Wall Street Journal
Fed's Lacker Slams Fed For "Inappropriate" Bond-Buying, "Distorting Markets & Undermining Independence"Submitted by Tyler Durden on 10/08/2014 09:40 -0500
Modern central banks enjoy extraordinary independence, typically operating free from political interference. Central bank actions that alter the allocation of credit blur those boundaries and endanger the stability the Fed was designed to ensure. Such interference in the allocation of credit is an inappropriate use of the central bank’s asset portfolio. It is not necessary for conducting monetary policy, and it involves distributional choices that should be made through the democratic process and carried out by fiscal authorities, not at the discretion of an independent central bank.
"The concept of an independent central bank clearly focused on price stability is neither old-fashioned nor outdated," exclaimed Bundesbank head Jens Weidmann. As The WSJ reports, he criticized the European Central Bank’s decision to buy private-sector bonds and signaled his fierce opposition to purchasing government bonds, underscoring his reluctance to back additional stimulus measures to combat weakness in the eurozone economy. "There is a risk of monetary policy, especially in the euro area, being held hostage by politics," Mr. Weidmann said, tying fiscal policies together through ECB bond purchases “is a dangerous path,”
"...it is rather medieval. But what can you do? Even in 2014, we hardly have any way to combat this virus... There will certainly be Ebola patients from Africa who come to us in the hopes of receiving treatment. And they might even infect a few people here who may then die... I am more worried about the many people from India who work in trade or industry in west Africa... that really is the apocalyptic scenario."
- Ebola Patient Fights for Life as Contacts are Monitored (BBG)
- GPIF Unlikely To Announce New Portfolio Until November: Delay Could Rattle Investors Hoping Fund Will Invest More in Stocks (WSJ)
- High risk Ebola could reach France and UK by end-October, scientists calculate (Reuters)
- Neves to Face Rousseff in Brazil in Surprise Comeback (BBG)
- Hong Kong democracy protests fade, face test of stamina (Reuters); A Hong Kong Protest Run on Fumes and Instant Noodles (WSJ)
- Putin Clans Said Gridlocked Over Arrest as Sanctions Bite (BBG)
- Surging dollar may be triple whammy for U.S. earnings (Reuters)
- Lloyds Said to Cut Thousands of Jobs as CEO Cuts Costs (BBG)
"What people underestimate is that what's at stake is the entire credibility of the rules," warns one EU official as The WSJ reports, is preparing to reject France’s 2015 budget, that would be the biggest test yet of new powers for Brussels that were designed to prevent a repeat of the eurozone’s sovereign-debt crisis. With the looming handover to former French FinMin Pierre Moscovici (fox, henhouse?) it appears the current European Commission will not stand for Current French FinMin Sapin's plan that would run a budget deficit of 4.3% of GDP next year (far greater than the 3% deficit it had previously promised) put France’s budget in "serious noncompliance" with the new EU rules and risking sanctions of as much as 0.2% of GDP. The credibility of Brussels' new powers threatens to be seriously undermined if big countries such as France and Italy are able to flout the new rules as "it’s not like they will try - and fail; they're actually planning not do it," another EU official said.
Despite constant cries of "isolation" from The West, China's popular support for Russia has risen since Moscow's confrontation with the West over Ukraine - rising to 66% in July from 47% a year earlier. That is borne out dramatically, as WSJ reports, books on Mr. Putin have been flying off shelves across China since the crisis in Ukraine began, far outselling those on other world leaders; leaving book-shop staff members with no doubt which foreign leader customers are most interested in: President Vladimir Putin, or "Putin the Great" as some Chinese call him.
As we explained previously, the end-of-quarter catastrophe in reverse-repo window-dressing malarkey between The Fed and The Banks (that own it) shows the Fed simply has no idea (once again) how financial markets really work in the modern era. As Alhambra Partners Jeffrey Snider explains, “We don’t exactly know how it will work” should be stamped upon every message coming from the policymaking apparatus from this point forward, and then retroactively applied to every message in the age of risk and rate repression. Action in short-term money markets has heated up yet again, and that is not a positive statement toward vital function.
Just a day after Argentine President Cristina Kirchner, in a televised speech, accused central bank employees of helping local bankers to speculate against the Argentine peso in hopes of forcing the government to devalue the currency, Juan Carlos Fabrega - the head of Argentina's Central Bank - has quit. As WSJ reports, unable to borrow abroad due to a legal dispute with creditors, Mrs. Kirchner has relied on money printing to cover spending deficits at the expense of inflation that is thought to be around 40%; and it appears the sanity of Mr. Fabrega was too much to bear for Kirchner (and Kiciloff - who had reportedly clashed with the Central Banker also). The reaction - not good - the stock index collapsed over 8%, bond yields spiked and the black-market peso dumped to record lows at 15.65 to the USD (drastically worse than the 8.51 official peso rate).
The global debt levels have swollen to 200 year highs. Yep, 200 year highs!
There Might Be Some Truth to China's Accusation that the U.S. is Doing Its Best to Stir Up Hong Kong
Another Conspiracy Theory Becomes Fact: The Fed's "Stealth Bailout" Of Foreign Banks Goes MainstreamSubmitted by Tyler Durden on 09/30/2014 12:25 -0500
Back in June 2011, Zero Hedge first posted: "Exclusive: The Fed's $600 Billion Stealth Bailout Of Foreign Banks Continues At The Expense Of The Domestic Economy, Or Explaining Where All The QE2 Money Went" Of course, the conformist, counter-contrarian punditry promptly said this was a non-issue and was purely due to some completely irrelevant micro-arbing of a few basis points in FDIC penalty surcharges, which as we explained extensively over the past 3 years, has nothing at all to do with the actual motive of hoarding Fed reserves by offshore (or onshore) banks, and which has everything to do with accumulating billions in "dry powder" reserves to use for risk-purchasing purposes. Fast, or rather slow, forward to today when none other than the WSJ's Jon Hilsenrath debunks yet another "conspiracy theory" and reveals it as "unconspiracy fact" with "Fed Rate Policies Aid Foreign Banks: Lenders Pocket a Spread by Borrowing Cheaply, Parking Funds at Central Bank"
When it comes to the robotization of the workforce - especially those who proclaim they earn less than they are worth - we have grown used to the fast-food-worker being upstaged by technology. However, Murata Manufacturing Co. has unleashed the ultimate threat to every financial TV media's anchor... the world’s first cheerleading robots. With ratings plunging, perhaps it's time for managers to consider the dancing pom-pom carrying machines as replacements to say "off the lows."
With more than $65 billion pulled from PIMCO's funds since May 2013, Bill Gross' firm had been struggling amid spotty performance and it seems, according to The Wall Street Journal, PIMCO (not Allianz) was set to fire the 70-year old bond king this weekend. It seems clear that Mr. Gross move was pre-emptive as sources cite his "increasingly erratic behavior" and ultimatums as factors in the move. Assumptions about Mohamed El-Erian returning to run the company have been denied. Some have estimated PIMCO could see a further 10-30% in fund outflows on the back of Mr. Gross' departure.
Yesterday's plunge in stocks (and credit markets) was pinned on several catalysts from Russia to Fed speak, but the 'liquidations' explanation appeared tomake most sense and now we have a candidate for the culprit. As The Wall Street Journal reports, $10.6 billion BlueCrest Capital Management LLP, one of Europe's largest hedge-fund firms (and best known for its credit market expertise), laid off several stock traders in the U.S. Thursday and began liquidating their investments, according to people familiar with the matter, not long after it aggressively expanded into equities. When one fund's liquidation of part of their portfolio can drop the Nasdaq by 2%, it should be clear to everyone (including Janet and here friends at The Eccles Building) that the stock market 'stability' is anything but "contained."
China is increasingly relying on 'student interns' to make gadgets like iPhones in Western China, according to The Wall Street Journal, where lower wages make it harder to attract 'real' migrant workers. As the following brief clip explains, the government has created 'vocational' schools in very rural areas of China for high-school students but the quality of education (and 'jobs') is not what they had hoped...