Monetary Policy

Futures Rebound As Yellen's Market-Lifting Track Record Offsets Greek Gloom

With the Fed's June FOMC statement in just over 7 hours and a Yellen press conference to follow shortly, one in which nobody expects the Fed will announces its first rate-hiking cycle in nine years despite repeated clues by Yellen that not only is there froth in the market but that the Fed has no dry powder to contain the next crisis when it emerges (even though a rate hike will catalyze the next crisis), traders have chosen to ignore the chatter from Greece which is getting worse by the hour, and unlike recent days, have bought risk overnight based on one simple technical: of the five press conferences in ten Fed meetings held by Yellen as Chairman, the S&P finished higher 80% of the time.

Chinese Iron Ore, Steel Prices Collapse Despite Government Stimulus

A funny thing happened in the last year since China gave up on its hard-line reforms and folded back to stimulate by all means necessary... the financial economy soared and the real economy sunk. Iron Ore prices are near record lows and Rebar prices are at record lows as stocks spike.. and this should be no surprise since we were told by a rural Chinese chap recently that "making money in stocks is a lot easier than farmwork" or construction or real world activity.

Brazil Retail Sales Drop Most On Record, Goldman Warns Will Get Worse

Just a few months ago, we warned Brazil's economy was on the verge of collapse as the fiscal situation was deteriorating rapidly. It appears, judging by the most recent data from the oil-rich nation, that we were right. Broad retail sales have now declined for five consecutive months with the seasonally adjusted broad retail sales index now at the same level as early 2012. Core retail sales declined 3.5% YoY during April (weakest print since Aug 2003) and broad retail sales declined by an even larger 8.5% YoY (lowest on record), and as Goldman warns, the outlook for private consumption and retail sales in the near term remains very weak.

Bank Of America Begins 66-Day Countdown Until The "Ghost Of 1937" Returns

The last time the Fed tried to exit a period of massive balance sheet expansion coupled with ZIRP - back in 1937 - its strategy completely failed. The Fed tightening in H1’37 was followed in H2’37 by a severe recession and a 49% collapse in the Dow Jones. This is the ghost of 1937 and it is about to make a repeat appearance.

Consumers Are Not Following Orders

Last week the government reported personal income and spending for April. After months of blaming non-existent consumer spending on cold weather, shockingly occurring during the Winter, the captured mainstream media pundits, Ivy League educated Wall Street economist lackeys, and Keynesian loving money printers at the Fed have run out of propaganda to explain why Americans are not spending money they don’t have. The corporate mainstream media is now visibly angry with the American people for not doing what the Ivy League propagated Keynesian academic models say they should be doing. An economy built upon the consumption of iGadgets, Cheetos, meat lovers stuffed crust pizza, and slave labor produced Chinese baubles, along with the production of enough arms to blow up the world ten times over, and the doling out of trillions to the non-productive class, is doomed to fail.

Mario Draghi Speaks Live In Brussels - Live Webcast

While not the much anticipated ECB announcement from this Wednesday which may resolve the Greek impasse with one brief press release, here is a live transcript of Mario Draghi speaking at the European Parliament's committee on economic and monetary affairs, in which we expect the topic of Greece to make a prominent appearance. 

The Futility Of Our Global Monetary Experiment

The Fed’s balance sheet grew eight times more rapidly than the economy during the last fourteen years. That’s just the inverse of the relationship that occurred back in the Golden Era. if you need any proof at all of this massive intrusion into the financial system isn’t working; the huge amount of money printing and balance sheet expansion; the unremitting financial repression and pegging of interest rates; look at that fundamental comparison. The only thing it’s really doing is simply inflating the serial bubble that ultimately reach unsustainable peaks and collapse. Hopefully on the third strike, the people who gave us these bubbles will be out.

The "Global Macro Investor" - An Interview With Raoul Pal

"We have a problem with this, and that is central bank hubris. They now think that they are omnipotent, because, essentially the government has said we are going to pass over all control of the economy to the central banks, they say to everybody else including financial market participants that “you don’t know, you don’t understand, we have our models and they are right”. And that kind of hubristic approach is when you sow the seeds of your own destruction."

The Fed And Most Economists Are Nothing More Than Glorified Weather Rock Analysts

The issue at hand is: far more people have discovered whether by chance or direct analysis of their own, both the Fed., as well as their gaggle of cohorts throughout academia, as well as in the financial media, are all watching and gaining their clues – from the same “rock.” Furthermore: It’s now self-evident to anyone willing to look. It’s not to see if the rock is wet, dry, or anything else. It’s to make the rock wet, dry, or anything else needed for the narrative. Because today; narrative trumps reality in today’s economic disciplines.

The Warren Buffet Economy, Part 4: Why Its Days Are Numbered

After 27 years, honest price discovery has been destroyed, thereby reducing the nerve centers of capitalism - the money and capital markets - to little more than gambling casinos. Accordingly, speculative rent-seeking in the financial arena has replaced enterprenurial innovation and supply side investment and productivity as the modus operandi of the US economy. This has resulted in a severe diminution of main street growth and a massive redistribution of windfall wealth to the tiny share of households which own most of the financial assets. Warren Buffett’s $73 billion net worth is the poster boy for this untoward state of affairs. The massive and systematic falsification of asset prices which lies at the heart of this deformation of capitalism is a direct and unavoidable consequence of monetary central planning.

The Warren Buffet Economy, Part 3: Why Its Days Are Numbered

During the last 27 years the financial system has ballooned dramatically while the US economy has slowed to a crawl - a divergent trend that has intensified with the passage of time. While the rationale for monetary central planning is bogus, the model on which state intervention is based is even more invalid.