Paul Volcker
PIMCO's Bill Gross "Which Way For Bonds?"
Submitted by Tyler Durden on 06/14/2013 14:36 -0400"While we are not likely to see a repeat of that type of [30Y bond] bull market any time soon, we also do not believe we are at the beginning of a bear market for bonds."
"We are concerned by the growing downside of zero-based money and QE policies – among them a worrisome distortion in asset pricing, the misallocation of capital and ultimately a dis-incentivizing of risk taking by corporations and investors."
"We believe caution is warranted not just for fixed income investors, but for investors in all risk assets; avoiding long durations, reducing credit risk away from economically vulnerable companies and sectors"
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Guest Post: Are Central Bankers Losing Control?
Submitted by Tyler Durden on 06/07/2013 21:00 -0400
The last couple of weeks have been very interesting. Remember that, certain regional differences aside, Japan has, for the past two-plus decades, been the global trendsetter in terms of macroeconomic deterioration and monetary policy. The West has been following Japan each step on the way – usually with a lag of about ten years or so, although it seems to be catching up of late. Now Japan is the first developed nation to go ‘all-in’, to implement a no-holds-barred money-printing regime to (supposedly) ‘stimulate’ the economy. We expect the West to follow soon. In fact, the UK is my prime candidate. Wait for Mr. Carney to start his new job and embrace ‘monetary activism’. Carnenomics anybody? But here is what is so interesting about recent events in Japan. At first, markets did exactly what the central bankers wanted them to do. They went up. But in May things took a remarkable and abrupt turn for the worse. In just eight trading days the Nikkei stock market index collapsed by 15%. And, importantly, all of this started with bonds selling off. Are markets beginning to realize that all these bubbles have to pop sometime and that sometime may as well be now? Are markets beginning to refuse to dance to the tune of the central bankers and their printing presses? Are central bankers losing control?
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Bulls Get Their Wish
Submitted by David Fry on 06/07/2013 19:34 -0400- Alan Greenspan
- Australia
- BLS
- Bureau of Labor Statistics
- China
- Consumer Credit
- Copper
- Crude
- Crude Oil
- Dallas Fed
- Excess Reserves
- Exchange Traded Fund
- Fisher
- Goldilocks
- headlines
- HFT
- High Yield
- India
- Main Street
- Market Breadth
- McClellan Oscillator
- New York Stock Exchange
- Paul Volcker
- Recession
- Richard Fisher
- SPY
- Unemployment
This was one helluva week. Nevertheless current markets are still hooked on QE.
- David Fry's blog
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Quote Of The Day: Fed's Fisher On Markets' "Monetary Cocaine" Addiction
Submitted by Tyler Durden on 06/06/2013 14:27 -0400
Hawkish Dallas Fed head Richard Fisher was relatively outspoken following a speech this morning in Toronto as some insightful truthiness leaked out. As Money News reports, Fisher exclaimed, "we cannot live in fear that gee whiz the market is going to be unhappy that we are not giving them more monetary cocaine," adding that, "only time will reveal the efficacy of current policy and whether the risks that I and more experienced observers like Paul Volcker fret over are as substantial as we surmise, or whether we have made much ado about nothing."
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El-Erian: Central Banks "Have Materially Damaged Their Standing"
Submitted by Tyler Durden on 06/04/2013 10:10 -0400
The “branding” of modern central banking started in the United States in the early 1980’s under then-Federal Reserve Board Chairman Paul Volcker. Facing worrisomely high and debilitating inflation, Volcker declared war against it – and won. In delivering secular disinflation, he did more than change expectations and economic behavior. He also greatly enhanced the Fed’s standing among the general public, in financial markets, and in policy circles. Building on Volcker’s success, Western central banks have used their brand to help maintain low and stable inflation. In the last few years, however, the threat of inflation has not been an issue. Instead, Western central banks have had to confront market failures, fragmented financial systems, clogged monetary-policy transmission mechanisms, and sluggish growth in output and employment. Facing greater challenges in delivering desired outcomes, they have essentially pushed both policies and their brand power to the limit. They will have materially damaged their standing and, consequently, the future effectiveness of their policy stance.
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Where Do We Stand: Wall Street's View
Submitted by Tyler Durden on 06/03/2013 08:39 -0400- 30 Year Mortgage
- 30 Year Mortgage
- Barclays
- Bear Market
- Bond
- Borrowing Costs
- BWIC
- Capital Formation
- Central Banks
- China
- Consumer Prices
- Detroit
- Equity Markets
- Exchange Traded Fund
- Federal Reserve
- fixed
- Gross Domestic Product
- Housing Prices
- Japan
- Marc Faber
- Mark To Market
- Mexico
- NAREIT
- National Debt
- Nikkei
- Paul Volcker
- Price Action
- Real estate
- Recession
- recovery
- REITs
- Unemployment
- Volatility
- Yuan
In almost every asset class, volatility has made a phoenix-like return in the last few days/weeks and while equity markets tumbled Friday into month-end, the bigger context is still up, up, and away (and down and down for bonds). From disinflationary signals to emerging market outflows and from fixed income market developments to margin, leverage, and valuations, here is the 'you are here' map for the month ahead.
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Volcker On Bernanke's Grand Monetary Experiment: "Good Luck In That"
Submitted by Tyler Durden on 05/29/2013 19:44 -0400“The Federal Reserve, any central bank, should not be asked to do too much to undertake responsibilities that it cannot responsibly meet with its appropriately limited powers,” Volcker said. He said a central bank’s basic responsibility is for a “stable currency.” “Credibility is an enormous asset,” Volcker said. “Once earned, it must not be frittered away by yielding to the notion that a little inflation right now is a good a thing, a good thing to release animal spirits and to pep up investment.” “The implicit assumption behind that siren call must be that the inflation rate can be manipulated to reach economic objectives,” according to Volcker. “Up today, maybe a little more tomorrow and then pulled back on command. Good luck in that. All experience demonstrates that inflation, when fairly and deliberately started, is hard to control and reverse.”
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Guest Post: Asset Valuation And Fed Policy: We've Seen This Movie Before
Submitted by Tyler Durden on 05/26/2013 15:51 -0400
Everyone seems to have an opinion on asset valuation these days, even commentators who are normally quiet about such matters. Some are seeing asset price bubbles, others are just on the lookout for bubbles, and still others wonder what all the fuss is about. Simply put, our financial markets weren’t (and still aren’t) structured to be efficient, and consistently rational behavior is a pipe dream, history shows over and over that the idea of a stable equilibrium is deeply flawed. Policies focused on the short-term tend to exacerbate that cycle, as we saw when decades of stabilization policies and moral hazard exploded in the Global Financial Crisis. Maybe if macroeconomics were rooted in the reality of a perpetual cycle - where expansions eventually lead to recessions (stability breeds instability) and then back to expansions - we would see more economists and policymakers balancing near-term benefits against long-term costs. Or, another way of saying the same thing is that mainstream economists should pay more attention to Austrians and others who’ve long rejected core assumptions that are consistently proven wrong.
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Guest Post: Fed Policy Risks, Hedge Funds And Brad DeLong’s Whale Of A Tale
Submitted by Tyler Durden on 05/15/2013 20:30 -0400- Ben Bernanke
- Ben Bernanke
- Bill Gross
- Bond
- Congressional Budget Office
- Creditors
- Cyclicality
- Guest Post
- Hayman Capital
- High Yield
- Jeremy Grantham
- John Maynard Keynes
- Kyle Bass
- Kyle Bass
- Maynard Keynes
- Monetary Policy
- National Debt
- Paul Volcker
- Reality
- Recession
- Student Loans
- Tyler Durden
- Unemployment
- Volatility
It’s amazing what people can trick themselves into believing and even shout about when you tell them exactly what they want to hear. It was disappointing to see Brad DeLong’s latest defense of Fed policy, which was published this past weekend and trumpeted far and wide by like-minded bloggers. If you take DeLong’s word for it, you would think that the only policy risk that concerns hedge fund managers is a return to full employment. He suggests that these managers criticize existing policy only because they’ve made bad bets that are losing money, while they naively expect the Fed’s “political masters” to bail them out. Well, every one of these claims is blatantly false. DeLong’s story is irresponsible and arrogant, really. And since he flouts the truth in his worst articles and ignores half the picture in much of the rest, we’ll take a stab here at a more balanced summary of the pros and cons of the Fed’s current policies. We’ll try to capture the discussion that’s occurring within the investment community that DeLong ridicules. Firstly, the benefits of existing policies are well understood. Monetary stimulus has certainly contributed to the meager growth of recent years. And jobs that are preserved in the near-term have helped to mitigate the rise in long-term unemployment, which can weigh on the economy for years to come. These are the primary benefits of monetary stimulus, and we don’t recall any hedge fund managers disputing them. But the ultimate success or failure of today’s policies won’t be determined by these benefits alone – there are many delayed effects and unintended consequences. Here are seven long-term risks that aren’t mentioned in DeLong’s article...
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Reuters Releases George Soros Obituary By Mistake: "Enigmatic Financier, Liberal Philanthropist Dies At XX"
Submitted by Tyler Durden on 04/18/2013 18:04 -0400First CNN, then AP, now Reuters: the entire media is increasingly starting to look like amateur hour. Unless, of course, Soros is like Osama, and had several "reincarnated" body doubles, with the original specimen long gone. Here is our suggestion for another prepared article: "Today after XX centuries of monetizing debt, the Emperor of the Galactic Central Bank, Gaius Maximus Printius Bernankius the DCLXVIth, ended QE in the year of the alien invasion, XXXXX. Bread costs XXXXXXXXXXX."
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BlackRock Calls For Bernanke To "Rein In" QE: Says It "Distorts Markets, Risks Stoking Inflation"
Submitted by Tyler Durden on 04/08/2013 19:49 -0400It has been well known for years that PIMCO's Dr. Jekyll and Mr. Gross, the original bond king in charge of Allianz' $1+ trillion bond portfolio, has been a vocal critic of QE even in the face of his daily tweet barrage, which often recommends positions in complete contradiction to what said king opined on in his expansive monthly essays. What will come a great surprise, however, is that the "other" fund, which is just as big, is run by Wall Street's shadow king Larry Fink, and which has been advocating to go all in stocks for over a year (preferably using ETFs) interim drawdowns be damned (after all everyone by now should have an infinite balance sheet) - BlackRock - just went all out against QE. As the FT reports, BlackRock's fixed income guru, formerly at Lehman Brothers, Rick Reider, "has called on the Federal Reserve to rein in its programme of quantitative easing, saying its bond-buying tactics are a “large and dull hammer” that have distorted markets and risk stoking inflation." Why, it is almost as if we wrote that... Oh wait, we did. Back in 2009.
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But Do We Really Want Smaller Zombie Banks?
Submitted by rcwhalen on 02/12/2013 10:11 -0400The problem with “too-big-to-fail” is first and foremost the behavior of our beloved political leaders in Washington
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Guest Post: Why Reforms Won't Work
Submitted by Tyler Durden on 02/07/2013 12:21 -0400
The list of public/private institutions that desperately need structural reform is long: the Pentagon, healthcare (a.k.a. sickcare), Social Security, the complex mish-mash of programs that make up the Welfare State, the 73,000 page tax code, public pensions and the financial sector, to name just the top few. Regardless of the need for reform, it isn't going to happen for these structural reasons.
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Deep Dive: Financial Repression Reconsidered
Submitted by Marc To Market on 01/17/2013 09:20 -0400- Bank of England
- Bank of Japan
- Bond
- Capital Markets
- Central Banks
- Credit Crisis
- Creditors
- default
- European Central Bank
- Federal Reserve
- Gross Domestic Product
- HIGHER UNEMPLOYMENT
- International Monetary Fund
- Japan
- Lehman
- Monetary Policy
- Money Supply
- national security
- Nominal GDP
- None
- Paul Volcker
- PIMCO
- Quantitative Easing
- Real estate
- REITs
- Swiss National Bank
- Switzerland
- The Visible Hand
- Unemployment
In this piece, I re-examine what many economists call "financial repression" and I find it to be sorely lacking as a description of what is happening. I also look at a related concern about the loss of central bank independence. Color me skeptical.
- Marc To Market's blog
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Qualified Mortgages, Loan Credit Standards and Safe Harbors for Securities Fraud
Submitted by rcwhalen on 01/14/2013 11:24 -0400It is a “fraudulent transfer” to transfer assets with intent to leave the transferor with inadequate capital... Thus every bank “sale” done for the purpose of reducing regulatory capital is, by definition, fraud – a form of bank theft.
- rcwhalen's blog
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