The Fed Chairman has some words of encouragement for the tens of millions of Americans who live at or below the poverty level, including that threatened with extinction class, affectionately known as "the middle." Her message? Build assets, or said otherwise... get rich.
During the FOMC pregame show, they punctually trotted out Johnny Waterboy Hilsenrath via SpreeCast, the sparkling new-media darling interactive webcast platform, to serve up another fresh jug of spiked reinvigorating Gatorade to his favorite NY Stock Market team.
The starting point in comprehending the dynamics of modern "markets' is to recognize that once they gain a head of steam, financial bubbles tend to envelope virtually every nook and cranny of the economy, creating terrible distortions and destructive excesses as they rumble forward. In this instance, Wolf Richter explains how Silicon Valley has once again (like 1999-2000) been transformed into a rollicking capital “burn rate” machine that has spawned a whole economy based on striving for bigger losses, not better profits. Even the leading venture capitalists now recognize that the insanity of the dotcom era has re-emerged. One of these days, even the monetary politburo may notice. But by then it will be too late. Again.
While Janet Yellen and her band of money printers work themselves into a tizzy over whether two buzz words - “considerable time” - should be dropped from their post-meeting word cloud, they might be better advised to just read the newspapers. This morning’s WSJ brings word that the lending boom which our monetary central planners are eager to stimulate is apparently off-to-the-races. Well, sort of. The item in question is a $122 billion globally syndicated loan to facilitate an M&A deal between the world’s two largest beer companies - AB InBev with a 20% global market share and SABMiller with 10%.
- Snow is coming: OECD Cuts Economic Growth Forecasts (WSJ)
- World waits for white smoke from U.S. Fed (Reuters) - Understandable error: they meant "green"
- Scots Breakaway at 45% Odds as Economists Warn of Capital Flight (BBG)
- Ukraine President Poroshenko Faces Backlash Over EU Trade Deal Delay (WSJ)
- German Anti-Euro Party Advances in Merkel Homeland Voting (BBG)
- Clinton Hints at 2016 Run as Super-PAC Packs Iowa Steak Fry (BBG)
- Air France, Lufthansa Hit by Strikes in Fight for Future (BBG)
- U.S. sees Middle East help fighting IS, Britain cautious after beheading (Reuters)
- Ex-Billionaire Charged by Brazil With Financial Crimes (BBG)
Q. What are traders talking about at the present time here at the New York Stock Exchange?
Cashin: We are concerned about two questions. First, how will the Fed do in keeping money reasonably easy without causing inflation? Second, where do we stand with the current geopolitical challenges? For now, these challenges seem to be short term concerns. But should we begin to see a financial contagion and pressure building on banks in Europe, perhaps out of the Ukraine situation, things could theoretically turn into what I call a «Lehman moment». That is when markets come under pressure but seem to be under control, and then things change suddenly.
Recent comments from FOMC participants on the forward guidance and the appropriate timing of the first hike of the fed funds rate suggest, Goldman warns, a greater clustering of FOMC participants' views around a mid-2015 'liftoff' in rates. Similarly, private sector forecasts for the first hike are becoming more centered on mid-2015 rather than August to September.
There is a connection between modern capital markets and the NFL (and between Central Bankers and Roger Goodell). The connection is solipsism – a pathological egocentrism where reality is defined by an individual’s mental perceptions and constructs. Collective solipsism is what overwhelming Common Knowledge looks like. It’s the annihilation of an individual’s perception of reality in favor of a group perception of reality. The collective solipsism of modern markets is the most crucial game to comprehend.
While BofAML's Michael Hanson expects Yellen’s overall tone to remain dovish, market perception will be key. The combination of changes to the forward guidance language, upward drift of the dots, and any comments seen as potentially hawkish, could lead to a selloff...
Well, I am profitable on this latest move up in 10-year yields, and I expect yields to continue rising through the 10 and 30 year bond auctions later this week ...
About a month ago we mocked the Albanian central bank when reports emerged that "two employees" had been charged with the theft of some $6.6 million in cash from the bank's vaults. Specifically, back in July the arrests come five weeks after a worker at the central bank admitted to stealing money over the course of four years, taking new bank notes printed in Switzerland when they arrived at his workplace and replacing them with old books. As it turns out, since there is a central bank involved, there is once again more than meets the eye, and the story has since mutated into something far more grotesque than even we could imagine, with news coming out late last week and over the weekend that not only was the theft by "two employees" a misdirection, but that the guilty party was none other than the Albanian version of Janet Yellen, the governor of the central bank himself Ardian Fullani.
"Washington is absolutely correct, in my opinion, to want to boost American consumption, but the Fed seems to be trying to boost consumption by igniting another asset bubble in the hopes that, like before 2007, Americans will feel “richer” and so will consume more. This isn't sustainable, however, and will leave us, as Paul and Druckenmiller fear, even more heavily indebted and more dangerously exposed to the underlying weakness in demand."
CNBC’s long-running “jobs Friday” fetish is getting downright appalling. Each month the BLS puts out a treasure trove of data on the rich and complex mosaic of the US labor market - a download that embodies a truly frightening trend of economic failure. Yet the clowns who assemble in its screen boxes to opine on Hampton Pearson’s 30-second summary of the BLS release never have a clue. Namely, that outside of health and education there has not been one net new job created in the American economy since July 2000! Yes, not a single new jo - as in none, nein, nichts, nada, zip! The point here, however, is about economics, not social worth. And in the realm of economics, the notion implicit in “jobs Friday” - that all jobs are created equal - is simply a fatuous shibboleth.
This past week has seen the market repeatedly attempt new "all-time" highs only to be found wanting. There has been plenty of headline data for the "bulls" to feast on from the ECB announcing a program to buy bonds, surging ISM data and improvement in productivity. However, the underlying data has kept the "bears" in the game with new orders and employment showing weakness, unit labor costs shrinking and the realization that the ECB's plans are likely be ineffectual.
Icahn, Soros, Druckenmiller, And Now Zell: The Billionaires Are All Quietly Preparing For The PlungeSubmitted by Tyler Durden on 09/03/2014 23:03 -0400
"The stock market is at an all-time, but economic activity is not at an all-time," explains billionaire investor Sam Zell adding that "I don't remember any time in my career where there have been as many wildcards floating out there that have the potential to be very significant and alter people's thinking." Zell concludes that "this is the first time I ever remember where having cash isn't such a terrible thing." Zell's calls should not be shocking following Soros. Druckenmiller, and Icahn's warnings that there is trouble ahead.