Monetary Policy

Tyler Durden's picture

Why Markets Are Manic - The Fed Is Addicted To The "Easy Button"





Honest price discovery is essential to capitalist prosperity since it is the miraculous mechanism by which capital is raised from savers and investors and efficiently allocated among producers, entrepreneurs and genuine market-rate borrowers. What the central banks have generated, instead, is a casino that is blindly impelled to churn the secondary capital markets and inflate the price of existing assets to higher and higher levels - until they ultimately roll-over under their own weight. The Easy Button addiction of our central bankers is thus not just another large public policy problem. It is the very economic and social scourge of our times.

 
Tyler Durden's picture

Japan Proves Monetary Policy Is Nothing But Destructive





Thus, the mistaken conceit of monetarism is on full display, especially in Japan, as they boil down their efforts to substitute financial wealth for true wealth as if they could simply conjure industrious creation from nothing. And Japan is proving useful as the full and complete refutation of every facet of such a notion, even if the mainstream resists so far confessing it.

 
Tyler Durden's picture

Debt Pile-Up To Fuel Further Oil Price Pressure





"An 'oil-debt nexus' could create a vicious circle whereby overindebted companies pump more oil to ensure they can pay interest on their loans, adding to the current global oil glut, and further depressing energy prices," WSJ notes, citing a BIS report. The interplay between the industry's growing debt pile and falling prices is a microcosm of the deflationary dynamic that’s taking hold in the macroeconomy and that serves, in Citi's words, to destroy creative destruction, creating "zombies" along the way.

 
Tyler Durden's picture

Is Nigel Farage The UK Election's "Kingmaker"?





Will a desire to protest the current establishment see Nigel Farage's UKIP broaden its mandate in the upcoming election? This UK election will mirror many elections around Europe (since the crisis started) in focusing on inequality and the need for political protest. This could make for big moves in the mandates... We foresee Scottish National Party and UKIP protest votes proving far more numerous than the latest polls suggest.

 
Tyler Durden's picture

UK Economy Grows At Slowest Pace Since 2012 Two Weeks Ahead Of National Election





With US Q1 GDP set to be a huge disappointment to initial estimates of 3% growth set at the beginning of the year, and since plunging to 1% or lower when it is reported later this week because, well, it inexplicably snowed in the winter for the second year in a row, earlier today we learned that US harsh weather cross the Atlantic and landed in the UK where ONS reported that the economy grew at a tepid pace of just 0.3% in the first quarter, well below consensus estimates of 0.5%, and at the lowest pace since Q4 2012 when GDP posted a 0.3% drop.

 
Tyler Durden's picture

S&P Futures Hug 2100 After China Denies QE, European Stocks Slide





Following yesterday's early MNI rumor that a Chinese QE is being "considered" and which sent the Shanghai Composite surging 3% and led to an initial boost in US stock futures, overnight the PBOC scrambled to once again deny such speculation. Of course, going full "cold Turkey" on Chinese stimulus would be too much for the market to handle, so in a piece by the WSJ also released overnight, the author said the PBOC would pivot from outright QE to mere LTRO, which is also not new and was reported over a week ago here in "China Floats QE Trial Balloon, PBoC May Launch LTROs." In any event, for now at least, Asian stocks are not happy despite Apple's latest blockbuster results, and neither is Europe, with the Stoxx 600 down 1%, and even the E-mini is hugging 2100 unable to levitate on any imminent central bank intervention.

 
Tyler Durden's picture

How This Debt-Addicted World Could Go The Way Of The Mayans





We are paying a high price for too many elites and their ‘frivolous cravings’. Nowadays many countries’ social and political structure relies on debt-driven consumption and increasing levels of entitlements. Blame the policy-makers as the “permanent lie [has become] the only safe form of existence.”

 
Tyler Durden's picture

Despite US Services PMI Miss, Markit Says "FOMC Should Normalize Policy Sooner"





After 3 months of somewhat surprising strength (given the background of disastrous hard data), US Services PMI dropped in April by the most since December, missing expectations by the most on record. Against serial extrapolators' expectations of a rise to 58.9, PMI fell to 57.8 with cost inflation jumping to a six-month high and the biggest rise in the jobs index suggests to Markit that "the FOMC to consider starting the process of normalising monetary policy sooner rather than later at its meeting later this week.."

 
GoldCore's picture

Gold Flows East – China, India Import Massive Quantities of Gold from Switzerland





While sentiment towards gold in the West is abysmal - even as gold languishes at record lows when adjusted for inflation - Asian demand remains insatiable. It would be wise for investors to inform themselves as to why this should be so. Demand for gold in Asia is often written off by Westerners as an irrational impulse of uneducated Asian peasant farmers and workers. 

 
Tyler Durden's picture

Boston Fed Admits There Is No Exit, Suggests QE Become "Normal Monetary Policy"





"Largely missing from these discussions about the Fed's "exit strategy" is a consideration that perhaps it should retain, not discard, the balance sheet tools," the Boston Fed says, in a new paper advocating the retention of QE as a permanent part of the Fed's tool box. QEfinity may yet become a reality and for the most ironic of reasons: because the Fed is now in charge of promoting "financial stability" something which, as last October's Treasury flash crash proves, is exacerbated by asset purchases not ameliorated.

 
Tyler Durden's picture

When QE Leads To Deflation: A Look At The "Confounding" Global Supply Glut





"The global economy is awash as never before in commodities like oil, cotton and iron ore, but also with capital and labor—a glut that presents several challenges as policy makers struggle to stoke demand," WSJ notes, suggesting yet again that QE can cause deflation when those who have access to easy money overproduce but do not witness a comparable increase in demand from those to whom the direct benefits of ultra accommodative policies do not immediately accrue.

 
Tyler Durden's picture

The "War On Cash" Migrates To Switzerland





It is undoubtedly a huge red flag when in one of the countries considered to be a member of the “highest economic freedom in the world” club, commercial banks are suddenly refusing their customers access to their cash. This money doesn’t belong to the banks, and it doesn’t belong to the central bank either. If this can happen in prosperous Switzerland, based on some nebulous notion of the “collective good”, which its unelected central planners can arbitrarily determine and base decisions upon, it can probably happen anywhere. Consider yourself warned.

 
Tyler Durden's picture

What Will Happen To You When The Dollar Collapses?





The day after the crash (and thereafter), what will be the currency that is used to buy a bag of groceries, a tank of petrol, a meal at a restaurant? Certainly, the need will be immediate and will be on a national level in each impacted country, affecting everyone. Many believe the US will be prepared ahead of time with a new, electronic currency - US citizens will then become the most economically controlled people in the world, overnight. A further possibility is taking place in Mexico today. Mexico is remonetising silver. As the Great Unravelling proceeds, we would be wise to monitor what happens with the Libertad in Mexico and watch for a similar return to precious metals in other jurisdictions.

 
Tyler Durden's picture

Volatility Is The Square Root Of Time & Fat Tails





The trio of macro-prudential policy, the onset and evolution of shadow banking, and the nebulous concept of financial stability may have become a toxic cocktail which can be instrumental in moving forward the Federal Reserve’s timeline for lift-off zero bound rates.  The intuition here is stooped in concepts of volatility and how market structure evolution may contribute or detract from asset volatility. Volatility is the square root of time. Financial repression times time equals volatility. Financial repression and/or macro-prudential policy times time equals the inverse of financial stability. Financial stability inverted equals volatility squared.

 
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