St Louis Fed

St Louis Fed

US Futures, Global Stocks, Metals Rise On Economic Confidence, Upbeat Earnings

European, Asian stocks and S&P futures are all up again in early trading, a repeat of the Monday session, buoyed by a generally upbeat corporate earnings season, rising economic confidence and signs of improvement in the world’s biggest economies. After Charles Evans' hawkish comments on Monday, the market is now pricing in a 71% chance of a rate increase this year, up from 68% last week.

Key Events In The Coming Week

Looking at the week ahead, the US election enters the home stretch and politics will likely dominate the headlines, especially the closer races in Congress. Despite data being overshadowed by politics, there are some key US releases coming up, with the first estimate of Q3 GDP, the employment cost index and durable goods the main focus.

"Pounded" - How Not To Manage A Fiat Currency

The Bank of England’s inept monetary policies under Mark Carney’s governorship seem certain to expose the fragility of fiat sterling to wider public attention and skepticism. If the consequences weren’t so serious, we might thank him for unwittingly toppling the status quo. But the inevitable crisis, many times worse than that faced in 1975, cannot be embraced even by the most extreme financial masochist. This is why people in Britain and America will increasingly find solace in gold.

Crude Declines As OPEC Deal Doubts Emerge; Futures Roll Over

After oil soared over 5% yesterday, its biggest jump since April, overnight skepticism and doubts have emerged about the viability and compliance with the deal, coupled with a boost in production by non-OPEC producers, and as a result WTI has dipped back under $47, down 0.5%, suggesting that the OPEC surge may be short-lived, and modestly pressuring US equity futures.

Key Events In The Coming Extremely Busy Week

The week ahead is striking in the sheer number of central bank speakers, but with the Fed on hold until December and the BoJ’s new framework now revealed, focus turns squarely from central banks to US politics. The first US presidential debate at the start of the week will be a key focus.

Like Everything Else, History Repeats (Almost Exactly) Because Power Truly Corrupts

The FOMC has no idea what it is doing, just like Bank of Japan officials about a decade before them. Rather than learn from all the experimentation, the power and prestige still, somehow, afforded to all of them is just too much to give up. They would clearly rather keep themselves on top of the political power structure as it relates to the economy than to admit what is increasingly obvious (a second time).

Time To Get Real, Part 2: "We Need Their Drugs"

On the current path, the world is experiencing the largest artificial asset allocation in modern history, one that is driven by a misguided interest rate regime that has lost its efficacy and is producing more harm than good. Yet the fear of withdrawal pain is keeping central bankers from doing the inevitable: Quit. The response is predictable: "I need the drugs!"

Magical Thinking

... the more we embrace and encourage state-directed magical thinking, whether it’s of the monetary or fiscal policy sort, what we are actually doing is opening the city gates to the old evil magic and the alt-priests of fascism and totalitarianism.

"All Eyes On Central Banks" In September, But "No Reason To Smile"

September will be quite a busy month for investors since there are around 30 major central banks meetings scheduled. Since the Bank of England’s last policy announcement, the total monthly amount in global official quantitative easing has reached almost $200 billion, which corresponds, for the purpose of comparison, to Portugal’s annual GDP in 2015. Long-rumoured and oft-discussed, QE infinity is now a reality.