PIMCO

Jim Grant Asks When The World Will Realize "That Central Bankers Have Lost Their Marbles"

Does the deployment of helicopter money not entail some meaningful risk of the loss of confidence in a currency that is, after all, undefined, uncollateralized and infinitely replicable at exactly zero cost? Might trust be shattered by the visible act of infusing the government with invisible monetary pixels and by the subsequent exchange of those images for real goods and services? To us, it is the great question. Pondering it, as we say, we are bearish on the money of overextended governments. We are bullish on the alternatives enumerated in the Periodic table. It would be nice to know when the rest of the world will come around to the gold-friendly view that central bankers have lost their marbles. We have no such timetable. The road to confetti is long and winding.

Why Is JPM's "Quant Guru" Suddenly Worried About The "Endgame"

"Increased government spending, financed by central banks could indeed create inflation, but will further elevate the problem of debt viability. If investors lose confidence that the debt can ever be repaid, they will reduce their holdings, increasing the cost to governments or inviting more central bank buying. This can eventually result in the devaluation of all currencies against real assets such as gold, high inflation or even outright defaults (as was the case in Greece). If such a trend develops in one of the large economies, it could have far-reaching consequences."

Global Stocks Plunge After Bank Of Japan "Shock"

Less than one week after the BOJ floated a trial balloon using Bloomberg, that it would reduce the rate it charged some banks which set off the biggest USDJPY rally since October 2014, we are back where we started following last night's "completely unexpected" (for everyone else: we wrote "What If The BOJ Disappoints Tonight: How To Trade It" hours before said "shock") shocking announcement out of the BOJ which did absolutely... nothing. "It’s a total shock,” Nader Naeimi, Sydney- based head of dynamic markets at AMP Capital Investors told Bloomberg. "From currencies to equities to everything -- you can see the reaction in the markets. I can’t believe this. It’s very disappointing."

GoldCore's picture

Silver had its biggest quarterly rise in nearly 30 years in the first three months of 2016 as ETF investors, buying of silver coins (now VAT free in UK and EU) and bars and speculators in the futures market pushed prices higher. Silver prices are likely to rise further as there is “supply trouble brewing” as strong industrial and investment demand are confronted by declining supply. 

Pimco Economist Has A Stunning Proposal To Save The Economy: The Fed Should Buy Gold

"In the context of today’s paralyzed political-fiscal landscape how silly is it to suggest the Fed purchase a significantly large quantity of gold bullion at a substantially greater price than today’s free-market level, perhaps $5,000 an ounce?  Admittedly, this suggestion is almost too outrageous to post under the PIMCO logo, but NIRP surely would have elicited a similar reaction a decade ago. But upon reflection, it could be an elegant solution since it flips the boxes on a foreign currency “prisoner’s dilemma”. Most critically, a massive gold purchase has the potential to significantly boost inflationary expectations, both domestic and foreign."

Frontrunning: April 5

  • Panama Papers: Biggest Banks Are Top Users of Offshore Services (WSJ)
  • Panama Papers probes opened, China limits access to news on leaks (Reuters)
  • Credit Suisse CEO Distances Bank From ‘Panama Papers’ (WSJ)
  • Fed's Evans says market more pessimistic on U.S. rate hikes (Reuters)
  • IMF's Lagarde Says Risks to Weak Global Recovery Are Increasing (BBG)

Gross To Central Banks: "Get Global Growth Moving Now, Or Else"

"The reality is this. Central bank polices consisting of QE’s and negative/artificially low interest rates must successfully reflate global economies or else. They are running out of time. Or else what? Or else markets and the capitalistic business models based upon them and priced for them will begin to go south. Capital gains and the expectations for future gains will become Giant Pandas – very rare and sort of inefficient at reproduction."

Frontrunning: March 29

  • Headline of the day: Oil prices fall as investors' faith in rally wanes (Reuters)
  • Europe shares, dollar gain as investors look to Yellen (Reuters)
  • Chinese Bidder for Starwood Has Mysterious Ownership Structure (WSJ)
  • Germany wants refugees to integrate or lose residency rights (Reuters)
  • BlackRock Joins Pimco Warning Investors to Seek Inflation Hedge (BBG)
  • Goldman Sachs and Bear Stearns: A Financial-Crisis Mystery Is Solved (WSJ)

Futures, Oil Dip On Stronger Dollar Ahead Of "Hawkish" Yellen Speech

With Europe back from Easter break, we are seeing a modest continuation of the dollar strength witnessed every day last week, which in turn is pressuring oil and the commodity complex, and leading to some selling in US equity futures (down 0.2% to 2024) ahead of today's main event which is Janet Yellen's speech as the Economic Club of New York at 12:20pm, an event which judging by risk assets so far is expected to be far more hawkish than dovish: after all the S&P 500 is north of 2,000 for now.