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"Dear Fed, It’s Time To Lean, Or Leave"
From Bloomberg's Richard Breslow whose recent pieces have been spot on.
Dear Fed, It’s Time to Lean, or Leave
At long last we’ve reached April’s FOMC day.
Interesting that while almost everyone agrees on what the statement will/should say, there is no clarity on what the members, especially the core members, are really thinking.
Communication policy -- the professed desire for "transparency" - and the crutch of “data dependency” crutch have turned market participants into great Fed staffer clones but not the Board Governors.
I for one think this is a golden opportunity for policy makers to lean the right way.
Not that I am unsympathetic to concerns about weaker than forecast 1Q economic numbers, or the the tenuous global situation. But given the Fed has QE everywhere (just today the Riksbank extended their QE), it really must consider that today represents a chance to move toward normalcy without anyone thinking they are going to get (overly or even mildly) aggressive.
Just today BlackRock was quoted as predicting an emerging market “taper tantrum” whenever the Fed begins to tighten. They are probably right but only as a knee-kerk reaction. Any “severe tension” or “major shock”, to quote BLK’s Amer Bisat, is likely to be followed by tactical and then strategic investors realizing what a great opportunity to get in at better levels just presented itself.
This is not 1994 because Yellen and Fischer remember that episode well. The Fed is not about to enter a sustained campaign of tightening. And everyone knows it. The rest of the world has had plenty of notice to get their ducks in a row.
Reserves held by emerging countries are at vastly different levels than they were 18 years ago. The expected weak GDP could actually help here to temper concern.
Goldman Sachs has a very interesting piece this morning comparing the causes and levels of increased corporate leverage in the US and Europe. As they say, corporates are releveraging (some would say their balance sheets are deteriorating) but showing “similar symptoms, different causes”
A big part of the U.S. equation is U.S. executives are looking at yields and realizing that to not borrow at these unsustainable levels could be a missed opportunity they will sorely regret. If you run a viable business and “investors” are throwing free money at you for future growth, why not leverage up and buy back some stock.
This is ultimately something the Fed needs to focus on and lean against.
Norway’s sovereign wealth fund, the world’s largest (although I would argue that all central banks are now sovereign wealth funds) reported today record gains of $53B in the first quarter. Equity holdings were the driver of this. Good for them. Bad for global markets if monetary policy decisions become tied to any greater extent to the level of the SPX.
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"If"?
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Oh yeah...right. After 6 years of giving away money to the top 1%, they suddenly stop. It's all Bullshit!!!!
It doesn't look to me like the Fed is cornered and out of bullets. Even we Zero Hedgers are mesmerized by their every move.
So what .........who gives a shit......This is not compicated. Bubble blown now bubble popped. Wash rinse repeat. Boyz make the money goin up and now they clean your clock.
Surely, the Fed would never do anything to harm us.
Like start a major war?
Nahhh... That would never happen... This week.
And don't call him Shirley.
Nope, my rigging rates they have raised the cost of living around the planet. The recent fall of governments across Africa is the fault of the FED.
cant clean my clock. what time is it? what clock?
This is not going to be the same bubble popping we've had in the past because they are closing all the doors (ie electronic currency and negative bond rates) and leaving big capital nowhere to go. When this thing finally rolls over (people lose complete faith in gov't) it will be like a supernova explosion, there really isn't anything in history to even compare it to.
The big capital is being herded into stocks where they will be anniliated.
All is going as planned, isn't it?!
The Fed the only part of government I see working today.
If we have nothing else to be thankful for, we have that.
Seem's there's something else I should add here, but I can't think what it is.
The FED is not part of government, its powers make it the de facto unelected ruler, controlling our lives in ways that were never thought of and far exceeding the boundaries of its charter.
J Yell is our CONgress.
The FED is not part of government
If the Fed wanted Clinton's and Lerner's emails, they would have them.
Are you sure they aren't the government?
Shh.. you'll get suicided again...
My point is the FED is the government, not part of it.
And the unelected one at that.
Who controls the money controls the world.
William Pitt made this statement: "Let the American people go into their debt-funding schemes and banking systems, and from that hour their boasted independence will be a mere phantom." He realized the maxim that Rothschilds laid down as fundamental: "Let us control the money of a country and we care not who makes its laws."
Ummm... the banks ARE the government. Always have been. Always will be.
To think otherwise is to misunderstand the power of the purse.
Don't know about mesmerized.
If anyone wanted over the last 7+ yrs to make some serious money to offset any other losses or simply enhance their own assets, all they had to do was react to the moves, which were predictable, forecast as they were by the market's historic rise nearly every day, uninterrupted by any major decline.
Alan Greenspan started the ZIRP and NIRP a long time ago to enhance the wealh of the 1%, and that succeeded spectacularly.
If there is mesmerization, it's to this blog, which was a major error on our part for sticking with it, when ignoring it would have been a boon to our own balance sheets. Or attended to as a contrarian indicator to do the opposite of it's hourly criticism of the Fed.
SO you're a "blue pill" kinda guy.
https://www.youtube.com/watch?v=RhlXqYiTz2Q
FUCKEN eh, this bullshit story goes back to reagans trickle down theory.
30 plus fucken trickle down years and the rich are as rich as ever and the middle class being gutted by cheap china labor and the poor are as poor as ever. the poor has become the trickle down free shit army. redistribution of marginal funds financed by the trickle down fed. all a fraud of a magnatude NEVER experienced by a DEMOCRACY that can't counter the fraud...
owned by the system, powned, ha... baaaa. sheeple, speak properly-baaaa.
as the big banks continue to crap out they will be calling in all available capital as collateral for their derivative house of cards
watch what happens to facebook/amazon/newtflix and every other "over-valued" biotech/socialmedia company created to reservoir capital in plain sight and out of reach of the tax and regulatory juggernaut.
It'll be a REAL eye-opener for all those companies and shareholders who thought it was all going to be "theirs"
Stocktivity yea it's like a drunken rapist on a 6 year spree.....but he's all back to normal now. Only fools could believe it.
It's called trickle down, it works for them, everybody else, not so much.
Someone needs to grab me a tupperware bowl and a pair of scissors, Janet needs a haircut.
All I could find at short notice was this chainsaw with extended hand guard and fetching gloss red paint job, but I still think you should give it a go.
Sorry, all I've got is this bonesaw.
rusty dull fish fillet knife?
fuck bloomberg, fuck the fed, fuck goldman. they are the problem not the solution.
I'm not sure I agree with your premise. If company balance sheets shrink those assets must be shifting somewhere. You can't have everyone increase leverage and reduce balance sheets at the same time. Unless the excess is being consumed in writedowns and losses then the assets must still exist somewhere. It can't just be going back on the Fed excess reserves can it?
Stop being to logical. Well said BTW.
The borrowed debt-money is going to purchase stock owned by insiders ... so the money is being pumped out of the company to insiders and the company is taking on the debt.
If you define money as an asset, then you know where it has gone.
in essence they are financing their own bonuses against future profits.
historically cheap money.
2.99% new car loan
3.5% HELOC
3.75 30 yrs mort.
WTF, telling of the value of cash.
zirp til death of dolla
ZIRP'd to DEATH
Think I'm going to throw up WB7. Lynda Carter was a hottie back in the day.
'Move towards normalcy'....big deal...we've been to full-retard, and even Simple Jack knows you can never go back from that.
once you pull back the curtain and realize there is just a single hobbit controlling the whole thing you can't go back to believing in free markets after that.
Yep. I think too much has been revealed. The market can never go back to "normalicy." In any case, that whole normalicy thing was based on the masses being ignorant--it was just as manipulated back then as it is now. Difference was, only the insiders knew it. Genie is out of the bottle
FOMC Fed members flapping their gums.
At some point gum-flapping will be ineffective.
When the Fed loses credibility is when the free markets return and they will panic. By then it's too late.
It will take some time.
the fed has zero credibility with anyone on any subject
Currently, she is a bag holder. In very near future, she is a witch ( hunted ).
I wonder if back in 1929, after the Fed and banks had created a decade of free and misallocated money, people got together and said: "this has to stop" and they started on the road to reforms that eventually led to the Glass Steagall Act in 1933.
The bankers and elitists have thrown another drunken orgy for themselves at the expense of real people. Now someone has to be the adult and clean up after them.
Unfortunately our politicians and media were invited to the party this time and photos of them were taken dancing naked with hookers on top of the bar... so they have been compromised and do not have the guts or maturity to do what is right.
I wish this is what the Bloomberg article said!
The fact that Breslow can even contemplate "normalization" demonstrates that he remains captive to outdated thinking. There can be no normalization as there is no return to "normal". The Fed will make feints in whatever direction they deem to be politically expedient and buy them more time, but we are moving unavoidably towards a whole new economic/societal phase. And at present it doesn't look very promising!
The shrubbery knows!
What difference does it make....ciitdel et al own the "market"...FED Chairmans are their bitches! Just ask bend over Ben!
Watch as they report GDP at 3.5% or so just to flip everyone on their head for half a day....gotta keep em on the edge of their seats Ya know!
What would I do with with all this cheap paper I was given , when the bubble pops?
Well of course I would buy up all your assets for pennies on the dollars !! Isn't that what Mr. Yellen meant when she said all deadbeats should have bought more assets !!!
unintended consequences bitchez.
all manipulation is unintended consequences
Pssst. It's not just the manipulation; unintended consequences are at the heart of any real analysis of economics.
"Pssst. I want to throw up everytime the Fed's "handing", "owning", "rigging", of the "Markets" is called "manipulation"... It is what it is, and maniplutaion does not begin to explain it.
.2% gdp growth can only mean RALLY MARKET RALLY!
I think Janet will choose to lean... on all of us, of course!
FREEZE stock prices and close the markets or did they already do that.
This article contains the invalid assumption that the FED is in any way interested in the well being of America and Americans.
The FED is a private malevolent predatory corporation, part of a network of mafioso criminals out to usurp the wealth of the world for the exclusive benefit of their anonymous foreign shareholders.
F T F... eom
I encourage all who are following the Fed to read my article on Common Sense Economics. Very few understand the dynamics of Federal Open Market Committee decisions. Please visit my blog and share the link.
http://quillian.net/blog/gaming-the-fed/
Didn't read it. Good job in sharing the obvious outcome.
everyone knows this game of redistributing wealth to the top will go on until war begins, civil and international. the first nations to go to war on their own territory lose, the last nations to have war on their own territory win.
stalin knew this lesson well. the british but really it was the americans who betrayed stalin for a whole 2 years from 42 to 44.
russia did almost all the work of dying on ONE front and was incensed with roosevelt and churchill because they duped him for 2 years.problem for stalin was he started a fight before having a solid lockup with the u.s. and britain. so really he was in no negotiating position with the u.s. to demand from them a second front be opened.
it's almost always best to be the last person in a fight. and that includes civil war. which is why our dhs is modeled after the stazi and other fascist entities. there will be no civil war in the united states. not before at least 10's of thousands are disappeared.
the so called 'reset' is not going to happen for many decades if at all. and when it comes it will be something different than what people expect entirely.