Monetary Policy

Chinese Stock Bubble Frenzy Returns; US Futures Flat Ahead Of Today's Pre-Holiday Zero Volume Melt Up

The highlight of the overnight newsflow may have been the BOJ's preannounced statement that it is keeping its QE unchanged (which comes as no surprise after a few weeks ago the BOJ adimitted it would be unable to keep inflation "stable" at the 2% in the required timeframe), but the highlight of overnight markets was certainly China, where the Banzai Buyers have reemerged, leading to another whopping +2.8% session for the Shanghai Composite which has now risen to a fresh 7 years high.

ECB's Willful Ignorance: Leaking Central Bank Says Austerity "Compliments" QE

There’s something quite contradictory about telling governments to tighten their belts while promising to buy any and every piece of paper their treasury departments care to issue. In fact, it’s probably fair to say that a €1.1 trillion QE program simply cannot peacefully coexist with a strict, currency bloc-wide austerity policy. This glaring contraction was on full display at the ECB’s April 14-15 policy meeting, minutes show.

3 Things: If You Don't Like It Change It

Since QE programs have not been effective at creating organic economic growth, the only effective monetary policy tool of the Fed to stave off the effects of a recessionary drag, lowering interest rates, is not available. This is why, despite weak economic growth, little inflation and a large amount of labor slack in the economy, the Fed has consistently hinted that they will likely raise the overnight lending rates in June. Therefore, since the Fed is "data dependent," a boost to GDP, via the recalculation of the numbers, would be vastly supportive in justifying that increase. However, is economic growth really stronger than currently reported? We can look at some alternative measures of the economy to answer that question.

Former Fed Governor Says Fed Lost Credibility To "Stay On Top Of Ticking Monetary Bomb"

"The Fed has dragged out the normalization of interest rates way beyond what is prudent... At some point... the market is going to say ‘on my god, we’re so far behind the curve’ and force an adjustment that is going to be wrenching... when this “wrenching” adjustment kicks in, it would turn into a market disruption at a level “seven or eight” on a scale of 10, with 10 being the worst."

Despite Weak Economic Data Overnight, Futures Slide On Rate Hike Concerns

The big news overnight was neither the Chinese manufacturing PMI miss nor the just as unpleasant (and important) German manufacturing and service PMI misses, but that speculation about a rate hike continues to grow louder despite the abysmal economic data lately, with the latest vote of support of a 25 bps rate increase coming from Goldman which overnight updated its "Fed staff model" and found surprisingly little slack in the economy suggesting that the recent push to blame reality for not complying with economist models (and hence the need for double seasonal adjustments) is gaining steam, and as we first suggested earlier this week, it may just happen that the Fed completely ignores recent data, and pushes on to tighten conditions, if only to rerun the great Trichet experiment of the summer of 2011 when the smallest of rate hikes resulted in a double dip recession.

4 Factors Signaling Volatility Will Return With A Vengeance

The uncertainty surrounding the inevitability, if not the exact timing, of multiple and possibly overlapping volatility drivers is itself a source of volatility. For the average person, these signs can be scary. Taking steps to avoid the circus as much as possible, such as extracting money from the markets, securing personal assets, and waiting out the swings, can be a source of emotional comfort and future financial stability.

Even Harvard Economists Admit Fed Policy Has "Created Dangerous Risks"

No lesser establishment economist than Martin Feldstein - Professor of Economics at Harvard University and President Emeritus of the National Bureau of Economic Research - has some warning words of wisdom for The Fed today: "...the Fed’s unconventional monetary policies have also created dangerous risks to the financial sector and the economy as a whole." When even The Ivory Tower is losing faith, you know The Fed is in trouble...

"Kept Afloat With Nothing But Happy Thoughts"

The Fed stimulates absolutely nothing but the media’s descriptions of it and the various economists and their models that depend solely on them being successful in doing so. If recessions are emotional and irrational pessimism as the monetary textbooks believe, then QE and ZIRP are just right sort of “happy pills” to push emotions back to the “right” direction. Is it any wonder the economy is in danger of sinking toward catastrophic failure?

Chinese Firm Reveals World's First 3D-Printed Five Story Apartment Building

Not content with building single-family houses (and WinSun's own office), WinSun recently made history when it demonstrated the world's first entirely 3D-printed five-story apartment building and a 1,100 square metre (11,840 square foot) villa, complete with decorative elements inside and out.

If Numbers Don’t Lie Then...

There’s an old saying that “numbers don’t lie.” However, when we apply simple common sense to the way we hear numbers spun across the financial media what doesn’t add up is precisely that: the numbers.

Leading German Keynesian Economist Calls For Cash Ban

"Coins and bills are obsolete and only reduce the influence of central banks," German economist and sole Keynesian member of the German Council Of Economic Experts Peter Bofinger tells Spiegel, becoming the latest central planning proponent to suggest that a cashless society would solve the world's economic problems by allowing the government to control who spends what and when in a futile effort to control the business cycle.

The Economist "Buries" Gold

The Economist is a quintessential establishment publication. Keynesian shibboleths about “market failure” and the need to prevent it, as well as the alleged need for governments to provide “public goods” and to steer the economy in directions desired by the ruling elite with a variety of taxation and spending schemes as well as monetary interventionism, are dripping from its pages in generous dollops.  The magazine has one of the very best records as a contrary indicator whenever it comments on markets. While gold hasn’t yet made it to the front page, but the Economist has sacrificed some ink in order to declare it “dead” (or rather, “buried”).

Marc To Market's picture

Dollar Blues

Dollar downmove still seems corrective in nature.  Fed hike in September still seems most likely scenario.  Taalk of US recession is over the top when unemployment, broadly measured is falling and weekly initial jobless claims are at new cyclical lows.