The Fed has finally come to terms with the realization that control is no longer an option. It's been a mirage that's held up far longer than originally anticipated. The monster has now grown far too big and dangerous while possibly exposing, to their dismay, the only way they might have a shot of regaining some stability for future control is to let it fall apart: as they stand by and watch hoping to 'thread the needle' for further intervention just in time. Along with trying to have some C.Y.A. assurance to the 'In Crowd' that "Hey – we tried to warn you!" if it indeed does exactly that.
Which is scarier? A Fed that may be signalling they’ve lost control? Or, a Fed that still believes "Don't worry – we've got this!"
Do our childish minds really think those whom we blindly empower will scurry away like cockroaches exposed by the refrigerator light and leave us be after the fall? Really? Are we serious?
World sleep walking from ‘Cold War’ to ‘Hot War’ and new World War ... It will lead to financial decimation in the coming years when the monstruous financial bubble of today eventually collapses ... and it will as sure as night follows day
If Tsipras and Varoufakis should elect to give in to Brussels and Berlin, that decision would still need to be put before the people to vote on, because it would mean a prolongation of austerity. And that is not the mandate. By the same token, if the leadership decides an exit is the only option, and that further negotiations are hopeless because Europe won’t accept anything else than strapping the proud Greek people in a straitjacket, that too will have to be put before a vote. They know there will come a moment when a referendum can no longer be postponed no matter what the polls say. In that, Greece is living up to its glorious past as the cradle of democracy. Still, make no mistake: of course they’re preparing to leave.
Since the depths of the last recession, the price of ground beef in the United States has doubled. Has your paycheck doubled since then? Even though the Federal Reserve insists that we are in a “low inflation” environment, the government’s own numbers show that the price of ground beef has been on an unprecedented run over the past six years...
If normalisation is the result of economic recovery we will be familiar with the playbook. However, The Fed has to face the possibility that, for whatever reason, highly suppressed interest rates are not working, and an escape from the zero interest rate bound without economic recovery may have to be contemplated. If interest rates cannot rise, then the dollar itself is ultimately exposed to loss of confidence in the foreign exchanges. The dawning realisation that after recent strength, the dollar is vulnerable after all can be expected to be reflected in a positive sentiment towards gold, which once under way could drive the price up dramatically due to the lack of available bullion.
"A relatively low-profile entity in Austria – Pfandbriefbank Oesterreich AG (Pfandbriefbank) – is becoming the next critical chapter in the Austrian banking system story." - Daiwa
Crude oil prices have rallied sharply this week on headlines that a coalition of Sunni-ruled nations initiated airstrikes on Yemen against Shiite Houthi rebels. Goldman's Damian Courvalin notes that this rally reversed the sell-off that occurred in part on the rising odds of a deal with Iran being reached. Courvalin expects both events to have negligible near-term supply impacts, with the build in crude inventories set to continue in 2Q15. Longer term, a deal with Iran could lead to greater OPEC supplies although the timing of the sanction relief remains uncertain. It appears today's weakness indicates a dawning realization that there's still too much...
"One of the potential options Syriza might eventually consider could be a popular referendum on Eurozone membership – a step that would obviously involve great risks and uncertainties," UBS says, as Athens stares down a tough month ahead and an even tougher June and July.
At first glance, the title to this commentary seems facile, especially to those readers in higher income brackets. The reality, however, is that “investing in food” is a risk-free means of generating an annual return on one’s investment that would likely exceed the return one could earn on almost any other investment – despite the fact that nearly all other asset classes carry significant risks.
“If you’re unhappy with what you’ve had over the last 50 years, you have an unfortunate misappraisal of life... should all be prepared for adjusting to a world that is harder..."
With NASA scientists warning about California only having one year of water left, it appears The Kardashians and March Madness continue to distract Americans from the ugly looming reality of water shortages. With summer around the corner, the US Drought Minitoring service reports today that a stunning 99.85% of California is "abnormally dry," and 98.11% of the state is in drought conditions leaving over 37 million people in harm's way.
Much of the commentary from the more liberal leaning media has continued to tout that the rise in asset markets over the last few years are clear evidence of economic prosperity in this country. However, is that really the case? In order for rising asset prices to be reflective of overall economic prosperity, the "wealth" generated by those rising asset prices should impact a broad swath of the American populous. Let's take a look to see if that is the case.
What would happen, for example, if a large number of holders decided to sell a high yield bond ETF all at once? In theory, the ETF can always be sold. Buyers may be scarce, but there should be some price at which one will materialize. But we can’t get away from depending on the liquidity of the underlying high yield bonds. The ETF can’t be more liquid than the underlying, and we know the underlying can become highly illiquid.... no investment vehicle should promise more liquidity than is afforded by its underlying assets. Do these recent promises represent real improvements, or merely the seeds for subsequent disappointment?