New York Fed

Startling Inflation News Illustrates The Failure Of Easy Money

Prices are actually falling faster than the official CPI number indicates, and have not picked up as oil has stabilized. In fact, the US has been in deflation for the past five months. So it’s no surprise that people who are actually buying the stuff that’s falling in price would register this fact and answer surveys with deflationary sentiments. It’s also no surprise that central banks, which presumably see the same data, would be looking for ways to ease even further (Japan and Europe) or walk back their previous threats to tighten (the US Fed) - apparently in the hope that increasing the dose will cure the credit addiction.

Key Economic Events In The Coming Week

While the market is still enjoying the post-NFP weekly data lull, economic data starts to pick up again in the coming days, alongside the start of the reporting season. Below are this week's key events.

U.S. Futures Jump In Tandem With Soaring Italian Banks On Hopes Of Government Bailout

it has been a rather quiet session, which saw Japan modestly lower dragged again by a lower USDJPY which hit fresh 17 month lows around 170.6 before staging another modest rebound and halting a six-day run of gains; China bounced after a slightly disappointing CPI print gave hope there is more space for the PBOC to ease; European equities rose, led by Italian banks which surged ahead of a meeting to discuss the rescue of various insolvent Italian banks, while mining stocks jumped buoyed by rising metal prices with signs of a pick-up in Chinese industrial demand.

Key U.S. Events In The Coming Week

Key economic releases for the coming week include the ISM non-manufacturing report on Wednesday. There are several scheduled speeches from Fed officials this week. Fed Chair Yellen will take part in a discussion with former Fed Chairs on Thursday.

Goldman's Take On Yellen's Dovish Deluge: "A Less Confident Take On Rate Normalization"

In recent weeks, Goldman Sachs has gained prominence by being the only bank left standing in its confidence that the Fed's forecast of 2 rate hikes in 2016 is wrong, and instead is sticking with its hawkish prediction of at least 3 rate hikes for 2016. This also explains why Goldman has been pounding the table on long US dollar bets, which incidentally have led to major losses in the past three major central bank announcements, two from Mario Draghi and one from Yellen. why we were curious how Goldman would reconcile the latest "dovish" shocker from Yellen which has unleashed a dramatic buying spree of all risk assets (as of this moments the S&P500 is trading at a 23x LTM GAAP P/E), with Goldman's hawkish bias.

The Stock Market Is A Monetary Policy Junkie - Quantifying The Fed's Unprecedented Impact On The S&P

The bulls will presumably argue that this Fed impact is now part of the accepted wisdom, and that P/Es should remain higher than history in order to reflect the Greenspan/Bernanke/Yellen Put. The bears will suggest that if ever there were a time for the scales to fall from investors’ eyes over the Wizard-of-Oz-like nature of the Fed, then this is it. We are inclined to the latter view. Betting on the Fed’s ability to generate continued market levitation seems like a dangerous game to us, but as Newton long ago opined, “I can calculate the motion of heavenly bodies, but not the madness of people.”

Mystery Man Behind $100 Million Central Bank Heist Revealed As Bangladesh Moves To Sue Fed

The incredible story behind the cyber heist that resulted in an $81 million loss for the central bank of Bangladesh continues to get more intriguing. Bangladesh is looking to sue the NY Fed for lapses in protocol, while Philippine officials race to untangle a complex web of bad actors and shady go-betweens that looks like it may lead back to one Kim Wong, who 15 years ago was accused of connecting then-Senator Panfilo Lacson to drug lords. Meanwhile, a cyber security expert who spoke to the police and the media was kidnapped from a motorized rickshaw by men in plainclothes who blindfolded him, threw him in a vehicle, and drove away.

Former Goldman Employee Avoids Prison, Gets $5,000 Fine For Stealing Secret NY Fed Documents

According to his "sentencing" moments ago, former NY Fed and Goldman Sachs employee, Rohit Bansal avoided prison time for criminal theft of NY Fed secrets, and instead was sentenced to two years’ probation after pleading guilty to a misdemeanor. U.S. District Judge Gabriel Gorenstein at a sentencing hearing in Manhattan also ordered Bansal to perform 300 hours of community service and pay a $5,000 fine.

Frontrunning: March 22

  • Brussels Rocked by Deadly Attacks With Blasts at Airport, Subway (BBG)
  • Death count climbs in Brussels blasts (Reuters)
  • Europe on High Alert After Blasts in Belgium (WSJ)
  • Brussels Phone Users Urged to Text Not Call as Networks Jammed (BBG)
  • U.S. Embassy Urges Citizens in Brussels to Shelter in Place (BBG)
  • Oil prices swept lower after Brussels blasts spook investors (Reuters)

Valeant Throws Its Former CFO Under The Bus; Accuses Him Of Cooking The Books After Coming Over From Goldman Sachs

Back in October, we tried to "tie the Valeant roll-up together by presenting The Goldman "Missing Link" in which we showed that Howard Schiller, Valeant's CFO from December 2011 to June 2015, previously ran Goldman Sachs’ health-care practice until 2009, when he became the chief operating officer of Goldman’s investment bank. The next year, the bank advised Valeant on its breakout purchase of Biovail Corp. Today, as part of its stunning announcement earlier today, the company - in looking for easy scapegoats - also threw its former CFO under the bus and accused him of cooking the books.

Mystery Of New York Fed Robbery Has Central Banks Asking Who's Next

From the NY Fed, to a local branch of a commercial bank in the Philippines, to a remittances company, to three casinos, and then... nothing. A cold trail. Who's at the end of the central bank heist rabbit hole? And do any of the people along the paper trail actually know who's pulling the strings? 

Stockman Slams "Simple Janet"'s Incoherent Babble

We now have an absolutely clear idea of why the Fed is impaled on its own petard. At the end of the day, managed rates will prove to be the ultimate destroyer of capitalism. They transform financial markets from organizers and allocators of real capital and the savings of producers and workers into gambling casinos which fuel massive speculative bubbles.