• Sprott Money
    05/05/2016 - 06:02
    Why is a Deutsche Bank mouthpiece suggesting “negative retail deposit rates or perhaps wealth taxes”? The answer is to (supposedly) stimulate our economies.

Gross Domestic Product

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Iraq On The Brink Of Chaos As Oil Revenues Fall





Nowhere are the stakes higher than in Iraq, and selling oil at half the price it would take to just break even could break this giant’s back. It certainly isn’t enough to stave off the unrest in Basra, not to mention the ISIS threat.

 
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Oil Didn't Wreck Venezuela's Economy... Socialism Did





If you read much of the commentary, people blame the country's economic woes on the low oil price. But while the oil price drop may have been a proximate cause, and an aggravating factor, Venezuela's economic woes predate the current oil price drop by many years, and were going on even while the oil price was high, under President Hugo Chavez. The culprit is clear and obvious: The problem is Venezuela's authoritarian socialism.

 
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This Is The Real Reason For The War On Cash





Beware politicians trying to limit the ways you can conduct private economic business. It never turns out well.

 
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Biggest Short Squeeze In 7 Years Continues After Bullard Hints At More QE, OECD Cuts Global Forecasts





Just when traders thought that the biggest and most violent 3-day short squeeze in 7 years was about to end a squeeze that has resulted in 3 consecutve 1%+ sessions for the S&P for the first time since October 2011, overnight we got one of the Fed's biggest faux-hakws, St. Louis Fed's Jim Bullard, who said that it would be "unwise" to continue hiking rates at this moment, and hinted that "if needed", the most natural option for the Fed going forward would be to do further Q.E.

 
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America's National Debt Bomb Caused By The Welfare State





The news is filled with the everyday zigzags of those competing against each other for the Democrat and Republican Party nominations to run for the presidency of the United States. But one of the most important issues receiving little or no attention in this circus of political power lusting is the long-term danger from the huge and rising Federal government debt.

 
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Buyer's Remorse? Axel Merk Warns "The Fed Doesn't Have A Clue!"





"The Fed doesn't have a clue!" - We allege that not only because the Fed appears to admit as much, but also because our own analysis leads to no other conclusion. With Fed communication in what we believe is disarray, we expect the market to continue to cascade lower - think what happened in 2000. To understand what's unfolding we need to understand how the Fed is looking at the markets, and how the markets are looking at the Fed.

 
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JPM's Striking Forecast: ECB Could Cut Rates To -4.5%; BOJ To -3.45%; Fed To -1.3%





JPM estimates that if the ECB just focused on reserves equivalent to 2% of gross domestic product it could slice the rate it charges on bank deposits to minus 4.5%. In Japan, JPM calculates that the BOJ could go as low as -3.45% while Sweden’s is likely -3.27%. Finally, if and when the Fed joins the monetary twilight race, it could cut to -1.3% and the Bank of England to -2.69%.

 
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Janet Yellen's "Humphrey-Hawkins" Testimony: Economic Strains, Tightening Pains, & No Stock Gains - Live Feed





Fed Chair Yellen will be presenting her semi-annual monetary policy testimony - sometimes called the "Humphrey-Hawkins" testimony - today (House Financial Services Committee) and tomorrow (Senate Banking Committee). Her prepared remarks offered little new information over the January FOMC Statement but the Q&A will likely be the most market-moving as politicians likely demand she "get back to work" for the good of the nation's shareholders.

 
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Fed Reveals Which "Developments To Financial Stability" It Is Most Worried About





Broad equity indexes have declined significantly since July 2015, and forward price-to-earnings ratios have fallen to a level closer to their averages of the past three decades.
Leverage [among speculative-grade and unrated firms] firms has risen to historical highs, especially among those in the oil industry, a development that points to somewhat elevated risks of distress for some business borrowers.

 
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Yellen Hints At Slowing Economy, Dropping Stocks, Accommodative Fed, But Does Not Go "Full Dove"





With world markets begging for moar, Janet Yellen's prepared Humphrey-Hawkins Testimony was a disappointment:

  • *YELLEN: FED EXPECTS ECONOMY TO WARRANT ONLY GRADUAL RATE RISES (everything is fine)
  • *YELLEN: JOB, WAGE GAINS SHOULD SUPPORT INCOMES AND SPENDING (everything is awesome)
  • *FED REPORT: LEVERAGE RISKS IN FINANCIAL SECTOR `REMAIN LOW' (so don't worry about banks)
  • *YELLEN: FINANCIAL STRAINS COULD WEIGH ON OUTLOOK IF PERSISTENT (so, there's chance)

The bottom line this is simply a rerhash of the Jan FOMC Statement and does not offer enouigh dovishness for the market.

 
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Futures Jump After Bill Dudley Hints At Fed "Policy Error", Warns Of "Significant Consequences" From Strong Dollar





"A weakening of the global economy accompanied by further appreciation in an already strong dollar could also have "significant consequences." I read that as saying we're acknowledging that things have happened in financial markets and in the flow of the economic data that may be in the process of altering the outlook for growth and the risk to the outlook for growth going forward."

- Bill Dudley

 
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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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"Time To Panic"? Nigeria Begs World Bank For Massive Loan As Dollar Reserves Dry Up





Having urged "don't panic" just 4 short months ago, it appears Nigeria just did just that as the global dollar short squeeze forces the eight-month-old government of President Muhammadu Buhari to beg The World Bank and African Development Bank for $3.5bn in emergency loans to help fund a $15bn deficit in a budget heavy on public spending amid collapsing oil revenues. Just as we warned in December, the dollar shortage has arrived, perhaps now is time to panic after all.

 
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$5.5 Trillion In Government Bonds Now Have Negative Yields, Covering 23% Of Global GDP





"Never before have so many central banks explored sub-zero territory at the same time."

 
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