Quantitative Easing

Saxo Bank Warns "This Is The Endgame For Central Banks"

Major central banks claim to be independent, but they are totally under the control of politicians. Many developed countries have tried to anchor an independent central bank to offset pressure from politicians and that’s all well and good in principle until the economy spins out of control – at zero-bound growth and rates central banks and politicians becomes one in a survival mode where rules are broken and bent to fit an agenda of buying more time. What comes now is a new reality...

Investors Are Losing Faith And "Markets Will Riot" Warns Albert Edwards

Global markets face three risks, according to Edwards: bearishness in the U.S. government bond market, a flawed confidence that the U.S. is in a self-sustaining recovery and undue faith in the relationship between quantitative easing (QE) and the equity markets. “It doesn’t matter how much QE is spewing out of the US,” he said. “The markets will lose confidence that the policymakers are in control of events, just as they did in 90's Japan. They lost faith that the policymakers were in control. This is the biggest risk out there.”

Mr. "QE4" Tells Hilsenrath He Now Wants To "Get Going" With Rate Hikes Soon

Having saved the world markets from a 10% correction fate worse than death (or recession) in October with 'hints' of reigniting QE4, The Fed's Jim Bullard is back to his jawboning best. Blaming The ECB's looming unconventional policy move for the global bond market rally (as opposed to collapsing growth and disinflation), Bullard proclaims the domestic US economy is doing well with tailwinds from low rates and oil prices (just don't tell the 7,000 Baker Hughes workers this morning) and tells WSJ's Jon Hilsenrath that he wants to “get going” with rate increases warning that the funds rate is 400bps below normal.

Another Former Central Banker Finally Gets It: "The Idea That Monetary Stimulus Is The Answer Doesn't Seem Right"

What is it about central bankers who wait to tell the truth only after they have quit their post. First it was the maestro himself, the Fed's Alan Greenspan (most recently in "Greenspan's Stunning Admission: "Gold Is Currency; No Fiat Currency, Including the Dollar, Can Match It"), and now it is the Bank of England's former head, Mervyn King, who yesterday told an audience at the LSE that "more monetary stimulus will not help the world economy return to strong growth." That this is happening just as we learn that in one year the world's 1% will collectively own more wealth than the rest of the world combined, and two days before Goldman's Mario Draghi unleashed up to €1 trillion (if not unlimited) in QE, is hardly as surprise, and will be surely ignored by everyone until the inevitable outcome of another "French revolution" finally arrives.

Why The ECB's QE Won't Work (In 4 Brief Minutes)

Given all the hints, promises, guarantees, and bets that have been made, the ECB better deliver quantitative easing on Thursday or the Swissnado from last week will be like a fart in a hurricane. But while most people believe that this time is different and Draghi will actually deliver more than simple rhetoric, investors are sceptical about its ability to actually reflate the eurozone's economy (and rightly so). "We're not learning from the past," warns RBS' Alberto Gallo, noting that "when 'wealth' increases [via QE reflation of markets], only the richest few people benefit," which means the weakest nations like Greece or Italy (who need QE the most) will not feel the benefits.

Ron Paul: If The Fed Has Nothing To Hide, It Has Nothing To Fear

Since the creation of the Federal Reserve in 1913, the dollar has lost over 97 percent of its purchasing power, the US economy has been subjected to a series of painful Federal Reserve-created recessions and depressions, and government has grown to dangerous levels thanks to the Fed’s policy of monetizing the debt. Yet the Federal Reserve still operates under a congressionally-created shroud of secrecy. No wonder almost 75 percent of the American public supports legislation to audit the Federal Reserve.

Hilsenrath Speaks: Fed Will Proceed With Rate Hikes "Later In The Year"

The Fed's own favorite mouthpiece Jon Hilsenrath (for more see "On The New York Fed's Editorial Influence Over The WSJ"), just released a piece in which he claims, or rather his sources tell him, that the Fed is "on track to start raising short-term interest rates later this year, even though long-term rates are going in the other direction amid new investor worries about weak global growth, falling oil prices and slowing consumer price inflation." In other words, just like the ECB in 2011, the Fed which has hinted previously that it will hike rates just so it has "dry powder" to ease once the US economy falls into recession, will accelerate a full-blown recession in the US when it does - if indeed Hilsenrath's source is correct and not merely trying to push the USDJPY higher (for reference, see Reuters "exclusive" report on the Samsung takeover of Blackberry, denied by both parties within hours - hike some time this summer.

Draghi's Looming "Anti-Integration" QE: It's The Structure (Not Size) That Matters

There are more important factors than merely looking at the total size of the QE program that is apparently coming next week from the ECB. the greatest probability in my opinion, and the only way we believe Draghi can retain enough votes, is for the Council to reject risk sharing (as suggested in the Der Spiegel article). This means QE will be implemented by the National Central Banks who would be responsible for the purchasing of their own debt. We believe this structure is of critical importance, because unlike other ‘bail-out’ structures, such an action is anti-integration. It would be a step back-ward; a step away from being a union.

"The Consequences Of The SNB Decision Will Not Be Limited To Switzerland"

Since the European sovereign-debt crisis erupted in 2009, everyone has wondered what would happen if a country left the eurozone. The risks created by the SNB’s decision – as transmitted through the financial system – have a fat tail - and the consequences will not be limited to Switzerland. After years of wondering whether the exit of a small, fiscally weak country like Greece could undermine the euro, policymakers will have to deal with an even bigger shock stemming from the exit of a small, fiscally strong country that is not even a member of the European Union.

Richard Koo Crushes The QE Dream (In 1 Brief Paragraph)

Late on Friday afternoon, desparate to relive his mid-October 'world-saving' heroics, The Fed's Jim Bullard unleashed some more Fedspeak aimed at the promise of moar money to save the world (i.e. stocks) if things don't work out. But it is his concluding comment that sparked the most 'keyboard-smashing-angst' for those not buying the spoon-fed omnipotence of the central planners. Bullard stated unequivocally that "the lesson of QE is that it works fairly well." While we are not exactly sure what his definition of 'works' is, as the chart below and Richard Koo's QE-dream-crushing commentary shows, by reflating assets by their hand, the central planners are putting the cart before the horse... and Japan is a perfect example of the vicious economic spiral that leads to...

5 Things To Ponder: A View Of A Correction

It has been a rough start to a new year as all of the gains following the end of the Federal Reserve's flagship "QE-3" campaign have been erased. There is currently little concern by the majority of Wall Street analysts that anything is currently wrong with the markets. While earnings estimates are rapidly being guided down, it is likely only a temporary issue due to plunging oil prices. However, not to worry, the economy is set to continue its upward growth trajectory. Maybe that is the case. But as investors we should always have a watchful eye on the things that could possibly go wrong that could lead to a rapid decline in investment capital.

Goldman Admits It, Too, Was Short The Swiss Franc

"In our portfolios with currencies, we have been short the CHF on the grounds that it was an expensive currency which we expected would experience capital outflows as European growth normalized. We were surprised by the sudden removal of the peg. Although the CHF real effective exchange rate is lower than during the European crisis of 2011, it has actually appreciated in recent months. We exited a substantial portion of our CHF short today and are monitoring the situation closely."

Peter Schiff: Swiss Surrender Wins Currency War

By ending its three year currency peg to the weakening euro Switzerland has become the first major economy to surrender in the international currency war, and in so doing has given a long-delayed victory to the Swiss people. Contrary to the indignant reaction by the media and financial establishment, the decision is not a disaster for Switzerland, but may be looked at in the future as the first significant counter-attack against our current global system of monetary insanity.

Why Our Central Planners Are Breeding Failure

Success, we’re constantly told, breeds success. And success breeds stability. The way to avoid failure is to copy successful people and strategies. The way to continue succeeding is to do more of what has been successful. This line of thinking is so intuitively compelling that we wonder what other basis for success can there be other than 'success'? As counter-intuitive as it may sound, success rather reliably leads to failure and destabilization. Instead, it’s the close study of failure and the role of luck that leads to success. In the macro-economic arena, we think it highly likely that the monetary and fiscal policies of the past six years that are conventionally viewed as successful will lead to spectacular political and financial failures in 2015 and 2016. How can success breed failure? It turns out there are a number of dynamics at work.

3 Things - Employment, Interest Rates & Retail Sales

The majority of the jobs "created" since the financial crisis have been lower wage paying jobs in retail, healthcare and other service sectors of the economy. Conversely, the jobs created within the energy space are some of the highest wage paying opportunities available in engineering, technology, accounting, legal, etc. In fact, each job created in energy related areas has had a "ripple effect" of creating 2.8 jobs elsewhere in the economy from piping to coatings, trucking and transportation, restaurants and retail. Simply put, lower oil and gasoline prices may have a bigger detraction on the economy that the "savings" provided to consumers.