Central Banks

The ZIRP/NIRP Gods & Their PhD Priesthood Have Failed

The priesthood's insane obsession with forcing people to spend their savings by punishing savers with ZIRP/NIRP has failed spectacularly for a simple reason: it completely misunderstands human psychology.

Junk-Bond Traders Pile Into Bearish Bets Ahead Of Fed/BoJ

After one the biggest rallies in the last seven years off the Feb lows, high-yield bond investors are rushing into bearish (hedge) positions ahead of this week's Fed/BoJ spectacle. Put volume (protecting downside) in the last few days has soared to levels only seen around Brexit and last December's Fed rate-hike as Bloomberg notes, investors have already become skittish on signs that global central banks may turn off the spigot.

Frontrunning: September 20

  • How Police Tracked Down Bombing Suspect Suspect Ahmad Khan Rahami (WSJ)
  • Dollar Falls With Treasuries Amid Fed, BOJ Countdown; Oil Rises (BBG)
  • Fed again poised to cut longer-run interest rate forecast (Reuters)
  • Pipeline Break Lights a Fire Under Gasoline Prices Across Southeast (WSJ)
  • U.S. investigators seek motive for NY, NJ weekend attacks (Reuters)
  • Carrie Tolstedt: In the Eye of the Wells Fargo Storm (WSJ)

An Unorthodox Solution To The World's Economic Problems

We currently face a monumental dilemma. How do we extract ourselves from all this excessive debt without crashing the world economy? It’s basically a “one time” get out of jail card for the world economy.

"The Big Short's" Steve Eisman Reveals What The Next Big Short Is

Asked to name the next big short, Eisman initially declined. “I’m not in such a rush to do it again,” he said. “It took years off my life.” Then he relented, saying, “The only big short out there is when the world loses confidence in QE.”

Key Events In The Coming Central Bank-Dominated Week

Central banks will take center stage this week, with the Boj and Fed within hours of each other, then also the RBNZ and Norges all delivering policy decisions. Of the four however, the BoJ will likely steal the spotlight, especially as we expect no changes in policy from the other three.

Global Stocks, US Futures Rebound As Oil Rises, Dollar Drops

Stocks across the board, and US equity futures are broadly in the green this morning as markets shrug off the terror-related events in the NYC area over the weekend.  There wasn’t a single positive “reason” for the green price action but fears about the bond “tantrum” appear to be fading while a stronger dollar helped push oil and the commodity complex higher.

On Europe's Train Wreck Of Monetarist Absurdity

"A mudslide off this mountain of debt will have to happen in order to correct the excesses built up in recent years. There is too much liquidity mass built into the markets devoid of investment demand, and too weak of an economy holding it."

Wells Fargo: Who Says Crime Doesn't Pay

As scandalous as the Wesll Fargo debacle was, what is far more insidious, is the damage it inflicts (once again) upon the very fabric of free market capitalism, trust in laws, and last but not least: trust and belief in actual contrition.

Why The EU Is Doomed

We are accustomed to looking at Europe’s woes in a purely financial context. This is a mistake, because it misses the real reasons why the EU will fail and not survive the next financial crisis. We normally survive financial crises, thanks to the successful actions of central banks as lenders of last resort. However, the origins and construction of both the the euro and the EU itself could ensure the next financial crisis commences in the coming months, and will exceed the capabilities of the ECB to save the system.

On The Process Of Awakening

"So instead we consider an exploding opiate epidemic, an epidemic of obesity and metabolic illnesses, a discourse of inchoate rage and a Grand Canyon-sized gap between what we're told is true and what we experience as true "normal." These things are not normal; they are manifestations of a system that can only generate one output: self-destruction."

Previewing Next Week's Main Event: What Will The BOJ Do? (Spoiler Alert: Probably Nothing)

At the BOJ's next Monetary Policy Meeting on September 20-21, the Central Bank will conduct a “comprehensive assessment” of trends in economic activity and prices under the current policy framework, as well as the policy impact, with a view to achieving its 2% price stability target at the earliest possible time. Here is what to expect from next week's main event.