"Let's say the fiscal policy comes. It succeeds. We get growth. We get inflation. Central bank balance sheets cannot expand in the growth and inflation. So who's going to buy the government debt? The answer is you are. Particularly if you work for a regulated financial institution. Regulated financial institutions are the people who will be expected to do that, and that is financial repression.”
Donald Trump's election as next US president has given the gold price a short-term 'uncertainty' trading boost. However, Trump's keen interest in the gold standard is a trend worth watching over the next 4 years.
"The market is unlikely to go “bang” in the way those bubbles did. It is far more likely that the mean reversion will be slow and incomplete. The consequences are dismal for investors: we are likely to limp into the setting sun with very low returns. For bubble historians, though, it is heartbreaking for there will be no histrionics, no chance of being a real hero. Not this time."
There seems to be a growing assumption that the elites have finally figured out how to turn a capitalist system into a perpetual motion machine by having central banks buy up all financial assets. This is classic “peak of the cycle” thinking, and the more widespread it becomes the closer the system is to breaking down.
Deutsche Bank has advised its sales and trading team to immediately report to their trading desks should Trump wins Pennsylvania and Michigan. So if Trump be is reported to be leading and/or winning the two key battleground states at 8pm, expect all volatility hell to break loose.
Overnight, China reported that the PBOC’s FX reserves fell another US$46bn to US$3.121 trillion in October as the central banks struggled to offset the impact of accelerating capital outflows, triple the official September decline of US$19bn (recall that according to Goldman, the true FX outflow in recent months has been far greater), and the biggest drop since January. The October decline brought China's total reserves the lowest amount since 2011.
"A new round of QE is more likely over the next two years than the Fed hiking by 100 basis points. With Washington in gridlock, the pressure on the Fed to do more will go through the roof. The residual credibility they have will need to be used up."