Federal Reserve Bank
Because when your year-end bonus depends on you not seeing it coming, you don't.
The real problem for the Fed will be how foolish it will look if it does raise by 25 basis points and is then forced by a slowing economy to lower rates back to zero soon after liftoff. At that point, the markets should finally understand that the Fed is powerless to get out of the stimulus trap it has created. But it looks like the Fed would rather look foolish later when it's forced to cut rates, than look foolish now by not raising them at all. The Fed’s rocket to nowhere will hover above the launch pad for a considerable period of time before ultimately falling back down to Earth.
The Fed & ECB are spawning the next crisis....
In High Stakes Game of the Future of Finance, Reggie Middleton Challenges Goldman Sachs Patent Filing With EaseSubmitted by Reggie Middleton on 12/04/2015 05:59 -0400
Year end 2015, we go from Ponzi scheme to failure to the thing every major global bank desires. The dilemma is, the ingenuity to excel in this space lies in scrappy young startups, not trillion dollar mega banks. Let me prove this to you, step by prior art step.
“Do not believe in anything simply because you have heard it. Do not believe in anything simply because it is spoken and rumored by many. Do not believe in anything because it is found written in your religious books. Do not believe in anything merely on the authority of your teachers and elders.” - Buddha
In the short run this will probably lead to dramatic and unexpected change in financial flows. Over the longer run, a much-overlooked problem emerges. Simply put, it is highly unlikely that market rates will respond as the Fed moves its target rate upwards; in this case, the FOMC will have lost all control.
The Federal Reserve has been telegraphing to markets that they are going to raise the fed funds rate by 25 basis points next month at its December Fed Meeting.
The 'Great Recession' was evidently so bad for the economy that it stopped the net influx of illegal immigrants from Mexico. For the first time since the 1940s, more Mexicans have been leaving the U.S. to return home than arriving, a reversal that brings down the curtain on the largest immigration wave in modern American history. As WSJ reports, the Pew Research Center figures released Thursday suggest that the surge in legal and illegal Mexican immigration that helped transform America - and remains a contentious issue on the presidential campaign trail - may have peaked for good.
Swap spreads recently took a nosedive and are once again trading at negative levels, even for shorter maturities. This market perversion suggest that Wall Street is a safer counterpart than the very institution that underwrites the whole fractional reserve fraud in the first place. To price in a higher risk premium on the US government than on US banks is a contradiction in terms so there need to be another explanation behind this puzzling market phenomenon... There is, and you're not going to like it.
There is a widespread global campaign to eradicate physical cash. And we’ve now got a connected insider confirming it.
The allure of ill-gotten oil money remains strong. The lull in drilling has given oil companies more time to scrutinize their operations -- and their losses. As Bloomberg reports, during booms "they are moving at such a rapid pace there’s not a lot of auditing and inventorying going on," said Gary Painter, sheriff in Midland County, Texas, in the oil-rich Permian Basin; but "whenever it slows down, they start looking for stuff and find out it never got delivered or it got delivered and it’s gone." From raw crude sucked from wells to expensive machinery that disappears out the back door, drillers from Texas to Colorado are struggling to stop theft that has only worsened amid tens of thousands of lost roughneck jobs.
U.S. stock investors may be complacent regarding the ability of the stock market to withstand higher interest rates. Their confidence may come from the fact that, historically, markets have not peaked until 12-24 months after the Fed begins to tighten. This assumes the tightening cycle begins with the first official rate hike. But if it really began with the increase in the Shadow Rate, then a December rate hike will already be 19 months into the tightening cycle! Plus, given how overvalued stocks may currently be, and the amount of corporate debt accumulated to finance share buybacks, this bull market may be far more vulnerable than most to higher interest rates.
- GOP debate winners and losers (Hill)
- European Stocks Rise as Dollar Weakens; Metals Decline on China (BBG)
- Global shares shrug off mixed China data, copper teeters near six-year low (Reuters)
- Fed's Evans: Looking forward to time when Fed can raise rates (Reuters)
- Alibaba’s Global Ambitions Face Counterfeit Challenge (WSJ)
- China Rebalancing Takes Hold as Output Slows, Retail Jumps (BBG)
As we noted previously, for the first time ever, primary dealers' corporate bond inventories have turned unprecedentedly negative. While in the short-term Goldman believes this inventory drawdown is probably a by-product of strong customer demand, they are far more cautious longer-term, warning that the "usual suspects" are not sufficient to account for the striking magnitude of inventory declines... and are increasingly of the view that "the tide is going out" on corporate bond market liquidity implying wider spreads and thus higher costs of funding to compensate for the reduction is risk-taking capacity.
Another Former Goldmanite Becomes Fed President: Neel "Chump" Kashkari Replaces Uber-Dove KocherlakotaSubmitted by Tyler Durden on 11/10/2015 11:58 -0400
Goldman Sachs -> Treasury -> PIMCO -> The Fed