"My conjecture is that investors have begun to price out June/July hiking risk they are beginning to reject the view that there is a high?probability fed funds path that is as shallow as the market is pricing in. Before you get to negative rates you would have the hail Mary of QE4 which would act mainly to push down long term yields. In the past the prospect of QE supported equity markets, but there is so much skepticism at this point that the equity market reaction is negligible and the brunt of the concerns are falling on USD and long?term yields."
Is there anyone on the planet who's actually stupid enough to believe these New Normal charts are healthy and sustainable? We doubt it. Rather, the apologists, toadies, apparatchiks and flacks are being well-paid to cheerlead, and the "leadership" (using the term lightly) of the discredited institutions are terrified of what will happen when people finally catch on. The New Normal is not sustainable.
After three years of the dollar being pretty much the only strong currency in the world, US corporate profits are falling (because it’s hard to sell things abroad when you price them in an expensive currency) and growth is slowing (because an economy can’t expand if corporate profits are falling). Presumably the plunging dollar will offer some relief on those fronts. But our relief comes at a high, potentially-catastrophic price for Japan and Europe...
"There are today, we know, a hundred neighborhoods in France that present potential similarities with what's happened in Molenbeek." - Patrick Kanner, Minister for Urban Areas.
"We’re condemned to serial bouts of severe volatility having been trained to dismiss real and knowable risks as just improbable black swans.... Central banks can’t keep giving markets everything they want, or the volatility in the end will be catastrophic"
“The zero interest [rate] policy is an attack on the assets of millions of Germans..."
Overnight Australia finally admitted it has succumbed to the global economic weakness plaguing the rest of the world when in a "surprise" move, Australia’s central bank cut its benchmark interest rate for the first time in a year to a record low and left the door open for further easing to counter a wave of disinflation that’s swept over the developed world. The move sent the local currency tumbling and local stocks climbing. Reserve Bank of Australia Governor Glenn Stevens and his board lowered the cash rate by 25 basis points to 1.75 percent Tuesday, a move predicted by just 12 of 27 economists surveyed by Bloomberg. The announcement has, not surprisingly unleashed havoc across FX markets and broadly pushed global mood into its latest "risk off" phase.
Debt, if used for productive investments, can be a solution to stimulating economic growth in the short-term. However, in the U.S., debt has been squandered on increases in social welfare programs and debt service which has an effective negative return on investment. Therefore, the larger the balance of debt becomes, the more economically destructive it is by diverting an ever growing amount of dollars away from productive investments to service payments. The relevance of debt growth versus economic growth is all too evident as shown below...
Quickly signally agreement to my question whether working as a waiter had hurt him financially, he said he dropped from $34.00 an hour toiling in the coal mine to $2.65 plus tips.
It appears as though the ECB has had enough of the thorn in its side that is Germany in this latest round of back and forth, and has taken to what it does best: jawboning. In an article published today in the Frankfurter Allgemeine Sonntagszeitung newspaper, executive board member Benoit Coeure writes a rambling article defending ECB's policies, tells Germany that the ECB is the reason for its economic success, and downplays the issues that any savers may be having under NIRP.
Unfortunately, the majority of analysts continue to put out increasingly worthless forecasts as they fail to understand the true nature of the problem... or rather, the predicament we are facing.
The initial refugee welcome in Germany is rapidly turning to rejection as the nation plan to ban EU migrants from most unemployment benefits for five years after arrival as a senior German politician has called for an "Islam law" that would limit the influence of foreign imams and prohibit the foreign financing of mosques in Germany. As The FT reports, the proposals, which are far tougher than had been expected even a few months ago, highlight the government’s concern over growing public anxiety about immigration and the related advance of the Alternative for Germany party, the most popular rightwing grouping since the second world war.
Following yesterday's Yen surge in the aftermath of the disappointing BOJ announcement, the pain for USDJPY long continued, with the key carry pair tumbling as low as 106, the lowest level since October 2014 before stabilizing around 107, and is now headed for its biggest weekly gain since 2008, which in turn has pushed the US dollar to to its lowest close in almost a year as signs of slowing growth in the U.S. dimmed prospects for a Federal Reserve interest-rate increase. As a result, global stocks fell and commodities extended gains in their best month since 2010.
It has been said that history may not repeat but it sometimes rhymes. Just as the generals always seem to fight the last war people seem to prepare for the last depression. Times change and the mechanism that leads to misfortune changes with it. Looking at the past may not give us the clear answer to how to deal with the future but it can help us to determine what might happen and how to deal with it when the time comes.
Not only is Donald Trump likely to gather the most votes of any GOP Presidential nominee ever, having swept the East Coast and crushed the anti-Trump alliance between Kasich and Cruz even before it made the news cycle; but now, as Reuters reports, the GOP establishment faces an ever bigger problem. Wealthy, well-educated voters helped carry the Republican front-runner to victory this week - a demographic the famously blunt-spoken billionaire had struggled to attract in the past.