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Caxton: Goodbye To The Self-Sustaining Recovery
"It’s clear to us now that the US economy just isn't going to reach escape velocity," said Andrew Law, head of Caxton Associates (one of the hedge fund industry’s most successful money managers) in a wide-ranging and rare interview with the Financial Times. "Tapering is off the table for the foreseeable future." As we have explained numerous times, Caxton notes the Fed has little option but to continue its policy of extraordinary monetary easing indefinitely, adding "what happened [last week] was just another can kicking exercise. The problem has not been solved and the hopes for a grand bargain are in tatters." Simply put, he concludes rather dismally, "there are no incentives for the corporate world to go out and spend right now..."
One of the hedge fund industry’s most successful money managers has warned that dysfunction in Washington has damaged the US economy, leaving the Federal Reserve with little option but to continue its policy of extraordinary monetary easing indefinitely.
“It’s clear to us now that the US economy just isn’t going to reach escape velocity,” said Andrew Law, head of Caxton Associates, in a wide-ranging and rare interview with the Financial Times. “Tapering is off the table for the foreseeable future.”
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Mr Law’s stark outlook for the US contrasts with widely-held expectations that the US economy will bounce back quickly in the coming months. Most investors and Wall Street analysts expect the Fed to begin “tapering” its programme of quantitative easing in December.
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The 47-year old Mr Law said the shutdown and debt-ceiling debate in Washington had “undoubtedly” caused damage to the country’s economy.
“What happened [last week] was just another can kicking exercise,” he said of the political deal reached between Democrats and Republicans in Washington to raise the cap on the government’s ability to borrow. “The problem has not been solved and the hopes for a grand bargain are in tatters . . . the lack of visibility is very damaging.”
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“We just don’t see how the economy is going to accelerate in the foreseeable future,” he said.
“Sequester spending cuts, the debt ceiling and shutdown have all taken their toll . . . there are no incentives for the corporate world to go out and spend right now . . . that, and the housing market are critical. You’ve already seen earnings release statements for companies mentioning shutdown as a reason for a drop-off in orders.”
The grim outlook, while contrarian, is shared by a number of hedge funds.
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Caxton also believes the dollar will continue to weaken against the euro – potentially precipitating a currency fight with the eurozone.
“It will be fascinating to see how the ECB [European Central Bank] responds,” said Mr Law, adding that one likely option for Frankfurt would be for it to lower rates. “They are not going to be too pleased [with a weakening dollar],”
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Wait wait, I'm unclear what happens if you fail to achieve escape velocity? You'll be OK right?
Well, off to see Gravity.
There has been NO recovery...
Zip... zero... nada!
Damn straigt.
Look at jobs, housing cost, living standards, anything that really matters.
If the media says there's a recovery, then there's a recovery.
Corporations don't spend for the same reason welfare losers won't work.
Why, when the money's free?
Trading paper is exactly the same as making things, add them up and the economy's recovering.
Paper's easier and they've already hired the government.
And all these workers, just put 'em on the dole and call them sponges.
English is hard language and Boris is sometime to struggle, but "self sustaining" and "recovery" are not most complex of words. "recover" is to make better, "sustain" is to keep of going, and "self" is without help or by self. Please, how can serious person to assemble phrase "self-sustaining recovery" to describe death spiral of economic situation of Amerika and IMF global?!
I am sorry but are you supposed to be a Russian with poor grasp of English or a case of life imitating avatar? Or did you learn English at G.W. Carver High School in New Orleans? Whatever the case, your shtick is becoming repetitious. Just saying. Sorry.
"Corporations don't spend for the samr reason welfare losers won't work."
GODDAM IT !!!! I AM SICK OF YOU IGNORANT FUCKS AND YOUR OUTDATED NOTIONS OF WELFARE !!!!
HALF THIS COUNTRY GETS AN EARNED INCOME TAX CREDIT IN THEIR REFUND CHECK AFTER FILING TAXES EVERY YEAR. THAT"S EEEEARRRRNNNED INCOME YOU STUPID FUCK ! THAT MEANS THEY ARE WORKING !!!!
But due to Republican and Democratic cock sucking the Powers That Be for the last 50 years a working man with a family HAS to get that earned income AND food stamps to get by.
You will ALWAYS have SOME worthless fucks in the system. But in this age......this is NOT YOUR DADDY's WELFARE. GROW UP AND REALIZE THE FACTS ON THE GROUND !!!!!!!!!!!!
Perhaps you should rethink that one- since long term disability is exploding while the employment level is collapsing.
"Earned Income" and the "EITC" are not an indication that anyone has been "earning" a living ~ .gov semantics 101.
http://www.irs.gov/Individuals/What-is-Earned-Income%3F
Goddam stupid fuck. I've been receiving EITC since 1998. Been working full time the whole time. A couple of years back I clocked in 422 hours worked over a 2 week pay period with no overtime.....during which I worked a 41 hour straight shift with no sleep.
There are 10's of MILLIONS of us who bust our balls in this satanic system and get EITC.
Fuck you and die you ignorant slut.
As far as the disability folks......HIP HIP HOORAY.....I SAY FUCK THE SYSTEM ANY WAY YOU CAN. You useless pieces of shit who are trying to change the system by voting are COSMICALLY FUCKING STUPID......and the others who bitch and moan about the system and quote Jefferson are too chicken shit to pick up the gun and have a full blown revolution.
I say rape America for all she's worth. Get on EVERY SINGLE GOVERNMENT PROGRAM YOU CAN AND COLLAPSE IT FROM WITHIN.
Perhaps Obamacare will hand you some psychological-care credits to help with your problem. It's no fun ripping a post to shreds when all that is required is to block the author from editing that post...
We, you, I didn't build that recovery ?
What's next ?
Anticipation...its making me wait.
Good things come slowly (or never?).
Need reset or CTL-ALT-DEL reboot.
of course there is no recovery. how about we define a good job as one a man can own a home and raise a family on? society is only going to work if daddy goes to work every day and mommy raises the kids. sure, mommy can work, and daddy can help with the kids, but first things first. automation is a strawman. if that were the case we would have the robots here, not in asia. i will believe automation is the jobkiller when foxconn shuts their doors.
"Well, off to see Gravity."
Fun movie as long as you forget everything you ever knew about physics.
Hey Debbie Downer, I go to the theater to escape reality; I come to the 'hedge to have it beat me about the head.
Escape of reality? You are enjoy CNBC Business News, then, no?
No. I mean yes. I mean..... you know what I mean. I agree.
BTW- I think I speak for everyone here when I say you are way better on ZH than you ever were doing that Yakov Smirnoff stand-up thing you used to do back in the 80s.
No Mr. Boris, I got rid of all TV 6 years ago. I use low carb beer and vodka as my escape vehicle now.
better save it for the 911 movie
"there are no incentives for the corporate world to go out and spend right now..."
No need to hire or expand. That's too risky when you can just buy stock and benefit from the Feds wealth effect.
... and use near zero cost currency to automate/buy robots to replace those pesky, needy organics!
Winning!
Except those robots work a lot better in the brochures than they do in the real world.
Mostly it isn't automation, it's offshoring.
But it is sucking subsidies that's the corporate business model.
You'd better flush out your headgear, newguy - results don't matter! Just like moving all those jobs offshore, what MATTERS is selling the story, increasing your stock options and salary, and getting out RICH! Who cares what the truth or results are 5-10 years down the road?
There is no risk at all in investing,
until everything on the planet collapses in a steaming pile of wookie doo.
Welcome to the new normal.
Phinius Yellen and Her Perpetual Printing Machine to the rescue. Warp speed set phasers to moar.
Look, she's not even in yet. You don't know that's what she's going to do. She might..... <urp>.....
Sorry, I threw up in the back of my mouth a little. I was trying something new, but my body rejected it.
You're right. She'll print. She's gonna show all the boys how it's really done.
Because the middle class is not consuming. Because the middle class wages have decreased since 1990 (because of increasing automation and offshoring, and tax structure). Wages were replaced with debt originating from Fed easy money policies and deregulation of the FIRE sector, making a fortune for the financial sector. Then the asset value undelying the debt decreased, leaving the middle class with no collateral (negative real wealth). Burdened by debt, the middle class cut consumption.
The govt and the Fed have been destroying the economy with their massive interventions.
But everything would have been great if only the Tea Party had not interfered the last couple of weeks .
Right.
While those poor, patriotic, public spirited banks have been forced to wipe out all those homeowners, pensioners, and small businesses.
If only Barry and Ben had listened to Dimon, Blankfien, and that loudmouth over at AIG.
Oh, wait...
There can be ecomonic recovery until Bernanke and his criminal cohorts are hanging in the gallows.
What do u mean? Another 3 trillion should do the trick. Yellen, get to work and dust off the cobwebs from the pink taco.
She is all vulva! A pink highway to heaven.
ewww. just ewwww.
Yeah, the shutdown damaged the economy, not the trillions in printed money.
So had it not been for the shutdown, the economy would be booming in a few months. Bullshit.
If not for QE most of these bankrupt zombie corporations would be pushing up daisies, letting well run corporations take their place. Maybe private ones that pay middle class wages. And that's why QE exists. Wall Street can't take a cut if there's no stock to trade.
When my company got sued one of the lawyers said, "You made your money, it's time for us to make ours."
In other words, it doesn't matter if the lawsuit is valid or not. Without lawsuits the lawyers couldn't exist. How would they make money?
Who could have known that the same Keynesian philosophy that turned the crash of 1929 into the Great Depression ... would turn the crash of 2008 into a depression?
We cannot recover as long as we live in a self-reinforcing system that corrupts or expels any honest, independent minded man of principle.
"Go with throttle up!"
This is purely ancedotal, but consider this:
A person I know had her hours cut to 29 hours per week, and with the cost of fuel to get to work, she is getting eaten alive, and will need to go on the dole. She is unable to find another employer that will work around her schedule either.
Another person I know had his hours cut to 29 hours, and his savings have evaporated, plus the "fees" his bank charged him for having an account with under $100 in it did not help either. He is thinking of declaring bankruptcy, and has applied for food stamps, heat and rent assistance. He applied for jobs all summer, but again, no one will work around his schedule either.
Before thier hours were cut, they were holding on, but this pushed both of them over the edge.
I fear that they are not alone.
Although I sympathise with the fate of the people referenced (probably a direct response to ACA), I cannot help but note the entitlement bias around this post, viz. "no one will work around his schedule either". There is a huge pool of unemployed and you expect an employer to accomodate a personal schedule WTF!!!
Entitlement bias?
When it's managerail/professional level everyone understands about schedules and multiple clients. And any small business owner understands if you're going to hire parttimers, you can't expect full time levels of commitment.
Or do you think employers are entitled to whatever terms they want?
There are all sorts of reasons for a personal schedule that does not allow for flexibility and all sorts of reasons why "accomodating" that worker is in the interests of an employer.
For instance, how could a divorced father with custody of the kids on a weekday get them ready for school on flexible hours? A school opens when it opens. You have to deal with it. Many employers (not all) realize that.
Society of victims. We've lost the spirit of individualism and self suffeciency.
Oh, I don't know. Most poor-bashing is based on the delusion of absolute self-sufficiency. No outside circumstances and no larger realities.
The power of positive thinking that nothing's out of the individual control. The lie that everything that happens is your fault.
It's still good for that.
If the job you had that once had at 40 hours is now at 29 hours or less, and you now work Mon Wed Fri with the old job, good luck finding a job that will let you work only Tue Thur and maybe a weekend to make up for what you lost. Or let you work only in the morning, or only at night.
One job that the girl applied for would only guarantee her 3 hours per week. Not three days per week, three hours.
If you need to drive 40 miles round trip to your job, for three hours of work, does it even pay to turn the ignition key?
How is actively trying to run a marathon to just stay in place an entitlement bias?
By doing so, will the two people in my post have more or less spending capacity as they did in the recent past?
When these two peple become tens of thousands and much, much more, what do you think will happen across the "economy"?
It will crash into pure authoritarian socialism, exactly as planned.
We just heard that IBM missed. That means for sending jobs offshore, IBM has realized every advantage it will get from wage arbitrage. Over and done with.
Plus, their service to the American Empire and the US Security State is rewarded.
http://www.zerohedge.com/contributed/2013-10-17/nsa-revelations-kill-ibm...
Of course the FED has a choice! Since they are owned by the few and can create money for them for nothing, they will continue to do the same. How stupid do these people think we are? Just once can someone come out and pull a George Carlin and uter some truth. The banks that will be left standing will own a greater and greater amount of everything!!
If you don't use it you lose it.
I have some priceless artworks by an unknown artist if anyone knows a banker that needs collateral.
It appears that the demand, my good Watson, was fake.
Ghost cities in China.
And the unbiquitous consumer? Castles made of sand ...
- The effectiveness of monetary policy was last discredited in the 1970s. The persistent attempts to revive growth with easy money led to stagflation.
Who remembers the 1970's?
It was a time of Stagflation.
The 'Bob Hope" generation entered their 'spend less-save more' life stage. OUR Parents!
It should be clear that the baby-boom is now in the same life-stage.
Not one Politician will admit they are helpless to restart Economic Growth!
They will wait this thing out, just like before.
Even if it takes 11 to 15 years!
We must demand cuts in Government spending, to match cuts in government revenue.
Anyone who can suggest how to elect political representatives that don't have to BUY votes by SELLING favors would do a really good thing for the world!
until it happens, I will keep on keeping on