its Q1 GDP growth expectations to just 0.1%, consensus estimates for 2016 growth have collapsed. However, none of this should surprise anyone as this is the sixth year in a row that over-optimistic growth hopes devolve into hype for more stimulus and a hockey-stick just around the corner. While expectations have not improved since 2010, at least one these dreadful soothsayers is defending this year's drop in the same old manner - by promising that H2 will be better, for these 4 reasons...

Ben Bernanke: "Helicopter Money May Be The Best Available Alternative"

"Money-financed fiscal programs (MFFPs), known colloquially as helicopter drops, are very unlikely to be needed in the United States in the foreseeable future. They also present a number of practical challenges of implementation, including integrating them into operational monetary frameworks and assuring appropriate governance and coordination between the legislature and the central bank. However, under certain extreme circumstances—sharply deficient aggregate demand, exhausted monetary policy, and unwillingness of the legislature to use debt-financed fiscal policies—such programs may be the best available alternative."