Monetary Policy

The World Has 6 Options To Avoid Japan's Fate, And According To HSBC, They Are All Very Depressing

"The escape options are a mixture of the ineffectual, the limited, the risky, the foolhardy or the excessively slow. As Japan’s recent experiments have demonstrated, upping the monetary dosage alone is not enough to cure the affliction. Indeed, to the extent that monetary stimulus only encourages a further wave of risk-taking within financial markets – often outside of the mainstream banking system - it may only perpetuate unstable deflationary stagnation."

Another Volcker Moment? Guessing The Future Without Say's Law

If the dollar’s purchasing power falls much further, the market will expect higher interest rates, so this then becomes the likely outcome. The question will then arise as to whether or not the Fed will dare to raise interest rates sufficiently to stabilise the dollar's purchasing power. If the Fed delays, it could find itself facing a difficult choice. The level of interest rates required to stabilise the dollar’s purchasing power would not be consistent with maintaining the record levels of debt in both government and private sectors. Thirty-six years on it could be another Volcker moment.

Krugman Goes To Japan, Scolds Abe For Worrying About Quadrillion Yen Debt Pile, Leaves

“About two years ago, I had a pleasure meeting with you, Professor Krugman. We were talking during that time that a rocket has to go out of the atmospheric region, which means that an escape velocity has to be earned in order to lift the Japanese economy out of deflation and we were looking for a good speed to do that. We worry about the accumulated debt. That is a source of another concern. What to do about it?

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The Forex Rigging Irony

While Forex banks, traders, and other institutions are being blamed for market rigging, the Swiss National Bank can publish reports about its own market rigging, but instead of being a scandal, it's economic data.  That's because the vast majority don't understand how the Forex markets work.  It's not insulting - it's a fact.  Currently there are hundreds of pending litigation cases against a plethora of Forex banks, traders, and other institutions - but none against a central bank.

The Stock Market Is A Monetary Policy Junkie - Quantifying The Fed's Unprecedented Impact On The S&P

The bulls will presumably argue that this Fed impact is now part of the accepted wisdom, and that P/Es should remain higher than history in order to reflect the Greenspan/Bernanke/Yellen Put. The bears will suggest that if ever there were a time for the scales to fall from investors’ eyes over the Wizard-of-Oz-like nature of the Fed, then this is it. We are inclined to the latter view. Betting on the Fed’s ability to generate continued market levitation seems like a dangerous game to us, but as Newton long ago opined, “I can calculate the motion of heavenly bodies, but not the madness of people.”

Why "It’s Hard Being A Bear"

It is always hard to buck the crowd, to be a bear when the market is up this much, this fast. Stocks are rallying and being underweight gets harder to maintain every day. The bulls are out there yapping about how this was just another correction, another dip to buy and that we better get back in, yada, yada, yada. What makes being bearish so hard is the noise of the perpetually bullish street, the lure of easy money in a market you know is overvalued but keeps going higher. Like JM Keynes "I change my mind when the facts change." Despite the rally, the facts – at least for now – still favor the bears.

The 8 Major Problems The Next President Will Face

Dear Donald and Hillary: In around ten months, one of you will wake up as Mr. or Mrs. President. After the fabulous fun of post-inaugural balls, you will walk into the Oval Office on Saturday, January 22 and launch into your first 90 days in office.  To make your job just a little more manageable, what we would like to do is take you around the world and review some of the economic realities faced by our global partners. For many of them, those realities are not pretty. And you want this job why?

Swiss National Bank Admits It Spent $470 Billion On Currency Manipulation Since 2010

Swiss policy makers rarely state outright that they’ve intervened, and analysts use data on sight deposits and foreign currency reserves to gauge the scope of the central bank’s actions. Breaking with the usual protocol, Jordan said in June the SNB had acted to stabilize the franc amid the Greek debt crisis. The bottom line: CHF86.1 billion spent on FX intervention in 2015 and a whopping $470 billion since 2010.

Yellen, Draghi, Kuroda: Deranged Lab Rats

It’s sad that “we the people” continue to allow deranged captured academics, under the complete command of the banking cabal, to control the destiny of our country. They have failed for 103 years, but we continue to bow down to these central bankers as if they knew what they were doing. They do know how to debase the currency, obfuscate true inflation, prop up financial markets through monetary manipulation, and generate prodigious amounts of propaganda and misinformation to coverup their true purposes. The people will sit idly by until these deranged rats destroy the world.

Alice In Wonderland - Why Everything Is Nonsense

The entire Deep State complex is at the heart of the nonsensical, corrupt, and fraudulent system... Expecting the Mad Hatter to protect you? Or the Cheshire Cat? Good luck with that!

Brazil's President Digs In: "I Will Never Resign Under Any Circumstances!"

It's all falling apart for Brazil's embattled President Dilma Rousseff whose political career could be over in a matter of months. With the impeachment committee in place and VP Michel Temer's PMDB set to break from the government, the fate of Lula's Worker's Party hangs in the balance. Meanwhile, the economy continues to collapse as last month was the worst February on record for jobs. As for the central bank, Alexandre Tombini is attempting to use reverse FX swaps to keep the BRL just weak enough to help the economy adjust and just strong enough to permit a Selic cut (or two). What could go wrong?

Bank Of Japan Unleashes Yield Curve Chaos: JGBs Inverted At Short- And Long-End

You know you have 'tinkered' too much in the machincations of what dealers now call a "dead market" when the world's largest sovereign bond market is inverted at the short-end and the long-end. Simply put, bond investors reluctance to sell their holdings - amid negative-er and negative-er yields - means The BoJ runs the risk of being unable to meet its buying operations this week.

The High Yield Bond 'Emperor' Has No Clothes, BofA Warns 1 In 3 Firms Face Default Threat

The market reaction from last week’s dovish FOMC statement took many by surprise, including BofAML's HY Strategy team, but as they say the High-Yield Emperor has no clothes, warning that the underlying commentary provided by Chair Yellen shows the vulnerability for high yield issuers to longer-term growth trends. Couple the deteriorating fundamentals for HY issuers with downgrades outpacing upgrades by a ratio of 3.5:1 and a worsening of global growth potential, and they believe the recent rally, though boosted by strong inflows and cash generation, will ultimately fade.