"As for the campaign for zero cash in the service of negative interest rates, Mr. Rogoff’s brief is best seen not as detached scientific analysis but as a kind of left-wing crotchet. Strip away the technical pretense and what you have is politics. The author wants the government to control your money. It’s as simple as that."
Idiocy and mendacity are a bad combo in the affairs of nations, especially in elections. The present case in the USA displays both qualities to near-perfection: on one side, a boorish pseudo-savior in zero command of ideas; on the other side, a wannabe racketeer-in-chief in full command of her instinctive deceit. Trump offers incoherent rhetoric in opposition to the current dismal order of things; Clinton offers empty, pandering rhetoric in defense of that order. Both represent an epic national drive toward political suicide.
Major bond markets sold off last week, led by the UK and Japan. Goldman Sachs expects the increase in long-dated yields to extend into Q4, with US Treasuries reaching 2% by year-end. Their views are based on three considerations...
After years of seeing the Fed operate within this “reflexivity conundrum. the markets have already spoken (meaning already financially tightened enough) to a point where the Fed ONCE AGAIN has to back away from their “hiking threat.” Back to “none and done,” which will likely merit a pretty violent rally in risk and reversal in rates."
By keeping interest rates low, the Fed has created a "false stock market," Donald Trump argued in a wide-ranging CNBC interview, exclaiming that Fed Chair Janet Yellen and central bank policymakers are very political, and should be "ashamed" of what they're doing to the country, "The Fed is not even close to being independent."
With traders in the US arriving at their desks, the global selling appears to be accelerating and as Bloomberg notes, "a selloff in fixed income is starting to snowball into a global market rout" driven by what Reuters dubbed "growing concerns that global central banks' commitment to the post-crisis orthodoxy of super-low interest rates and asset purchase programs may be waning."
It appears we have a disagreement between two JPMorgan analysts: while one, namely head quant Marco Kolanovic anticipates a significant deleveraging by quant and algo funds, JPM's fund flow guru is desperate to talk down the threat from a coordinated global selloff, and concludes that a VaR shock may not be imminent after all.
On the current path, the world is experiencing the largest artificial asset allocation in modern history, one that is driven by a misguided interest rate regime that has lost its efficacy and is producing more harm than good. Yet the fear of withdrawal pain is keeping central bankers from doing the inevitable: Quit. The response is predictable: "I need the drugs!"
Governments and central banks would very much like to frighten people away from cash, but that only underlines its value under the current circumstances. Cash is king in a deflation. The powers-that-be know that, and would like the available cash to end up concentrated in their own hands rather than spread out to act as seed capital for a bottom-up recovery. Holding on to cash under one’s own control is still going to be a very important option for maintaining freedom of action in an uncertain future.
Looking for group think, extrapolation of extreme silliness, linear thinking, and belief in absurd models? Then look no further than Fed presidents, their advisors, and academia loaded charlatan professors.
In this letter we are taking up the ambitious goal of painting a picture of the global economic landscape as we see it, in order to walk you through the investment process that we been fine tuning for this less-than-exciting picture.
The signs are ominous, the rhetoric constant. Whichever way you look at it, the world is slowly descending into an ever greater spiral of conflict. We all know that the current wars raging in the Middle East have the potential to go catastrophically wrong and pull the super-powers into something much bigger. You also know things are not good when the so-called ‘conspiracy theories’ from alternative media outlets eventually go mainstream...