Monetary Policy

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Futures Flat Despite China Scare As Oil Rebounds Over $47





The main risk over the weekend was that markets, which have now dropped for three consecutive weeks the longest negative streak since January, would focus their attention on the latest batch of negative Chinese economic news released over the weekend, which missed expectations across the board, most prominently in Retail Sales and Industrial Production, and following Friday's disappointing new credit loan data, would sell off as the Chinese slowdown once again becomes a dominant concern. However, after some initial weakness, the risks were all but gone when first the USDJPY jumped on another round of deflationary Japanese economic data which led to renewed hopes of more BOJ easing and a jump in the USDJPY and thus US futures.

 
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The Endgame





There is a growing fear in financial and monetary circles that there is something deeply wrong with the global economy. Publicly, officials and practitioners alike have become confused by policy failures, and privately, occasionally even downright pessimistic, at a loss to see a statist solution. It is hardly exaggerating to say there is a growing feeling of impending doom. In short, growing evidence of price inflation and stagnant production can be expected to materially increase the risk of a global banking and currency meltdown. The best escape-route is ownership of anything other than purely financial assets and fiat currency deposits. No wonder the price of gold, which is the soundest of moneys, appears to have entered a new bull market.

 
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"The Global Negative Feedback Loop" - Why Investors Are Fleeing Capital Markets





Investors are fleeing and volumes are falling due to extreme valuations amid global uncertainties related to monetary policy and political decisions made in wake of the 2007-2009 financial crisis. It’s a flight that’s creating a negative feedback loop. "First it’s China, then Japan, then the ECB. When you singe the fingertips of speculators, they don’t like to play anymore," says Brean Capital managing director Russ Certo. Investors "are stewards of other people’s money and they don’t want to allocate capital to a pyramid scheme."

 
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London's Ex-Mayor Compares The European Union To Hitler





The history of the last couple of thousand years has been broadly repeated attempts by various people or institutions – in a Freudian way – to rediscover the lost childhood of Europe, this golden age of peace and prosperity under the Romans, by trying to unify it. Napoleon, Hitler, various people tried this out, and it ends tragically."

 
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The Mouths Of Madness - The Grand Delusion Of Central Bankers





Never before have central bankers done so much to achieve so little... and yet they continue to propagandize more of the same...

 
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Fed Worries About Deflation But Pays Banks Billions Not To Lend QE Proceeds!?





In a world in which growth is slowing, is it not strange that the Fed (privately owned by the largest banks in the world) would institute a system of rising payments rewarding banks for not taking risk or lending money!  This all tends to make believe that manipulation is the order of the day and the explanation is far simpler than most would believe...

 
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The ECB Met With Goldman, Other Banks At Shanghai G-20 Meeting, Allegedly Leaking March Stimulus





On March 10, 2016 when the ECB announced the biggest expansion to quantitative easing in European history, when it shocked the market by announcing not only a reduction in its negative rate and expansion in the TLTRO program, but also the launch of a corporate bond monetization program.Well maybe not "shocked" the market, because as Bloomberg writes, ECB board members met with representatives of banks and investment managers including Goldman Sachs, BlackRock, Credit Suisse and Moore Europe Capital Management in February, just days before the ECB's March 10 announcement.

 
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Bloody Start To Friday The 13th For Global Markets





Global stocks have started Friday the 13th on the wrong foot, with not only Hong Kong GDP unexpectedly tumbling by 0.4%, the worst print in years while retail sales fell for a thirteenth straight month in March, the longest stretch since 1999 as the Chinese hard landing spreads to the wealthy enclave, but also following a predicted collapse in Chinese new loan creation, which will reverberate not only in China but around the globe in the coming weeks. The latest overnight drop in the Yuan hinted that should the recent USD strength continue, China will have no choice but to repeat its devaluation from last summer and winter. 

 
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June 2003 - The Fed's Brief Moment Of Clarity





We have referred to the June 2003 FOMC meeting many times before and we suspect that we will continue to do so long into the future. It was one of those events that should be marked in history, truly relevant to the future developments that became panic and now sustained economic decay. It’s as if the committee members at that time anticipated their current powerlessness – yet did nothing about it. Their preferred course from that moment until August 2007 was relieved ignorance, as Greenspan admitted at the time, " I don’t think we know enough about how the private financial system works under these conditions [sub-1% rates],  I don’t believe, that we can construct an effective preemption strategy. Well, we can construct a strategy, but I’m fearful that it would not be very useful."

 
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Peak Economy - The Failure Of Fed Policy Exposed In 5 Painful P&G Charts





What is taking place in the macro economy is a true demand death spiral and this can be seen very clearly by using Proctor & Gamble’s microeconomic context as a representative model. If one steps back and simply looks at the accuracy of the world’s prominent PhD economists and market pros’ predictions over the past 7 years one can’t help but shake one’s head. And we believe investors have become wise to their ignorance.  We’ve seen a record 15 consecutive weeks of net selling of equities despite these expert pundits continuing on in their attempt to deceive investors into believing we are just one or two quarters away from that (now) proverbial recovery.

 
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Full-Blown Fearmongering: Bank Of England Warns Of Recession, "Sharp" Sterling Fall If UK Leaves Europe





While the Bank of England voted unanimously 9-0 to keep rates on hold at 0.5%, what the market was far more focused on the BOE's latest gloomy scenarios about what would happen should the UK vote for Brexit on June 23. The BOE did not disappoint, and cautioned that that sterling could fall "sharply" and unemployment would probably rise, while in the press conference after the announcement BOE governor and former Goldmanite Mark Carney went all the way warning Brexit "could possibly lead to recession."

 
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Futures Halt Selloff, Levitate Higher On Another USDJPY Spike; Oil Rises





If yesterday's selloff had a specific catalyst, namely some of the worst consumer retail earnings seen in years, it merely undid the Tuesday rally which levitated global risk with no fundamental driver, aside for a 200 pip spike in the USDJPY.  Some central bankers may even say it was a "magical" levitation. Fast forward to the overnight session when following a muted Asian session, it was once again up to the "magical" USDJPY to send stocks well into the green without any actual catalyst whatsoever, but what merely appears to have been another "magical" intervention session by the BOJ.

 
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Why One Trader Thinks "There’s A Growing Belief That This Can’t End Peacefully"





"There’s a growing belief that this can’t end peacefully. And why more and more central banks are screaming about the negative externalities exported by those practicing the extremes of extraordinary monetary policy. We’ve learned that we exist in a global economy. What hasn’t been accepted, because the consequences may prove dire, is that we also are moving toward global monetary policy."

 
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