Having learned nothing from the mistakes of the last recession, the “cures” that are being prescribed for the next one are very likely to come with even worse side effects...
For those wondering, no, Andrew Bailey has never worked at Goldman, perhaps a testament to the waning influence of the bank which once upon a time was an incubator of central bankers around the globe.
On the surface, Nike's Q2 results were stellar, with the sportswear company beating on the top and bottom line, and yet Nike stock, which as a reminder has a weight of around 2% in the Dow Jones, is trading well lower after-hours. Here's the reason why.
"It is hard to see this environment improving as long as central banks continue to attempt to manipulate markets and with HFTs playing a dominant role in liquidity provision." - BofA
The risk now is that if rates start to back up those people (many are pensions who are mandated to buy) will be holding a double loss on the principle and payment back to the government. But it’s more than this because the global feast on debt from the great financial crisis was not a "great deleveraging" as Ray Dalio called it then but a giant yield chase.
Greenspan couldn’t stop it until he cut rates by 500bp... Bernanke couldn’t stop it until he cut rates by over 500bp... Powell barely has 200 bp to play with...
...signs of the shale slowdown are already surfacing in the form of vacant hotels, a dip in home prices, a noticeable reduction in overtime hours for oil workers, and a change in standards for hiring...
