“The risk of a US recession next year is rising fast” and “the Federal Reserve has no margin for error” according to Ambrose Evans Pritchard writing in the Telegraph. "AEP" is quite well connected and very well informed on such matters and hence the need to consider what he is saying and more importantly prepare.
"I am concerned that the appointment for Treasury Secretary offers either a great opportunity or a lost one or in one case would create a future problem. The latter, obviously, is Larry Summers who is... arrogantly unpleasant to his subordinates, dismissive to his equals and pandering to his superiors."
"...we surely do not want to unnerve markets by saying anything that would suggest your Treasury Department would undo this modification after January 20. However, the combination of the questionable terms of the original Fed lending and failure to increase the effective stake of taxpayers as part of this deal means that we should avoid saying anything that would identify us with this move."
While Goldman is best known for creating the revolving door, where it either soaks up SEC "regulators", spawns central bankers and/or Treasury Secretaries like Hank Paulson, a new function was revealed today: providing sabbaticals for the spouses of presidential candidates. Case in point: Heidi Cruz, who left Goldman Sachs last year to help her husband Ted Cruz in his quest for the Republican presidential nomination, is returning to the bank in a newly created role in the Houston office.
But after 100-years of mismanagement, the last eight being in the radically extreme, the Fed has scored a big fat rotten tomato. The data still stinks – GDP’s still anemic. But the downside of their actions is downright putrid.
"...the corrupt status quo of both useless political parties are making a huge calculated error by coming together so publicly against Trump. By rallying so aggressively and passionately around Hillary Clinton, the worst of the worst from America’s oligarchy have succeeded in the impossible. They have made a billionaire reality tv star look like a counter culture iconoclast."
"I'd like to think that logic and reality will prevail; that distaste for being told how great the world is has become sufficiently revolting and obviously false to stir the world’s populace to end the imbalances. But that, again, will take time, perhaps a good deal of time; until then, whenever it hopefully is, central banks continue to operate with impunity even though the risks of their intemperance rise exponentially..."
Only one question matters for global investors - Where is the helicopter? Helicopter money will be raining from the skies in Japan, the Eurozone, the UK and even in the USA. This form of reflation will likely work and in due course work too much. Few things are binary in investment, but this huge decision to be taken in Berlin is the biggest binary event for investors this analyst has yet come across.
During Friday’s bloodbath we heard a CNBC anchor lady assuring her (scant) remaining audience that Brexit wasn’t a big sweat. That’s because it is purportedly a politicalcrisis, not a financial one. Here’s a news flash. That’s all about to change. The era of Bubble Finance was enabled by a political abdication nearly 50 years ago. But as Donald Trump rightly observed in the wake of Brexit, the voters are about to take back their governments, meaning that the financial elites of the world are in for a rude awakening.
The approximate hour Janet Yellen spent wandering in circles and spewing double talk during her presser yesterday was time well spent. When the painful ordeal of her semi-coherent babbling was finally over, she had essentially proved that the Fed is attempting an impossible task. And better still, that the FOMC should be abolished. The alternative is real simple. It’s called price discovery on the free market; it’s the essence of capitalism.
This past Thursday marked the one-year anniversary of the US stock market’s death when stocks saw their last high. Market bulls have spent a year looking like the walking dead. They’ve tried to push back up to that distant high that means new life several times, but each time the market falls into a pit again to where the market is once again lower than it was a year ago. These are the last gasps of a stock market (and economy) that is struggling to rise again, which it simply cannot do now that QE has been turned off and the oxygen tank of zero interest is being slowly turned down.
It turns out that Puerto Rico's plan to default on its debt and beg congress for help is working out as planned. After a slight delay, House Republicans have reached an agreement with the Obama administration to provide a path to restructure Puerto Rico's $70 billion debt load. The bill would offer the island a legal out similar to bankruptcy and wouldn't commit any federal money according to the WSJ.
Today we look back to the recent past with singleness of purpose. Context and edification for the present economy is what we’re after. We have questions... How come the recovery has been so weak? Why is it that, nearly seven years after the official end of the Great Recession, the economy’s still mired in a soft muddy quagmire? Squinting, focusing, and refocusing, there’s one particular week that rises above all others.