Monetary Policy

Is There A Problem With The BLS Employment Reports?

It is quite evident there is something amiss about the BLS’ employment reports. Is the disparity simply an anomaly in the seasonal adjustments caused by the depth of the financial crisis? Is there an exceptional and unaccounted for margin of error in the surveys? Or, is it something more intentional by government-related agencies to keep “confidence” elevated as Central Banks globally “paddle like crazy” to keep global economies afloat.

 

Fund CIO Explains "The Only Way To Make Money This Year"

"Central banks are mistaken. They think they’re targeting employment and inflation,” he continued. “They’re actually targeting asset prices and leverage.” When asset values rise, inflation and employment gradually increase. When assets fall, inflation collapses; it’s a coincidental variable. “At these levels of asset prices, it takes a lot of leverage to lift them further.” So the second central banks see a little inflation and curb leverage, rates rise and it all unwinds. “The only way to make money this year is to understand this sequence, and trade it.”

If Draghi's Latest Doesn't Scare You? You Just Aren't Paying Attention

Today, everything (and we do mean everything!) one thought they understood about free market capitalism has been thrown into the wastebasket of history and replaced with edicts and dictates set forth by an un-elected gaggle of economic theorists who've decided the world of business is theirs to control. How do they control it? Hint: The courage to print! Whether you're a solo-practitioner or CEO of a global concern one thing should be making you very, very, very concerned: The recent proclamations, as well as, delivery from the ECB’s Mario Draghi. To say central banks have intervened far too long within the financial markets would be an understatement.

Why Goldman Expects The Japanese Yen To Collapse Within 12 Months

"We expect $/JPY to move higher again in the near term and continue to forecast $/JPY at 130 a year from now.... by making the fiscal expansion permanent and funded through money creation (a politically correct phrase for a form of 'helicopter money'), expectations of future inflation should increase and real rates fall"

Gundlach Predicts "Trump Will Win", Says "The Federal Reserve Has Basically Given Up"

"The US stock market seems egregiously overvalued versus other stock markets... you are going to see declines in the US stock market and since the correlations are so high this means that probably the junk bond market will go back down, too. Negative interest rates are the dumbest idea ever. It’s horrible.... Gold is doing fine. It’s preserving capital in the US, it’s been making money over the last couple of years for European investors. That’s why I own gold.... Trump is going to win. I think Clinton and Sanders are both very poor candidates."

Albert Edwards Finally Blows Up: "I'm Not Really Sure How Much More Of This I Can Take"

"I'm not really sure how much more of this I can take. So here we are 5, 6 or is it now 7 years into this economic recovery and it still remains pathetically weak. And so it should in the wake of one of the biggest private sector credit bubbles in history. The de-leveraging hangover was always going to be massive and so it is. Quick-fix monetary QE nonsense has made virtually no difference to the economic recoveries other than to inflate asset prices, make the rich richer, inequality worse and make Joe and Joanna Sixpack want to scream in rage."

Depression, Debasement, & 100 Years Of Monetary Mismanagement

There must be some dark corner of Hell warming up for modern, mainstream economists. They helped bring on the worst bubble ever... with their theories of efficient markets and modern portfolio management. They failed to see it for what it was. Then, when trouble came, they made it worse. But instead of atoning in a dank cell, these same economists strut onto the stage to congratulate themselves.

Why Has An "Apolitical" Fed Governor Donated To Hillary Four Times?

It is one thing to note the obvious, it is different to have proof that Fed members have a clear ideological bias. Thanks to recent Fed appointee Lael Brainard, we have just that. The recent Treasury staffer and close friend of the Clintons fourth donation since November brings her total contributions to Hillary Clinton during this election campaign to $2,700, the limit for individual candidate donations in the cycle. Do not worry though, as Fed Chair Janet Yellen said in March that legal donations from central bank employees don’t undermine the Fed’s standing as a non-partisan agency.

Pimco Economist Has A Stunning Proposal To Save The Economy: The Fed Should Buy Gold

"In the context of today’s paralyzed political-fiscal landscape how silly is it to suggest the Fed purchase a significantly large quantity of gold bullion at a substantially greater price than today’s free-market level, perhaps $5,000 an ounce?  Admittedly, this suggestion is almost too outrageous to post under the PIMCO logo, but NIRP surely would have elicited a similar reaction a decade ago. But upon reflection, it could be an elegant solution since it flips the boxes on a foreign currency “prisoner’s dilemma”. Most critically, a massive gold purchase has the potential to significantly boost inflationary expectations, both domestic and foreign."

China's Other Big Problem - Porkflation

For those who believe that broad-based stimulus is coming to save the world from China (via RRR cuts or even pure QE) - as opposed to the hole-filling credit pump they just supported - think again. As we warned last year, this is 'western' thinking as the go to policy of the rest of the world's central banks has been - put on pants, print money, paper over cracks, proclaim victory. However, in China there is one big problem with this... stoking inflation... and most crucially the social unrest concerns when suddenly a nation of newly minted equity - and now bond - losers can no longer afford their pork - which is surging to record highs.

"This Is The Most Crowded Trade in History"

"Instead of looking for manager’s and investment opportunities to beat the market, investors are opting to be the market and are likely creating the most crowded trade in historyStagnant monetary policy fosters a groupthink outlook.  The Fed Put prompts the same positioning.  Computerized programs trade correlations and relationships established during an extended period of abnormal policy.  Active managers continue to retrench as the market diverges from the fundamentals, but the blind buyers continue to participate - it does not matter if the market is 10x, 15x, or 20x earnings, they buy for one reason, it is the market."

Merkel Facing Political Rebellion After Caving To Erdogan

The backlash has been intense against the German Chancellor as many claim this is an outrageous infringement of free speech, and to add insult to injury, it's being used simply to placate Erdogan who already has strained relations with the German people over the Syrian refugee crisis. As the Telegraph reports, Merkel is now facing a government rebellion over her decision.