Norges Bank continues to hold rates at .5%, signaling an upward bias but willing to cut if needed, depending on unforeseen external shocks like BREXIT. In my opinion, they really don’t know what to do while the country heads for stagflation (simultaneous rising unemployment and inflation). They are in a “damned if they do and damned if they don’t situation.”
"When the Household survey is put on the same comparable footing as the payroll series (the payroll and population-concept adjusted number), employment fell 119,000 in June — again calling into question the veracity of the actual payroll report — and is down 517,000 through this span. The six-month trend has dipped below the zero-line and this has happened but two other times during this seven-year expansion."
Due to the "new lower path for mortgage rates" Goldman is raising their estimate for 2016 MBS Issuance to $1.3 trillion from $1.2 trillion and raising their 2017 MBS issuance estimate to $1.3 trillion from $1.1 trillion. Goldman's team cut their 10-Yr US TSY estimate to 2% from 2.4% ahead of an expected refinancing blitz.
So for the third time this century, a business cycle contraction will come without warning from the Fed. Once again the Kool-Aid drinking perma-bulls, day traders and robo-machines will be bloodied as they stampede for the exit ramps. But it is the main street homegamers, who have been lured back into the casino for the third time this century, that will suffer devastating losses yet another time. Indeed, if there were even a modicum of honesty left in the Eccles Building it would be warning about the weakening trends in the US economy, not cheerleading about fleeting and superficial signs of improvement.
Over the past several decades, the U.S. State Department has deteriorated from a reasonably professional home for diplomacy and realism into a den of armchair warriors possessed of imperial delusions, a dangerous phenomenon underscored by the recent mass “dissent” in favor of blowing up more people in Syria. The neocons and liberal hawks who control the State Department – and are eagerly looking forward to a Hillary Clinton presidency – will never stop coming up with these crazy notions until a concerted effort is made to assess accountability for all the failures that that they have inflicted on U.S. foreign policy. Until then, the madness will continue and only grow more dangerous.
“The few who understand the system will either be so interested in its profits or be so dependent upon its favors that there will be no opposition from that class, while the great body of people, mentally incapable of comprehending the tremendous advantage that capital derives from the system, will bear its burdens without complaint, and perhaps without even suspecting that the system is inimical to their interests.”
The probable end result, when subtracting from the potential Democratic vote disenchanted millennials, economic-revolutionaries, and doves could easily bury any and all hope for the Clintons to return to the White House. Many millennials won’t vote; and many impoverished whites in the Democratic Party will feel forced to switch their anti-establishment allegiance from Bernie to Donald Trump, as incongruent as that may seem, hoping for a better economic future and/or a more constructive, less confrontational hawkish attitude internationally. For all the antipathy that might exist between African-American and Latino “super-minorities” and Donald Trump, it is these major minority voting blocks that appear to be clearing the path for this Demeaner-in-Chief to exchange his ostentatious quarters in Trump Plaza for the more modest ceremonial trappings of the White House.
Gordon Brown, back when he was the UK Chancellor of the Exchequer, distinguished himself by selling off approximately one-half of Great Britain’s gold reserves at what turned out to be a near-bottom at the end of the secular bear market in gold which lasted from 1980 to 2000-ish. However, the news that the new Canadian Finance Minister Bill Morneau has completed selling all remaining Government of Canada gold reserves may remove Brown's laughing-stock status.
The top economist for Moody’s (one of the largest rating agencies in the world) said yesterday, as he unleahed the latest jobs guess, that there are absolutely zero signs of recession. These sameguys were so drunk on their own Kool-Aid that in October 2007, Moody’s announced that “the economy is not going to slide away into recession.” Everyone assumed that the good times would last forever. This is what virtually assures negative interest rates in America.
"Experience in other countries that have entered into this territory should sober you up on the likely economic and inflation impact. No country that has gone into negative rates has experienced major shifts in its growth and inflation profile – minor, yes; major, no. As a consequence every dip into negative rates has been followed by additional moves."
One thing policy makers should have learned after watching Greece unravel last summer is that capital controls almost always backfire. Once the market (not to mention the populace) senses panic, it's all downhill from there and make no mistake, there's blood in the water here.