• Steve H. Hanke
    02/11/2016 - 16:08
    The burgeoning literature contains a great deal of hype, which validates the 95% Rule: 95% of what is written about economics and finance is either wrong or irrelevant.

Central Banks

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JPM: "The Backdrop Remains The Same: Sell Rallies Toward 1950"





Yesterday we reported that following a spike in calls by the sellside to "sell the rally", hedge funds did just that and according to BofA client data, hedge funds dumped the most shares in the past week in two years.  Today, JPM's Adam Crisafulli repeats the firm's now default call for 2016, noting that "the bigger picture backdrop for the market remains the same."

 
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The Coming Revaluation Of Gold





The discipline of gold as Reserves backing currency at a revalued price will restore order to a world that has refused to adopt the necessary discipline until forced to do so in the desperate situation now evolving, where there will be no other alternative but to accept the detested fiscal and financial discipline imposed by gold.

 
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The Bank Of Japan Has Betrayed Its People





The Bank of Japan’s unexpected rate cuts to negative are a desperate attempt to help out The Fed and to support the dollar at the expense of the aging Japanese population.

 
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BofAML Warns The Risk Of "Quantitative Failure" Is Growing





Yield “fatigue” may be overtaking yield “euphoria”. The further central banks go down the rabbit hole of unique monetary policy, the greater the fear factor of how normality will eventually be restored. And asBofAML's Michael Hartnett highlights, the risk of “quantitative failure” in markets grows.

 
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The Last Time These Five Outlier Events Coincided Was In February 2009





(i) HY spreads above 800bp; (ii) oil down at least 25% yoy; (iii) S&P 500 EPS is negative yoy; (iv) Technicals are weak (% of stocks above 200d is below 15%) and (v) sentiment is terrible (AAII).

 
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Wall Street Drops The 'C' Word: Proclaims Junk Bond Risks Are Contained





To an economist, the economy can bear no recession. In times of heavy central bank activity, an economy can never be in recession. Those appear to be the only dynamic factors that drive economic interpretation in the mainstream. And they become circular in the trap of just these kinds of circumstances – the economy looks like it might fall into recession, therefore a central bank acts, meaning the economy will avoid recession; thus there will never be recession. The risks are all still there, and economists are still determined to downplay if not miss them entirely.

 
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Paying A Corporation To "Buy" Its Debt? It's Coming Soon, Jim Reid Warns





As a result of the rush to global NIRP, which now sees central banks and their sovereigns accounting for over 25% of global GDP, amounting to around $6 trillion in government bonds, trading with negative yields, a question has emerged: when will corporate bonds follow this govvie juggernaut and how soon until investors pay not government but companies to borrow? That is the focal piece in today's note by our favorite DB credit strategist Jim Reid who muses as follows.

 
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Groundhog Day Trading: Stocks Slide As Oil Plunge Returns; BP Suffers Biggest Loss On Record





It certainly does feel like groundhog day today because while last week's near record oil surge is long forgotten, and one can debate the impact the result of last night's Iowa primary which saw Trump disappoint to an ascendant Ted Cruz while Hillary and Bernie were practically tied, one thing is certain: today's continued decline in crude, which has seen Brent and WTI both tumble by over 3% has once again pushed global stocks and US equity futures lower, offsetting the euphoria from last night's earnings beat by Google which made Alphabet the largest company in the world by market cap.

 
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The End Of Plan A: The Big Reset & $8000 Gold





Willem Middlekoop, author of The Big Reset – The War On Gold And The Financial Endgame, believes the current international monetary system has entered its last term and is up for a reset. Having predicted the collapse of the real estate market in 2006, (while Ben Bernanke didn't), Middlekoop asks (rhetorically) -can the global credit expansion 'experiment' from 2002 – 2008, which Bernanke completely underestimated, be compared to the global QE 'experiment' from 2008 – present? - the answer is worrisome. In the following must-see interview with Grant Williams, he shares his thoughts on the future of the global monetary system and why the revaluation of Gold is inevitable...

 
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World's Largest Silver Producer Slams LBMA's "Manipulated" Fix





“The large discrepancy between the spot price and the fix is very alarming to us especially that it happened twice in a row,” KGHM head of market risk Grzegorz Laskowski exclaimed.

 
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How To Beat The Market: One Surprisingly Simple Trade





Today, none other than Bank of America's chief equity quant Savita Subramanian throws in the towel and admits that the best trade over the past several years has been precisely what we suggested several years ago: do the opposite of what the crowd does.

 
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Ron Insana Kindly Requests The Fed Lower Rates To Negative To Help His Virtual Portfolio





"The Fed should, given recent events, simply admit its error of pre-emptively raising rates before both its employment and inflation mandates had been met, and reduce the Federal Funds rate back to zero, pending further improvements in the economy. Certainly, the Federal Reserve risks its credibility by admitting an error, but that is a far better outcome than risking recession by not doing so"

 
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"The February Air Pocket": Buybacks Are Back But No Central Banks To Hold Traders' Hands





There will be two key themes for investors seeking to shake off the abysmal "as goes January" blues: buybacks, which are set to return in February, and central banks, which are poised to do absolutely nothing to calm investor nerves in the next 4 weeks.

 
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Rally Hobbled As Ugly China Reality Replaces Japan NIRP Euphoria; Oil Rebound Fizzles





It didn't take much to fizzle Friday's Japan NIRP-driven euphoria, when first ugly Chinese manufacturing (and service) PMI data reminded the world just what the bull in the China shop is leading to a 1.8% Shanghai drop on the first day of February. Then it was about oil once more when Goldman itself said not to expect any crude production cuts in the near future. Finally throw in some very cautious words by the sellside what Japan's act of NIRP desperation means, and it becomes clear why stocks on both sides of the pond are down, why crude is not far behind, and why gold continues to rise.

 
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So It Begins: Bloomberg Op-Ed Calls For An End Of Cash





"Cash had a pretty good run for 4,000 years or so. These days, though, notes and coins increasingly seem declasse: They're dirty and dangerous, unwieldy and expensive, antiquated and so very analog.... Much depends on the details, of course. But this is a welcome trend. In theory, digital legal tender could combine the inventiveness of private virtual currencies with the stability of a government mint."

 
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