• EconMatters
    08/27/2014 - 21:30
    Investors in European Bonds are running over each other all in an effort to front run what the Big Banks have been begging the ECB to begin a bond buying program.  It is hilarious as ...

Central Banks

Tyler Durden's picture

David Rosenberg: "Hope And A Prayer"

It is not going to be a new government that necessarily ushers in a whole new era of growth, prosperity and confidence. Even under the revered Ronald Reagan, the period of secular growth and bull market activity took two years to unfold — it didn't happen right away. It took the inflationary excesses to be wrung out of the system and concrete signs that the executive and legislative branches could work together to usher in true fiscal reform — and to get blue Democrats on board with reduced top marginal tax rates.  Hope isn't generally a very useful strategy, but there is reason to be hopeful nonetheless. The critical issue is going to be how we get Washington to move back to the middle where it belongs. This requires bipartisanship which in turn requires leadership. Reagan's whole eight-year tenure in the 1980s occurred with the House being in Democrat hands the whole way through. Bill Clinton's second term coincided with both the House and Senate controlled by the Republicans.

It can be done! 

With this in mind, the best that can happen is a Reaganesque and Clintonesque return to compromise on the road to fiscal reform.  It will be painful. We all know it will be painful.

smartknowledgeu's picture

Are Republicans or Democrats Better for Gold & Silver Performance?

Here’s a breakdown of gold and silver performance by political party for the last 5 US Presidential terms.

Tyler Durden's picture

The Far More Important 'Election' Part 2: China's Market Implications

Having made clear in Part 1 the various policy leanings, uncertainty, and potential reform headlines, we delve a little deeper into the specifics of what the systemic and idiosyncratic implications might be. In two simple tables, Goldman lays out the top-down asset-class perspectives as 'new' China addresses its systemic issues and then looks at how China's equities (and by implication global equity indices) can meaningfully re-rate with a background of economic sustainability concerns as reforms impact various sectors more or less. As Goldman concludes: "Cyclical adjustments can help to restore confidence, but investors will likely be unwilling to meaningfully re-rate the market until more concrete progress is made on the reform front…but reforms may not be good for all sectors."

Phoenix Capital Research's picture

What a Romney Presidency Would Mean for the Economy and Markets

Yesterday we assessed the impact a second Obama term would have on the US economy and markets. Now let’s assess what impact a Romney Presidency would have on the US economy and financial markets.

Tyler Durden's picture

Gold And Silver Worth $1.4 Billion Carried In Baggage From Turkey To Iran, UAE And Middle East in September

Turkey’s trade deficit has been shrinking and the country has enjoyed the best bond rally in the emerging markets this year due in part to the contributions of airline passengers transporting gold in their baggage. Statistics from Istanbul’s 2 main airports show $1.4 billion of precious metals were registered for export in September.  Iran is Turkey’s largest oil supplier and Turkey has been paying for the oil not only with liras but also with gold bullion. Turkey exported $11.7 billion of gold and precious metals since March, when Iran was barred from the Society for Worldwide Interbank Financial Telecommunication, (Swift) making it nearly impossible for Iran to complete large international fund transfers. Of the $11.7 billion, $10.2 billion or 90% was to Iran and the United Arab Emirates, according to data on Turkey’s state statistics agency’s website. Turkey’s current account deficit is second in the world at $77.1 billion or 10% of GDP while the US currently holds the top spot.   The problem with Turkey switching from a net importer to a net exporter of gold bullion this year is that the foreign trade data is misrepresented. Turkey’s use of precious metals is a key factor to help turn around its nation’s current junk bond rating status.

Tyler Durden's picture

Friday Humor: The ECB Explains What A Ponzi Scheme Is; Awkward Silence Follows

From the ECB's Virtual Currency Schemes, aka the "Bash Bitcoin Boondoggle" (p. 27): "A Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors. Ponzi scheme organizers often solicit new investors by promising to invest funds in opportunities claimed to generate high returns with little or no risk. In many Ponzi schemes, the fraudsters focus on attracting new money to make promised payments to earlier-stage investors and to use for personal expenses, instead of engaging in any legitimate investment activity." Considering that this elucidation comes from the very same entity that launched the SMP, LTRO, OMT, EFSF, ESM, oh, and of course, TARGET2, and whose head said to not short the EUR as there is "no risk" whatsoever in holding said currency, one would expect that this definition is absolutely spot on...


Tyler Durden's picture

It Begins: Ecuador Demands Repatriation Of One Third Of Its Gold Holdings

Phoenix Capital Research's picture

Could It Get Worse Than 2008?


Indeed, when you think about it, 2008 happened at a time when paper money was still perceived as a safehaven. That is no longer the case as the Central Banks now have the printers running both day and night. Small wonder that Gold and Silver are at or near all time highs in every major currency.

Tyler Durden's picture

Overnight Sentiment: BTF Window Dressing And Ignore All News

If trying to explain why S&P futures are up another 9 points to 1417, and are now 25 ticks from the Monday night lows, there are so many catalysts: perhaps it was the European September unemployment rate rising to a new record of 11.6%, (Italy unemployment is now 10.8% up from 10.6% but it still has a way to go until it hits Spain's 25%) even as Consumer prices kept inflation at a steady 2.5% rate, or that French producer prices rose more than expected even as spending missed expectations, or that Spanish housing permits collapsed by 37.2% in August from July, or that Greek retail sales plunged by 7.2% Y/Y and the Greek 2013 economic outlook was cut in the latest budget with the budget deficit now seen at 5.2% from 4.2% before and that Greece now sees 189.1% debt/GDP in 2013 up from 175.6% in 2012, or that Japan just cut its economic outlook last night after its manufacturing PMI came at 46.9, the lowest since 2009 excluding Fukushima, or that UK consumer confidence printed -30, vs -28 last and the lowest since April, or that Taiwan slashed its 2012 GDP forecast from 1.66% to 1.05%, or that nothing has been resolved on the Greek labor reforms or the now two month overdue Troika bailout, or that insolvent Spain has still not requested a bailout, or that virtually every company that has reported revenues in the last two "dark days" missed expectations, or that US Mortgage applications tumbled 6% for its fourth straight weekly decline (government refi index down 5.5%, mortgage apps down 4.8%), or of course that Hurricane Sandy will cut both Q4 GDP and corporate profits (not to mention sales). Truly, there are so many reasons why the S&P has now soared since Apple announced the termination of its two key executives on Monday afternoon, one doesn't know where to start (and don't you dare say "window dressing"). Perhaps Kevin Henry would, but sadly his Bloomberg status is now "gray"...

Tyler Durden's picture

Guest Post: A Case For Legalized Insider Trading

Defending the indefensible? In the past weeks, there has been a 'revival' of news related to high-profile inside trading cases. Insider trading is accurately pictured in that great movie called "Wall Street", by a famous line of Gordon Gekko to Bud Fox. Gordon said: "If you’re not inside, you are outside". Gordon was right. If only people understood that this is just a natural thing... It has nothing to do with ethics. Yes, we know that there is something in our argument that may not make sense to you... and we dare to guess that it is because you expect fairness when you invest your savings in a public security (i.e. a stock or a bond). But in all honesty…have you ever asked yourself why you expect fairness? We are not implying people should not trust those who issue or market these securities. But if they do, they should recognize that there is the risk that they may suffer a loss due to insider trading. Public securities, ceteris paribus, should trade at a discount to private securities, to compensate for the risk of lack of control and transparency. Yet, today, the opposite applies.

Tyler Durden's picture

Greek Ruling Coalition Collapses Days Ahead Of Critical Vote

If one is curious why the EURUSD has been ramping as if no one will ever sell one more euro ever again, the reason is simple: the BIS is desperate to mask the fact that the fragile Greek coalition, whose creation sent Europe to the edge back in June during the Greek re-elections that just barely avoided a Grexit, has just crumbled. And with an illiquid market, the reflexive argument always is a simple one: if someone is buying, the news must be good, so dear momo-chasers - buy along. Only the news isn't good, and in a centrally-planned world, the only buyer left are central banks, who are now solely political, and not market, forces. What the news really is, is that with Greece poised to vote on critical labor reforms (read more layoffs) next week, which must be passed in Parliament with a majority vote in order to get the next Troika bailout tranche, the Samaras-led coalition just lost one of its three members, after the Democratic Left announced it would take its 16 votes and vote against any further austerity. In doing so it has effectively joined Syriza and any other anti-bailout powers, and has made certain that yet another Greek election is imminent, one which will finally see the rise of the "anti-memorandum" forces on top, and finally launch the 3 year overdue departure of the Greek ferryboat from the monetary landmass, with even more dire consequences for the USS EURtanic.

Tyler Durden's picture

How Central Bank Policy Impacts Asset Prices Part 5: How Far Can They Go?

With the unlimited asset purchase announcements by the Fed and ECB recently, the limits of balance sheet expansion will be put to the test. The current levels would have been seen as inconceivable a mere few years ago and now it seems business-as-usual as investors have become heuristically biased away from the remarkable growth. The problem is - central banks are missing inflation targets and credit growth is still declining - need moar easing, forget the consequences.

Tyler Durden's picture

How Central Bank Policy Impacts Asset Prices Part 4: Commodities

Through a wider looking glass, apart from Gold, commodity prices remain mostly driven by economic cycles rather than central bank actions. The correlation of Gold with Central Bank balance sheets remains the dominant theme as it grows in substance as a true global currency and a hedge against money debauchment. Since September’s coordinated easing from central banks, commodities have turned in mixed performances (-5% for oil, -3% for metals). The direct impact of monetary policy on industrial commodity prices appears very limited today (contrary to the situation during QE2 period), given the bleak global economic outlook and the absence of aggressive easing from China.

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