Jim Bianco

Groupthink Or Black Swan Rising? Not A Single 'Economist' Expects An Economic Downturn

This doesn't happen very often. Marketwatch reports that Jim Bianco points out in a recent market comment that the 67 economists taking part in a regular Bloomberg survey have a unanimous forecast regarding treasury bond yields: they will be higher 6 months from now... and a separate poll of economists recently showed that exactly zero expect the economy to contract. This is an astonishing degree of consensus thinking, but it perfectly mirrors the complacency we see in stock market sentiment and positioning data. The probability that such a unanimous view will turn out to be correct is traditionally extremely low. The economy is likely resting on a much weaker foundation than is generally believed. This is not least the result of massive monetary pumping and deficit spending, both of which tend to severely weaken the economy on a structural level, even though they can create a temporary illusion of 'growth'.

Thursday Humor: Hockey Porn

For some, especially Bruins fans, it appears hockey is better than porn, but only until you lose the Cup... According to the people at pornhub.com, when the game ended around 11 p.m. ET, something funny happened. The people in Chicago were busy celebrating their second Stanley Cup in four years, so traffic stayed down. But in Boston? Obviously, it skyrocketed from people looking for a... relief.

Art Cashin Warns Bernanke Fans "Be Careful What You Wish For On The Deficit"

The venerable UBS floorman asks (and answers) an interesting question. With the re-institution of the payroll tax and higher level rates and with spending lowered by sequestration, will the Treasury need to offer fewer bonds? And if so, will the Fed remain steadfast in its purchasing 'size' (good for bond bulls since secondary demand will increase) or reduce its 'size' to meet the lower monetization needs of the Treasury (bad for equity bulls since flow is all that matters.) Thoughts below...

Bill Gross Goes Searching For "Irrational Exuberance" Finds "Rational Temperance"

The underlying question in Bill Gross' latest monthly letter, built around Jeremy Stein's (in)famous speech earlier this month, is the following: "How do we know when irrational exuberance has unduly escalated asset values?" He then proceeds to provide a very politically correct answer, which is to be expected for the manager of the world's largest bond fund. Our answer is simpler: We know there is an irrational exuberance asset bubble, because the Fed is still in existence. Far simpler.

Biderman And Bianco Berate Bernanke, Buy Bullion, And Batter Bullishness

Critical of the market's reaction to the 'no new QE' news, Biderman and Bianco wholeheartedly believe yesterday's plunge was entirely due to the fact that the 'Bernanke Put' - that we have become so conditioned to expect - did not appear at the levels many expected. Despite a federal deficit of $100 billion per month, it seems the Fed is now in agreement with Biancerman that US growth is limping along at best but notably Jim Bianco believes the fiscal cliff will end up more of a bump in the road as he sees politicians being forced to agree to extend or roll-back (maybe at the very last minute) offsetting the abyss. However, with the debt ceiling looking like it will be hit before the election, it will be interesting to see what political parlance is used if-and-or-when Geithner borrows from the trust funds to keep the government going this time (or not). Positive on Gold longer-term, Bianco sees it like other markets: "Gold is a junky that has not got its money fix" and the only reason to believe Gold is a sell is if you think CBs are done - they are not! Finally the two discuss the fact that 'nobody wants to be bearish anymore' when looking at sentiment surveys - setting up a 'trap-door' for the market.

Biderman And Bianco Bury Bernanke's Bond Bull Market Backbone

Digging into the details of the Fed's balance sheet can sometimes be a thankless task but  Charles Biderman and Jim Bianco have some fascinating insights into where the real money is being hidden. The stability of the Fed's balance sheet post-QE2, given we are borrowing-and-spending over $100bn per month is all down to Operation Twist and the Fed's creation of demand at the short-end (via telling banks that rates will be low forever and 'guaranteeing' positive carry returns on rolling overnight repo) and using this 'cash' to almost entirely fund longer-term borrowing. In a simple primer of the Fed's implicit risk-free carry trade, the two chaps note that the only downside is too much growth or inflation which would cause a massive unwind of these positions (leading only to further bailouts). Critically though, they explain the fact that Operation Twist (and its implicit off-balance-sheet funding of this risk-free carry trade) is nothing more than the Fed's version of the ECB's LTRO - as the banks are 'encouraged' to buy short-term government debt with risk-free-carry expectations - implying the Fed's balance sheet could in fact be considerably larger than it appears. Yet more ponzinomics explained in a simple way - that surely eventually will trickle down to the masses who will question the emperor's clothing.

Gold Bug Bill Gross Will Gladly Pay You Tuesday For A Hamburger Today, Hoping "Tuesday Never Comes"

We will forgive Bill Gross for taking the chart that Zero Hedge first presented (oddly enough correctly attributed by his arch rival Jeff Gundlach) as the centerpiece of his just released monthly musings, and wrongfully misattributing it, for the simple reason that everything else in his latest monthly letter "Tuesday Never Comes" is a carbon copy of the topics covered and discussed extensively on these pages both recently and over the past 3 years. However something tells us that the man who manages over $1 trillion in bonds in the form of the world's largest bond portfolio (second only to the Fed's of course, with its $2.5 billion DV01) will be slow in getting branded a gold bug by the idiot media even with such warnings as "real assets/commodities should occupy an increasing percentage of portfolios." Also won't help warnings that the tens of trillions in loose money added to the system will ultimately be inflationary: "inflation should creep higher. Do not be mellowed by the affirmation of a 2% target rate of inflation here in the U.S. or as targeted in six of the G-7 nations. Not suddenly, but over time, gradually higher rates of inflation should be the result of QE policies and zero bound yields that were initiated in late 2008 and which will likely continue for years to come." Finally, since Zero Hedge is the only venue that has been pounding the table on the whole "flow" vs "stock" debate which is at the heart of it all (see here), we were delighted to see this topic get a much needed mention by the world's now most influential gold bug: "The Fed appears to have a theory that is somewhat incomprehensible to me, stressing the “stock” of Treasuries as opposed to the “flow.” And there you have it. In summary: to anyone who has read Zero Hedge recently, don't expect much new ground covered. To anyone else, this is a must read.