Federal Reserve Bank
It appears someone forgot to tell The Federal Reserve Bank of New York (FRBNY) how to 'seasonally-adjust' its data to meet the narrative. In Februrary's survey of consumer expectations, FRBNY reports a collapse in consumer spending growth expectations in January. Even more worrying for President Obama's "middle-class economic" strategy is that the biggest plunge is among the $50-100k income cohort. Not exactly the picture of the 'wreckovery' Americans are supposed to be buying right now. All those jobs, all that wealth created, all the low-gas-price-tax-cut, and spending expectations collapse...
- if rates go negative, the U.S. Treasury Department’s Bureau of Engraving and Printing will likely be called upon to print a lot more currency as individuals and small businesses substitute cash for at least some of their bank balances.
- As interest rates go more negative, market participants will have increasing incentives to make payments quickly and to receive payments in forms that can be collected slowly
- if interest rates go negative, the incentives reverse: people receiving payments will prefer checks (which can be held back from collection) to electronic transfers
- we may see an epochal outburst of socially unproductive—even if individually beneficial—financial innovation
In a stunningly honest reflection on itself (and its peer group of professional prognosticating panderers), The Federal Reserve's San Francisco research group finds that - just as we have pointed out again and again - that since 2007, FOMC participants have been persistently too optimistic about future U.S. economic growth. Real GDP growth forecasts have typically started high, but then are revised down over time as the incoming data continue to disappoint. Possible explanations for this pattern include missed warning signals about the buildup of imbalances before the crisis, overestimation of the efficacy of monetary policy following a balance-sheet recession, and the natural tendency of forecasters to extrapolate from recent data. The persistent bias in the track records of professional forecasters apply not only to forecasts of growth, but also of inflation and unemployment.
The Tulip Lunacy in the Bond market is just off the charts stupidity at its finest! The U.S. 2-Year Bond is currently pricing in no rate hike, and in fact, a negative rate of inflation over the next two years....
The gravy train is over for oil workers. All over North America, people that felt very secure about their jobs just a few weeks ago are now getting pink slips. Since 2003, drilling and extraction jobs in the United States have doubled. And these jobs typically pay very well. It is not uncommon for oil patch workers to make well over $100,000 a year, and these are precisely the types of jobs that we cannot afford to be losing. The middle class is struggling mightily as it is. And just like we witnessed in 2008, oil industry layoffs usually come before a downturn in employment for the overall economy.
The Bundesbank, Germany’s powerful central bank, announced very publicly this morning the further repatriation of some of it’s gold being held in foreign locations – namely in Paris and New York with the Bank of France and the Federal Reserve.
"This is why Putin is Public Enemy Number 1. It’s because he’s blocking the US pivot to Asia, strengthening anti-Washington coalitions, sabotaging US foreign policy objectives in the Middle East, creating institutions that rival the IMF and World Bank, transacting massive energy deals with critical US allies, increasing membership in an integrated, single-market Eurasian Economic Union, and attacking the structural foundation upon which the entire US empire rests, the dollar." Up to now, of course, Russia, Iran and Venezuela have taken the biggest hit from low oil prices; but what the Obama administration should be worried about is the second-order effects that will eventually show up...
- Police Surround Paris Terror Suspects Near CDG Airport (BBG)
- ECB Said to Study Bond-Purchase Models Up to 500 Billion Euros (BBG)
- How OPEC Weaponized the Price of Oil Against U.S. Drillers (BBG)
- German Industrial Production Falls Amid Plunge in Energy Output (BBG)
- Car Loans See Rise In Missed Payments (WSJ)
- Jim O'Neill threatens he will replace BRICs with ICs (BBG)
- Oil heads for seventh weekly loss as supply glut drags (Reuters)
- Armed man takes hostage in kosher grocery in Paris (AFP)
- Janus Chairman Didn’t Know Details of Gross’s Investment (WSJ)
- Kaisa Bondholders Dream of White Knight as Default Becomes Real (BBG)
Less drilling will not only lead to a loss of jobs for oil workers, but the services that pop up around drilling sites – restaurants, bars, construction, and more – are feeling the slowdown as well. States like Texas, North Dakota, Oklahoma, and Louisiana have seen their economies boom over the last few years as oil production surged. But the sector is now deflating, leaving gashes in employment rolls and state budgets. With such extensive dependence on oil for prosperity in these states, the pain will mount if oil prices stay low.
Apparently taking a page out of China's book, Factually reports the Philadelphia Federal Reserve office (apparently aware of the worthlessness of their fiat currency) sends old currency to local power plants, where it's burned for electricity. As WSJ reports, The Fed destroys more than 5,000 tons of U.S. currency a year - most of it once went to landfills, but the central bank has pushed for years to go green with all that green. It appears we have come a long way from the Federal Reserve Bank of Richmond’s 1953 annual report when it boasted it had "money to burn."
Every year, David Collum writes a detailed "Year in Review" synopsis full of keen perspective and plenty of wit. This year's is no exception. "I have not seen a year in which so many risks - some truly existential - piled up so quickly. Each risk has its own, often unknown, probability of morphing into a destructive force. It feels like we’re in the final throes of a geopolitical Game of Tetris as financial and political authorities race to place the pieces correctly. But the acceleration is palpable. The proximate trigger for pain and ultimately a collapse can be small, as anyone who’s ever stepped barefoot on a Lego knows..."
Evil Booze Deflation Got Your Keynesian Spirits Down? Then Rejoice In The Biggest Surge In Beef Prices Since 2003Submitted by Tyler Durden on 12/12/2014 10:02 -0400
Remember: deflation is bad, evil, horrible... except when it involves tumbling crude oil prices: then it is "unambiguously good" for the consumer and a "tax cut." Which is why we are moritifed to report that for the second month in a row, alcohol prices have dropped, and are down 0.1% from a year ago. Surely, time for more QE to reset US consumer inflation expectations? Or maybe not, because if said Keynesian US consumer is drowning his sorrows from declining alcohol prices in, well, alcohol, all shall be well if on the side said consumer orders some steak: with a price increase of 28.6% from a year ago, this is the biggest annual jump in beef prices since 2003.
"My Helicopters Are Ready. You Will All Be Trillionaires." Must see chart of gold in German marks from 1918 to 1923. The Fed - "Silently robbing your purchasing power since 1913 ... "
Did you know that there exists a federal Immigrant Investor Program that grants “EB-5? immigration visas to foreigners who provide at least $500,000 to U.S. projects that create 10 or more American jobs? Apparently the good folks at the Pennsylvania Turnpike Commission are well aware of it, and are using it to raise $200 million. Here’s what we’d like to know. Who are these investors and who vets them? It is a known fact that corrupt Chinese officials and businessmen are scrambling to get themselves and their money out of their homeland as the government cracks down on corruption. How many of them are going to use this program to get into the U.S., and what will be the long-term impact to our society?