My model of interest rates and currencies says that long-term yields are just an amalgam of short-term yields with a term premium tacked on. There’s nothing there about money flows from people moving money to where yields are highest. I think this matters when thinking about what the flattening yield curve signals as central banks begin to tighten globally. Related posts: The dollar bull market will eventually break something Underconsumption and the end of excess demand Some thoughts on systematic central bank policy errors
Recently I have indicated I see a lot of problems in asset markets despite the economic acceleration in Europe, Japan, and the US. Commercial real estate is a problem that I want to highlight briefly since I believe it will be a locus of distress in the next global downturn. Related posts: An anecdote on the German housing bubble Overbought Some incomplete comments on the current US economic environment
Председатель Федеральной резервной системы Джанет Йеллен в понедельник заявила, что она уйдет из правления ФРС в то же самое время, когда закончит свой срок в качестве председателя. Президент Трамп решил в начале этого месяца назначить республиканца Джерома Х. Пауэлла, в качестве следующего председателя, решив не предлагать г-же Йеллену второй срок. Г-жа Йеллен, чей срок в качестве председателя заканчивается в феврале, могла остаться на совете ФРС до истечения срока полномочий губернатора в 2024 году. Ее решение уйти в отставку было широко ожидаемо, хотя некоторые демократы спорили публично и конфиденциально, что она могла бы лучше защитить свое наследие изнутри. "Я удовлетворена тем, что финансовая система намного сильнее, чем десять лет назад, будет лучше противостоять будущим всплескам нестабильности и продолжать поддерживать экономические стремления американских семей и предприятий," - написала г - жа Йеллен в понедельник в письме к президенту Трампу объявляя свое решение из ФРС. - "Меня также радует существенное улучшение экономики после кризиса". Г-жа Йеллен также высоко оценила выбор г-на Пауэлла в качестве ее замены и обещала работать в направлении плавного перехода. Уход г-жи Йеллен оставил бы ФРС всего три человека в совете из семи человек, что было бы наименьшим в истории ФРС и могло бы ограничить способность совета управлять операциями центрального банка. Недостаток губернаторов также означает, что большинство голосов в Комитете открытого рынка ФРС, которое устанавливает денежно-кредитную политику, в настоящее время удерживаются президентами региональных резервных банков, а не политическими назначенными лицами. Комитет состоит из 12 членов - семи федеральных правителей, президента Федерального резервного банка Нью-Йорка и четырех президентов Резервного банка. Администрация Трампа заполнила одну вакансию на совете ФРС в начале этого года, когда г-н Трамп назначил Рэндала К. Кварлса заместителем председателя по надзору. Но он еще не выдвинул каких-либо кандидатов для заполнения трех текущих вакансий, и теперь, с уходом г-жи Йеллен, г-н Трамп будет иметь четвертое место для заполнения. 71-летняя г-жа Йеллен провела в ФРС почти два десятилетия. Президент Билл Клинтон назначил ее губернатором в середине 1990-х годов. Она вернулась, чтобы преподавать в Калифорнийском университете в Беркли, прежде чем вернуться в ФРС в качестве президента Федерального резервного банка Сан-Франциско в 2004 году. Затем стала вице-председателем в 2010 году. Будучи вице-председателем, она тесно сотрудничала с тогдашним председателем Беном Бернанке в кампании ФРС по посткризисному стимулированию. Она отдала дань уважения г-ну Бернанке после его отставки, написав, что его «руководство во время финансового кризиса и его последствий имеет решающее значение для восстановления надежности нашей финансовой системы и процветания нашей экономики». После г-на Бернанке в 2014 году г-жа Йеллен продолжила эти усилия. Среди ее самых важных достижений было убедить чиновников ФРС быть терпеливыми и неоднократно продлевать кампанию стимулирования. Она объединила своих коллег с мнением о том, что экономика имеет достаточно возможностей для расширения без повышения инфляции. ФРС продолжала удерживать процентные ставки, а рост занятости продолжался в темпе, который многие считали неустойчивым. Уровень безработицы в октябре снизился до 4,1%, а инфляция осталась вялой. ФРС редко приближается к своим целям максимизации занятости и стабилизации инфляции. Эндрю Левин, экономист, который работал советником г-жи Йеллен, приписывал ей "руководство и управление ФРС с множеством независимых голосов". "Иногда это называют какофонией", - сказал он. - "Ей удалось превратить работу ФРС в симфонию". Информационно-аналитический отдел TeleTrade со ссылкой на New York Times Источник: FxTeam
Monday Smackdown: Republican Whoppers on Tax "Reform" from Politicians, Non-Technocrats, and Technocrats Edition...
How did we get here? First, where are we? **Matthew Yglesias**: [If the GOP tax plan is so good, why do they lie so much about it?](https://www.vox.com/policy-and-politics/2017/11/20/16674640/gop-tax-plan-lies): "Democratic programs may or may not be... good idea[s], [but] the bills they write that they say will expand the provision of social services in the United States really do expand the provision of social services... >...Not so... with the Republican plan.... >Trump ran on promising a middle-class tax cut.... At the beginning of the month, Trump was on the same page, saying.... Treasury Secretary Steve Mnuchin made an unambiguous promise that there would be “no absolute tax cut for the upper class”.... Trump went so far as to phone up a group of Senate Democrats to tell them, “My accountant called me and said, 'You're going to get killed in this bill.’” This is all a bunch of lies.... Rather than own up to the reversal and defend it on the merits, Trump’s team is now engaging in bizarre deflections.... >A telling thing about the cavalcade of lies Republicans are telling about taxes is the party can’t quite get its story straight as to what the policy agenda even is here. They...
New Fed Chief Powell - A “Swamp Critter Extraordinaire” - Is the New Fed Chief Jeremy Powell a "Swamp Critter Extraordinaire"?- Trump surrounding himself with elites disconnected from everyday society- Realities of America's difficulties not recognised by US power makers- Powell will likely continue to protect Wall Street over Main Street- Savers should diversify to protect themselves from Fed's ponzi policies Editor: Mark O'Byrne Just like many of his other campaign promises, Trump isn't doing a great job of draining the swamp. His nominee for Fed Chair is Jerome Powell. Powell is a 'swamp critter extraordinaire' so declared by Bill Bonner last week. We're inclined to agree. Name-calling is poor sportsmanship when it comes to politics, but hey, Trump started it. When Trump traveled around the United States campaigning for the most privileged position in the country he lashed out at the seemingly abstract promise to 'Drain the Swamp' at every opportunity. He used it to criticise anything he didn't like about the status-quo. He made the 'swamp critters' the fall-guys for every hardship Americans were facing. In many ways he was right. Yet as has been the case throughout the last eleven months, Trump hasn't done a great job of turning rhetoric into reality. He has continued to fill the swamp rather than drain it. Spending by lobbyists has reached levels unseen since 2012. Secretaries are flying in private government jets and Trump uses Republican Party money to fund his own legal expenses. This is nothing compared to the senior appointments he has made. Trump has taken 'swamp critters' and placed them in positions of such power and influence one wonders what his supporters make of it all. Hypocrisy was a word heard frequently during the Obama Presidency. Obama was great with words and preached peace while practicing war. Trump's hypocrisy is on a whole new level. Powell is just his latest appointment. With an estimated fortune of $55 million the likely new Fed Chair has spent his career in Washington flip-flopping between roles in both regulation and industry. He is now set to take the wheel at a job whose sole role is to steer the US economy. Indeed, some more imperially minded Americans see the job as being to steer the global economy. Trump is like a school boy with football stickers, keen to make up the set of Team Wall Street. As Vox outlined: Trump will have in place a Wall Street Fed chair to go with his Wall Street Treasury secretary, Wall Street Council of Economic Advisers chair, and Wall Street slate of bank regulators. In a country that is set to see 8,000 retail store closings this year (more than in 2008), where not a single person is employed in nearly one out of every five U.S. families and almost 60% of people do not have enough money saved to even cover a $500 emergency expense, can another Washington elite be expected to build an economy that will benefit the many? Powell, another Swamp dweller or worse, a crony? Unsurprisingly Powell's nomination was a step away from the norm for Trump. Previous Presidents have usually renominated the incumbent chair. Given Trump's ongoing criticism of Yellen a replacement was expected. One thing that was expected was the financial stature and Wall Street position of a Trump nominee. Powell is a Republican who built a vast wealth as a partner at Carlyle. In Powell's latest financial disclosure (June 2017) he lists his net worth between $19.7 million and $55 million. Once he is Fed Chair he will be the richest Fed chair since banker Marriner Eccles, who held the position from 1934 to 1948. What wasn't quite expected in this nomination was how similar to Yellen the nominee would be. Powell has often backed Ms. Yellen on a number of issues from raising interest rates to reducing the Fed's balance sheet. He has supported every policy decision since joining the Fed, including interest rate increases, and supported its decision to unwind the bond-buying program put in place during and after the 2008 financial crisis. There might be some difference in bank regulation. Yellen has often given a somewhat skeptical view of the pro-business approach by the current White House. However given Trump's appointment of Randy Quarles, a dedicated deregulator, as the Fed’s vice chair in charge of regulation, there is likely to be little noticeable change here. As Bill Bonner explains: The important thing, from our point of view, is that he can be relied upon to do exactly as expected. Like Ms. Yellen, he will be in favor of shrinking the Fed’s balance sheet… and raising interesting rates… until the money supply tightens and all hell breaks loose. Then, he will move heaven and earth to protect the Deep State from bankruptcy… with an aggressive program of QE Encore. The one area where there is a major difference is the the strong academic background in monetary policy that both Yellen and Ben Bernanke shared. This is where Powell is most certainly lacking. But, given the horrors seen as a result of previous chairpersons, this might not be such a terrible thing. Where this will backfire is if Powell is easily persuaded by the views of others. Others who might just not have the entire country's interests at heart, say... everyone else from a pro Wall Street position? This isn't an impossible thing to imagine. He reportedly likes to raise any concerns he has in private rather than in public. At first this sounds like a professional approach, but in a political climate where the President will bully publicly we perhaps need a Fed Chair who is willing to shout about any concerns he has. Powell seems to be a people-pleaser. What the president wanted was a Republican without particularly strong views on monetary policy, someone who would continue with Yellen’s softly, softly approach to raising rates but would be ready to roll back some of the post-crisis regulations imposed on the financial sector. By those criteria, Powell was the perfect choice. The Guardian In short, Powell comes from the background Trump likes and he seems to have the personality the President can handle. Powell is unlikely to make life difficult for Trump and the rest of the swamp. Worryingly we may be faced with little upset as it will be business as usual but this may result in far more upset in the wider economy. Far removed from reality Powell isn't the only one who appears to have never looked beyond America's elite when it comes to life experience. He will no doubt have to have a close working relationship with the US Treasury Secretary whose department works hand in hand with the Federal Reserve to preserve economic stability. Treasury Secretary Steve Mnuchin is a banker turned Hollywood film producer with little known experience of policy and public finance. To look at his resume is to basically read a tailor-made mockery of Trump's pledge to drain the swamp of 'bankers' and 'globalists'. Prior to becoming Trump's Chief fundraiser Mnuchin was a banker who had previously worked at hedge funds. During the financial crisis he (along with Soros and others) bought the failing IndyMac bank. It was rebranded to OneWest bank and received some major criticism surrounding its quick approach to foreclosing on homeowners: Back in 2011, local housing activists and the Occupy movement in Los Angeles camped out on [Mnuchin's] lawn to save the home of Rose Mary Gudiel, a La Puente, California, resident who faced eviction after being just two weeks late on one mortgage payment. The activists threatened to move all of Gudiel’s furniture into Mnuchin’s $26 million Bel Air estate if the eviction wasn’t stopped. Twenty police officers and a helicopter met the protesters. Why was Mnuchin’s front lawn the focal point for the protest? Because years after forming Dune Capital in 2004, Mnuchin’s hedge fund purchased the failed lender IndyMac, one of America’s largest home lenders and a leading distributor of Alt-A mortgages, a subprime hybrid which did not require borrowers to accurately state their incomes. After IndyMac failed, Dune led the investment group that purchased it from the Federal Deposit Insurance Corporation (FDIC) in 2009, renaming it OneWest Bank. Mnuchin became OneWest’s principal owner and chairman. ...Protected by a federal backstop, OneWest turned $3 billion in profits from 2009 to 2014, off an initial investment of $1.65 billion. They spun $1.86 billion of that out to investors in dividend payments. Meanwhile, the FDIC wound up losing $13 billion on the IndyMac failure, and will pay an estimated $2.4 billion to OneWest for its foreclosure costs. Things haven't much improved for the Treasury Secretary's image since his government appointment. During his time he has gone on to marry actress Louise Linton. Their marriage got off to a rocky start when they came under investigation for requesting a government jet to take them on their honeymoon. Since then Linton has enjoyed posting snapshots into her designer life by posting on instagram. It's almost like an Imelda Marcos in waiting. Of course, a man can't be blamed for his wife's lack of taste or subtlety. But his approach to policies should also come under some scrutiny, which isn't hard given how close to the surface of the swamp they are. He has repeatedly praised Yellen and flip-flopped on tax reform. He has even expressed an interest in following the lead of other countries by issuing 50–100 year bonds government bonds. As Dr. Joseph Salerno explained in reference to Austria's 70-year bond, this is a bad and dangerous move that only serves to benefit the elite. The creation of [long-term bonds] enables the political elite to covertly and repeatedly plunder and impoverish productive savers, capitalists, entrepreneurs and workers, while avoiding the need to incur the wrath of the productive class by raising taxes. So with untrained, wealthy Powell keen to people-please at every opportunity and Mnuchin showing off his vast wealth and lack of understanding for the poor, things aren't looking promising when it comes to Making American Great Again. What is the moral of the story of critters of the swamp? Sadly the moral is likely to be that we should not trust a government to protect our individual interests. Even if they come to power with the best of intentions, they rarely have the genuine desire of improving the lives beyond the few. From every political experiment in history there have been few examples where all of the country's citizens feel they have benefited equally. There have also been few examples of politicians following through on their promises. In regard to the US the worrying point of concern is that Trump appears to have forgotten the devastating consequences that low interest rates have had on normal people. This is something he campaigned on and yet has almost guaranteed its future presence in the US economy by nominating yet another Yellen-type. On paper Yellen improved the economy, unemployment has fallen and the US Fed's balance sheet is set to be reduced. However these 'improvements' aren't being felt by US citizens. Hard-working individuals, from the upper middle classes downwards are being forced to choose between putting their savings into a bubblicious stock market or receive nothing in return (or worse) from their bank account. Meanwhile the economy is awash with food stamps, untenable personal loans and growing inequality. The future does not appear to look any different. We stand and watch with curiosity but in the meantime suggest savers take charge of their own finances. Ensuring they are well protected from the damaging policies made in regard to the United States' economy. This isn't just a point to note for those in the U.S. The power of the U.S. dollar is so extensive that Powell's leadership will have far-reaching consequences around the world. Powell will likely take instruction from Trump and his Wall Street swampies, suggesting that the world no longer just has to fear Trump's tweets but also his take on the management of the dollar as well. The best way to protect yourself from dollar debasement and ongoing devaluation is to invest in gold. This is exactly the approach taken by a number of central banks. They know that gold cannot be devalued by the US Federal Reserve and will only benefit from Trump's dangerous, Wall St approach to economic and monetary management. Physical gold held in an allocated and segregated manner protects from counter party risks. The same cannot be said for the paper and digital U.S. dollar and its many counter party risks. Trump's appointment of Powell, the latest addition to the Goldman Sachs / Wall Street line-up, confirms Trump'splans to let the wealthy counter parties take precedence over the masses. Related reading: Russia Buys 34 Tonnes Of Gold In September Gold Price Reacts as Central Banks Start Major Change Central Bank Wants Every Citizen To Own 3.5 Ounces of Gold Bullion Gold Coins and Bars Saw Demand Rise 17% to 222T in Q3 News and Commentary Gold prices inch up, head for second weekly gain (Reuters.com) Stocks Climb After Tumultuous Week; Dollar Falls (Bloomberg.com) Stocks Rebound on Tech Rally as Treasuries Weaken (Bloomberg.com) How Mt. Gox's bitcoin customers could lose again (Reuters.com) Saudi Arabia Suspends Bank Accounts and Expropriates Detainees (Bloomberg.com) Palladium - This Year's Best Commodity Is One of the Smallest Metals Markets (Bloomberg.com) Source: Bloomberg Prepare for a crash (MoneyWeek.com) What happens when the next recession hits? (StansBerryChurcHouse.com) Turks Just Bought The Most Gold Ever As Lira Tumbles (ZeroHedge.com) How The Fed Destroyed The Functioning American Democracy And Bankrupted The Nation (ZeroHedge.com) What History Teaches About Interest Rates (DailyReckoning.com) Gold Prices (LBMA AM) 17 Nov: USD 1,283.85, GBP 969.31 & EUR 1,088.19 per ounce16 Nov: USD 1,277.70, GBP 969.01 & EUR 1,085.53 per ounce15 Nov: USD 1,285.70, GBP 976.62 & EUR 1,086.29 per ounce14 Nov: USD 1,273.70, GBP 972.47 & EUR 1,086.59 per ounce13 Nov: USD 1,278.40, GBP 977.59 & EUR 1,097.89 per ounce10 Nov: USD 1,284.45, GBP 976.44 & EUR 1,102.19 per ounce09 Nov: USD 1,284.00, GBP 980.98 & EUR 1,106.29 per ounce Silver Prices (LBMA) 17 Nov: USD 17.09, GBP 12.95 & EUR 14.49 per ounce16 Nov: USD 17.04, GBP 12.92 & EUR 14.48 per ounce15 Nov: USD 17.12, GBP 13.00 & EUR 14.45 per ounce14 Nov: USD 16.94, GBP 12.92 & EUR 14.45 per ounce13 Nov: USD 16.93, GBP 12.93 & EUR 14.53 per ounce10 Nov: USD 17.00, GBP 12.92 & EUR 14.60 per ounce09 Nov: USD 17.10, GBP 13.03 & EUR 14.69 per ounce Recent Market Updates - UK Debt Crisis Is Here – Consumer Spending, Employment and Sterling Fall While Inflation Takes Off- Protect Your Savings With Gold: ECB Propose End To Deposit Protection- Internet Shutdowns Show Physical Gold Is Ultimate Protection- Gold Coins and Bars Saw Demand Rise 17% to 222T in Q3- Prepare For Interest Rate Rises And Global Debt Bubble Collapse- Platinum Bullion ‘May Be One Of The Only Cheap Assets Out There’- World’s Largest Gold Producer China Sees Production Fall 10%- German Investors Now World’s Largest Gold Buyers- Gold Price Reacts as Central Banks Start Major Change- Why Switzerland Could Save the World and Protect Your Gold- Invest In Gold To Defend Against Bail-ins- Stumbling UK Economy Shows Importance of Gold- Wozniak and Thiel Fuel Bitcoin-Gold Debate: Gold Comes Out On Top Important Guides For your perusal, below are our most popular guides in 2017: Essential Guide To Storing Gold In Switzerland Essential Guide To Storing Gold In Singapore Essential Guide to Tax Free Gold Sovereigns (UK) Please share our research with family, friends and colleagues who you think would benefit from being informed by it.
В техническом смысле каждый из 12 федеральных резервных банков является не государственной организаций, а корпорацией (ФРБ расположены в Бостоне, Нью-Йорке, Филадельфии, Кливленде, Ричмонде, Атланте, Чикаго, Сент-Луисе, Миннеаполисе, Канзас-Сити, Далласе и Сан-Франциско).
Этот день в истории запомнился официальным открытием первого банка Федеральной резервной системы, так называемого Федерального резервного банка. Произошло это 16 ноября 1914 г.
Этот день в истории запомнился официальным открытием первого банка Федеральной резервной системы, так называемого Федерального резервного банка. Произошло это 16 ноября 1914 г.
Authored by Jeffrey Snider via Alhambra Investment Partners, As a natural progression from the analysis of one historical bond “bubble” to the latest, it’s statements like the one below that ironically help it continue. One primary manifestation of low Treasury rates is the deepening mistrust constantly fomented in markets by the media equivalent of the boy who cries recovery. That narrative “has ruffled a few feathers,” BMO Capital Markets strategists Ian Lyngen and Aaron Kohli wrote in a note last week. “Growth is moving at a solid clip and the labor market is ostensibly at full employment — so why aren’t we in an environment with a steeper curve and higher yields?” If solid growth plus full employment equals a steeper yield curve and higher long rates, and they do, then a flatter curve at lower nominal rates must then equal what? The answer is far easier than the media makes it out to be. In what is pure Aristotelian sophistry, they try very hard to ignore their own logic where the answer to this “conundrum” is clearly choppy, lackluster growth that has left the (global) economy considerable hangover slack. That’s what the yield curve continues to say, the only thing it has said for many years now. It’s amazing that after more than a decade now of these markets (UST’s, eurodollar futures, swaps, FX, etc.) declaring that “something” is wrong how easily it is for these people to simply set it all aside because their highly optimistic view on the economy, derived exclusively from central bank forecasts and actions, just has to be right. They are actually saying that markets need to conform to their opinions without evidence, and without recognizing the market prices are evidence, as if theirs is the only correct possibility. Time plays a significant component of that backwards view because it is extremely hard to believe the global economy could ever be stuck in such an awful place for so long. It just seems so impossible, completely out of our own experience. Even if by random luck you would think enough would have gone right in just monetary policy by now that what is claimed for the economy in the mainstream might actually have come true. But this set of circumstances is not absent from all experience, just the modern one. The point of failure is right where it shouldn’t be. That’s what’s making it so difficult. Even the bond market (as eurodollar futures and the rest) is declaring this to be the case. The issue is central banks and central bankers who have done nothing right, failed to achieve any positive offsets, and left the global economy to stand naked against the intermittent forces (three so far) of negative monetary decay. So the real problem in the mainstream is over who to believe; the central bank technocrats who most people have been thoroughly schooled to trust without question, or these markets where actual discipline is the order of operation? As hard as it may be to believe, I once gave central bankers the benefit of the doubt, too (though perhaps not as stridently as some still today). I had come to expect in early 2007 that the Fed, though clearly behind the curve, would catch up and fix the problem before it got out hand. Greenspan’s reputation had lost a lot of luster in my eyes as a result of lingering unanswered questions about the dot-com era and “jobless recovery” after that (mild) recession, but surely he wasn’t grossly incompetent. He couldn’t have been, could he? It was really difficult to accept that it was all smoke and mirrors, one of those viral kind of things where you tend to believe something is true simply (solely) because everyone else does. It becomes such hardened “fact” that to even think about challenging it makes people wonder what’s wrong with you. The wisdom of the crowd is perhaps just as often that sort of mass delusion wrapped in an impenetrable bubble. Then August 9 happened, and similar days happened afterward in repeating fashion. Then 2008. That should have been more than enough to dispel any notions of competence on any subject related and not; monetary as well as economic. The panic itself and the enormous global economic consequences should have ended Economics. They really don’t know what they are doing. They never have. The central bank holds only one specialty to which it is any good, a capability that Milton Friedman pointed out in one of the last interviews he ever gave more than a decade ago just prior to the onset of all this trouble. The difficulty of having people understand monetary theory is very simple - the central banks are good at press relations. The central banks hire people and the central banks employ a large fraction of all economists so there is a bias to tell the case - the story - in a way that is favorable to the central banks. But the Great Depression was such a major event and such a disaster that there was no way in which you could talk it away, although they tried to do so. If you read the annual reports of the Federal Reserve Board or its testimony before Congress, you will find that as late as 1933, at the very depths of the depression, it’s talking about how much worse things would have been if the Fed hadn’t behaved so well. [emphasis added] Central bankers simply did it again. What was Ben Bernanke’s message at the end of 2008? He was no longer talking about prevention, as had been standard up until Lehman, and accounting for what he had done prior. Bernanke simply began speaking and writing and televising exclusively about “jobs saved”, what the Fed was going to do in the future to cushion the blow that was then some devious, exogenous factor no reasonable person could ever think to blame monetary officials about. No longer would there be much about the past, what they had done prior. All the world’s central banks were suddenly victims, too. And like the thirties, it was all BS. But “we” let them off the hook to write their books, revise the official history of the crisis so that somehow they come off the heroes when they were seriously, perhaps criminally, as well as obviously (when you look), derelict. The degree of gross incompetence was absolutely staggering – and it never ceased. You require no special training to easily understand that if as a central banker you “need” a second QE (let alone a third or fourth) the whole thing just doesn’t work (how can it be “quantitative” if you don’t know the right quantity?) Central banks are the epitome of PR and media manipulation. And that’s all they are, certainly no money in monetary policy. They’ve done such a masterful job of it that even today no matter how much market data disagrees, people just refuse to believe it.
Одно из важных полномочий любого президента США – назначать руководство множества ведомств, которые отвечают за соблюдение законов и норм регулирования в стране. Во многих случаях они управляют экономикой. В этом смысле, наверное, нет более важного института, чем Федеральная резервная система (ФРС). Нобелевский лауреат Джозеф Стиглиц в своей статье на Project Syndicate пишет, что Дональд Трамп, […]
Глава Федерального резервного банка (ФРБ) Чикаго Чарльз Эванс стал вторым чиновником из ФРС, который призвал к новому подходу в установлении процентных ставок, что позволило бы ЦБ реагировать на потрясения, когда одного смягчения будет недостаточно.
Глава Федерального резервного банка (ФРБ) Чикаго Чарльз Эванс стал вторым чиновником из ФРС, который призвал к новому подходу в установлении процентных ставок, что позволило бы ЦБ реагировать на потрясения, когда одного смягчения будет недостаточно.
Authored by Tom Luongo, With the calling off of the New York Agreement to force the implementation of Segwit2x Bitcoin is now at a fascinating fork in the road (all puns intended). Bitcoin prices are falling as people leave the network and Bitcoin Cash prices are spiking. I advised my subscribers to hedge 15-25% of their Bitcoin position with Bitcoin Cash at $400 on October 28th. That trade has a current return of over 300% with Bitcoin Cash now trading solidly above $1200. Even with what now looks like a blow-off, near-term top in Bitcoin prices, Bitcoin investors are still up around $600 per Bitcoin (around 12%) since that day. So, no one should be crying in their beer just yet. Where Winning Looks Like Losing But, as Rhett Creighton points out in a very good article at Cointelegraph,com, Bitcoin’s newfound weakness may be structural for more than just a few days worth of healthy, technical correction. In short, the Bitcoin Core Developer team which won the battle over Segwit2x may have lost the war. Bitcoin needs a transaction-scaling solution. And it needs one quick. Bitcoin Cash is a real competitor to Bitcoin because it combines big 8MB block and quick settlement times without any of the off-chain or side-chain complications associated with segregated witness (Segwit). But it does have the drawback of a single core developer. But, I’m a hard-core free-market guy. Competition is what keeps everyone honest. This is not to say that I’m not a fan of Segwit. I am. But, am I a fan of Segwit on Bitcoin? I don’t know. In the world of cryptocurrencies I want a reserve asset that sits at the bottom of Exter’s Monetary Pyramid that can be 1) incorruptible and 2) a standard against which all other monetary-like assets, including utility tokens like Ethereum, can be measured. The Current Monetary System – Exter’s Pyramid with Gold as the Foundational Asset It’s the function that gold still functions within the global monetary system, despite protestations to the contrary by everyone from central bankers like Ben Bernanke (“I don’t know? Tradition?”) to students of history like Martin Armstrong (a hedge against government incompetence). Bitcoin has to continue to be that asset for the cryptocurrency and crypto-token community or the community will go adrift, unmoored from the anchor of sequentially-verified transactions from previous blocks. The Real Battle for Bitcoin And that’s where I have a bone to pick with Rhett over the following: I fully expect the market cap of all crypto tokens to increase exponentially over the next few years, but this is not a winner-take-all scenario. Today, mainstream media financial advisors are touting Bitcoin as “the new gold,” but it can’t ever be that. To get a sense of how it’s different, imagine a universe where anyone could create a new kind of metal with essentially the same properties of gold. Expecting Bitcoin to have the majority market share of Blockchains in the future is about as ridiculous as expecting the East India Company to be more valuable than all other corporations combined today. Nonsense. The cryptocurrency market languished for four years because there was no compelling reason to back any other coin than Bitcoin in any substantive way. The past is littered with technologically superior coins to Bitcoin and yet Bitcoin is $6000+ and many of them are $0.001. The market craves those unit of account and store of wealth attributes that real monies have. Just because something has the potential to be that doesn’t mean the market has to pay it any attention. Otherwise Feathercoin or Litecoin would have out-competed Bitcoin three years ago. Litecoin would have never had to incorporate the Lightning Network to differentiate itself from Bitcoin. Rhett’s own project, Zcash, wouldn’t have been looking for its niche in the privacy space. But, the use of these coins doesn’t mean that Bitcoin can’t act like digital gold. In fact, with the collapse of Segwit2x and maintaining its high fees and low transaction density Bitcoin has more in common with physical gold than it has ever had previously now that the cryptocurrency market is maturing into one that settles actual trade. Crypto-Gold Mine It’s become a bad medium of exchange, just like gold. If you want to move money around the net Litecoin is far superior as are dozens of other coins. But, if you want the security of the oldest blockchain with the most trust built up over time, then Bitcoin is absolutely where you store your wealth. Just like Gold. Bitcoin’s Flaws Become Strengths when viewed as a Foundational Monetary Asset Do you see the similarities here? Gold is hard to do real business in. Who wants to weigh out 0.1 grams of gold to buy a hamburger (around $4.50)? There’s a real cost to doing transactions using gold as a medium of exchange. It’s a time cost. Bitcoin now looks exactly like Gold. It’s expensive to own and or move Gold when compared against the dollar just like it is expensive and slow to move Bitcoins when compared with Litecoin or something else. That makes its flaws strengths as a means by which to interface the ‘real’ world with the ‘crypto’ world. Bitcoin doesn’t need to maintain transaction market share to maintain its relevance. In fact, it losing market share is an expression that it is becoming that foundational asset we need it to be. What we need is the volatility of the cryptocurrency exchange rates to stabilize. For Litecoin to trade consistently within a 10% band relative to Bitcoin. If we begin to see that volatility of the LTC/BTC pair die down over the next 18 months or so, then remember then you’ll know what is happening. It will prove the whole cryptocurrency thesis that lack of central control over the issuance of monetary assets will be driven by end-users not central planners. The dollar price of these coins will continue to rise, but they will do so in concert, in relation to the foundational asset, most likely Bitcoin. Over time, we should see one currency emerge as the standard by which all others are measured. Bitcoin’s Competition But, Rhett is right that Bitcoin Cash has the real potential to be the real winner here. Why? Because it is a soft fork of that original Bitcoin blockchain with the added advantages of a it being, for now, an excellent medium of exchange — low fees, short settlement times, no side-chains. What this means is that Bitcoin Cash can, if its backers and developers stay on mission and are honest, compete with Bitcoin for the role of foundational asset. Litecoin can’t. It made it’s choice by going with side-chain payment processing. The dark horse in this race is Bitcoin Gold. But, it too has the potential to become the new crypto-gold. What Does this Look Like? What we don’t know at this point is what the market wants in terms of cost structure for its reserve asset. Do we want a very liquid one or a relatively-speaking illiquid one like Gold? It’s a good question that I don’t have an answer to today. My guess is an illiquid one that can reflect the value of the crypto-markets versus the value of the fiat-markets better by resisting hot money flows because of the high barrier to exchange. Either Bitcoin or Bitcoin Gold. But what I do know is that the entire cryptocurrency market just grew up a little and real world growing pains are on the horizon. I would be hedged accordingly amongst all of the top market-cap coins that the market is right now separating off as serving real market needs. I believe in the division of labor. Each will serve different niches and work to keep the foundational coin developers honest. There is no one blockchain can rule them all. We tried that in the ‘real world,’ it was called the petrodollar and it gave rise to a level of wealth inequality and systemic corruption orders of magnitude larger than the world has ever seen. Why would we want to recreate that in the crypto-world? That’s what, ideologically, the Bitcoin Core developers were fighting for against Segwit2x. If we want to make the crypto-dollar then we’ve learned absolutely nothing. And we’re the ones that need to grow up, not Bitcoin.
So I woke up a few days ago and saw this WSJ piece.Yes, world; letting real rates stay negative for so long was probably going to do that.I thought it would be a good excuse to compose another thought piece. Like the kids say: here goes nothing.Now we've detailed potential drivers for inflation in the past - with oil ripping towards new highs (Saudi-corruption-purge-driven or not), nominal rates ripping higher, and stocks falling, I was curious to also see gold also down. I am a strong believer that gold trades like a currency rather than a commodity. Commodities for the most part trade based on supply and demand. The demand function is usually the result of end-use products that during special situations may be propelled further by speculative fervor.Oil gets turned into gasoline and put into vehicles, grains, softs, meats get eaten, metals get thrown together to make cool stuff, etc. etc.The supply function, in many aspects, behaves in accordance with price. Price goes higher, people invest in getting more of that high price "stuff" whatever it may be and vice versa.Gold is a bit different. Why? Like all commodities, it can store some value. But the key difference here is the fact that global central banks, those crazy economic professor types, deem it as a viable form of storer of value and medium of exchange so much that they accumulate it as reserves.As a result, gold more than any other precious metal trades like a currency based on the rates of the country that it's denominated in.So here we are at the focal investigation of the post. Hypothetically, if inflation rises (let's not argue this right now and just assume such is the case), will gold be a good hedge? Let's go to the charts first, since I'm lazy.Yes, yes I know - I didn't get the chance to run the regression on returns vs returns - I have a very finite window to use BBG and the files I build I cannot keep. On top of that, without a BBG API, it takes a horrific amount of time to manually extrapolate the real yield (before the existence of TIPS) by interpolating the CPI.With my whining in mind, even with an "incorrect" price vs price regression - you can observe the directional relationship between gold and those rates. Also, the relative relationship between the different rate products vs gold should be valid as well (the base effect from the regression of price vs price as a result of the level differences should be somewhat negated as all the rate products are roughly on the same base level).Spot gold px vs real yield shows the tightest connection here. So we'll focus in on that one for a sec.From the above, it is evident that gold goes down when real yields go up in a semi-lockstep fashion. (I assume the economic driver here is: holding gold which yields vs holding a currency which in some situations can yield a lot in real terms and in other situations can yield very little or even negative in real terms)Conclusion 1 - Gold trades rather closely with real yields. Although there are sure to be other factors influencing the gold price, it is roughly over the long term a function of real yields.Moving along. Assuming the answered found in Conclusion 1. Can gold always be a good hedge for inflation? Or better yet, can real vs nominal yields diverge (widening of breakevens and thus the emergence of "inflation") without real yields actually going up significantly (real yields going up would theoretically put significant downward pressure on gold)Let's look at some different yield regimes. The two main interests that occupy my focus for this experiment. They are the high inflation periods of the 70's and 80's as well as the periods of shock post the dot-com bubble and the GFC.Now I'm going to add some events to shed some qualitative light on the various worldly happens which caused individual reactions to rates. FYI, for those with a short attention span - this will be a very long table. I will highlight in red those times when real rates were likely zero or negative (higher inflation vs fed funds rate) and I will also provide a summary at the bottom.Disclaimers: The inflation prints were averaged out for entire years while the Fed Funds rate is printed on the table only when a change occurs. Basically, this analysis is far from perfect. However, assuming that those highlighted periods were times when real rates were either negative or close to zero is probably semi-safe. Besides what's life without the right amount of danger, eh?Those with the curiosity of a cat and armed with a Bloomberg terminal can hopefully use this as a launch pad for additional analysis.DateFed Funds Rate EventFed Chair Arthur Burns (January 1970 - March 1978)1971: GDP = 3.3%, Unemployment = 6.0%, Inflation = 3.3% Jan4.5% - 4.0%Expansion.Feb3.5%Jul5.5%Fed raised rate to fight inflation.Aug5.75%Wage-price controls.Nov5.0%Lowered rate to stimulate growth. 1972: GDP = 5.2%, Unemployment = 5.2%, Inflation = 3.4% Mar5.5%Raised rate to combat inflation. Confused markets.Dec5.75%1973: GDP = 5.6%, Unemployment = 4.9%, Inflation = 8.7% Jan6.0%Raised four times that month.Feb6.75%Lowered to 6.5%, then raised to 6.75%.Apr7.25%Raised for next five months.Aug11.0%OPEC embargo created inflation in October.1974: GDP = -0.5%, Unemployment = 7.2%, Inflation = 12.3% Feb9%Jul13%Raised from March to mid-July.Dec8.0%Lowered gradually from July to December.1975: GDP = -0.2%, Unemployment = 8.2%, Inflation = 6.9%Jan6.5%Lowered four times in January.May5.0%Lowered five times in five months.Sep6.5%Raised from June through September.1976: GDP = 5.4%, Unemployment = 7.8%%, Inflation = 4.9%Jan4.75%Lowered from October through January.Apr5.5%Raised in April and May.Nov4.75%Lowered from July - November.1977: GDP = 4.6%, Unemployment = 6.4%, Inflation = 6.7%Aug6.0%Raised from December through AugustOct6.5%Raised again in September and October.Fed Chair William Miller (March 1978 - August 1979)1978: GDP = 5.6%, Unemployment = 6.0%, Inflation = 9.0%Jan6.75%Dec10.0%Raised each month from April through December.Fed Chair Paul Volcker (August 1979 - August, 1987)1979: GDP = 3.2%, Unemployment = 6.0%, Inflation = 13.3% Apr10.25%Oct15.5%Raised rates 4 points.Dec12.0%Gradual decline through the month.1980: GDP = -0.2%, Unemployment = 7.2%, Inflation = 12.5%Jan14.0%Increased rapidly that month.Mar20.0%Raised rates in February and March.Jun8.5%Lowered to 9.5% in May and 8.5% in June. Sep12.0%Rates increased to 10.0% in August and 12.0% in SeptemberDec20.0%Raised steadily until mid-December.Dec 2918.0%Lowered two points.1981: GDP = 2.6%, Unemployment = 8.5%, Inflation = 8.9%Jan20.0%Reagan took office. Volcker raised rates again.Apr16.0%Lowered 4 points.May20.0%Raised 4 points.Dec12%Lowered 8 points.1982: GDP = -1.9%, Unemployment = 10.8%, Inflation = 3.8%Apr15.0%Raised 3 points.Dec8.5%Lowered nine times over nine months.1983: GDP = 4.6%, Unemployment = 8.3%, Inflation = 3.8%Aug9.66%Raised from May to August.Oct9.25%Lowered from August to October1984: GDP = 7.3%, Unemployment = 7.3%, Inflation = 3.9%Aug11.75%Raised from March to August.Dec8.25%Lowered from September to December.1985: GDP = 4.2%, Unemployment = 7.0%, Inflation = 3.8%Mar9.0%Raised from February to mid-March.Dec7.75%Lowered from April to December.1986: GDP = 3.5%, Unemployment = 6.6%, Inflation = 1.1%Aug5.66%Lowered from March to August.Dec6.0%Fed Chair Alan Greenspan (August 1987 - January 2006)1987: GDP = 3.5%, Unemployment = 5.7%, Inflation = 4.4% Sep7.25%Raised rates from April to September.Nov6.75%Lowered after October 19 stock market crash.1988: GDP = 4.2%, Unemployment = 5.3%, Inflation = 4.4%Feb6.5%Lowered in January and February.Dec9.75%Raised rates to fight inflation.1989: GDP = 3.7%, Unemployment = 5.4%, Inflation = 4.6%Dec8.25%S&L crisis. Fed lowered rates.1990: GDP = 1.9%, Unemployment = 6.3%, Inflation = 6.1%Dec7.0%Recession began in July.1991: GDP = -0.1%, Unemployment = 7.3%, Inflation = 3.1%Dec4.0%Recession ended in March.1992: GDP = 3.6%, Unemployment = 7.4%, Inflation = 2.9%Apr 93.75%Expansion.Jul 23.25%Sep 43.0%Clinton took office in 1993. Fed made no changes.1994: GDP = 4.0%, Unemployment = 5.5%, Inflation = 2.7%Feb 43.25%Mar 223.5%Apr 183.75%May 174.25%Aug 164.75%Nov 155.5%Raised rates.1995: GDP = 2.7%, Unemployment = 5.6%, Inflation = 2.5%Feb 16.0%Raised rates.Jul 65.75%Lowered rates.Dec5.5%1996: GDP = 3.8%, Unemployment = 5.4%, Inflation = 3.3% Jan 315.25%Kept rates low despite inflation.1997: GDP = 4.5%, Unemployment = 4.7%, Inflation = 1.7% Mar 255.5%1998: GDP = 4.5%, Unemployment = 6%, Inflation = 1.6%Sep 295.25%LTCM crisis.Oct 155.0%Nov4.75%1999: GDP = 4.7%, Unemployment = 6%, Inflation = 2.7%Jun 305.0%Raised ratesAug 245.25%Nov 165.5%2000: GDP = 4.1%, Unemployment = 6%, Inflation = 3.4%Feb 25.75%Raised rates despite stock market decline in March.Mar 216.0%May6.5%2001: GDP = 1.0%, Unemployment = 6%, Inflation = 1.6% Jan 36.0%Bush took office. Jan 315.5%Mar 205.0%Recession began. Fed lowered rates to fight it.Apr 184.5%May 154.0%Jun 273.75%EGTTRA tax rebate enacted.Aug 213.5%Sep 173.0%9/11 attacks.Oct 22.5%Afghanistan War.Nov 62.0%Dec 111.75%2002: GDP = 1.8%, Unemployment = 6%, Inflation = 2.4%Nov 61.25%2003: GDP = 2.8%, Unemployment = 6%, Inflation = 1.9%Jun 251.00%JGTRRA tax cuts enacted.2004: GDP = 3.8%, Unemployment = 6%, Inflation = 3.3%Jun 301.25%Low rates pushed interest-only loans. Helped cause Subprime Mortgage Crisis.Aug 101.5%Sep 211.75%Nov 102.0%Dec 142.25%2005: GDP = 3.3%, Unemployment = 6%, Inflation = 3.4%Feb 22.5%Borrowers could not afford mortgages when rates reset in 3rd year. Mar 222.75%May 33.0%Jun 303.25%Aug 93.5%Sep 203.75%Nov 14.0%Dec 134.25%Fed Chair Ben Bernanke (February 2006 - January 2014)2006: GDP = 2.7%, Unemployment = 6%, Inflation = 2.5% Jan 314.5%Raised to cool housing market bubble. More homeowners default.Mar 284.75%May 105.0%Jun 295.25%2007: GDP = 1.8%, Unemployment = 6%, Inflation = 4.1%Sep 184.75%Home sales fell.Oct 314.5%Dec 114.25%LIBOR rose.2008: GDP = -0.3%, Unemployment = 6%, Inflation = 0.1%Jan 223.5%Jan 30 3.0%Tax rebate.Mar 182.25%Bear Stearns bailout.Apr 302.0%Lehman fails. Bank bailoutapproved. AIG bailout.Oct 81.5%Oct 291.0%Dec 160.25%Effectively zero. The lowest fed funds rate possible.Fed Chair Janet Yellen (February 2014 - January 2018)2015: GDP = 2.6%, Unemployment = 6%, Inflation = 0.7% Dec 170.5%Growth stabilized.2016: GDP = 3.2%, Unemployment = 4.6%, Inflation = 0.4% (as of December, 19 2016)Dec 140.75%2017: GDP, Unemployment and Inflation TBDMar 151.0%Fed projects steady growth.Jun 141.25%Whoa, that was a lot of blog space. If you want a descriptive version of what happened - here's an NY Times article.So to summarize some of the events in the table, we have a few periods of interest. You have 1973 - 1979 where there were often times when real rates were either negative or close to being negative. Same can be said about 2004 - 2005 and then 2008 where real rates were negative at the end of the year. - 2016.I believe monetary stimulus is much more effective (perhaps, only effective) when there is fiscal stimulus implemented in a concurrent fashion.Here is a chart of long-term government spending.If you carefully look, I saw spikes in government spending relative to government receipts in 1975-1977, what looks to be around 1987, 1992, 2001, and then 2009. Therefore, I expect those times, if combined with low/negative rates to create a sizable amount of inflation.The opposite trend could be said from the mid 1990's to 2000. I would expect low inflation during this period especially if real rates were positive.Now tying it all together with the gold price. I have three screenshots. Rates: Nominal vs Real in different "regimes"Corresponding gold in corresponding regimesMy weekly data for gold doesn't go back that far - so here is the chart for the first "regime (1975 to 1985) in monthly spot gold prices.1975 - 1985As you can see from the above: our data starts with gold falling close to ~50% (from 180 to below 100) from 1975 to late 1976 as real yields rose against steady nominals (a closing of the breakeven inflation). Then, we experienced something extraordinarily scary - a rise in nominal yields with a falling real yield from 1978 to 1980. This development of inflation along with real yields actually trading lower led to an explosion in gold prices (trough to peak move of ~400% in one year) - proving that gold was indeed a good inflation hedge in this scenario. Finally, real yields marched higher along with nominals and gold went into a huge bear market.So yes, there could be a bond bear market (nominal rates rising) while there is a breakout in inflation - during which gold would be a great hedge. However, interestingly, even with low rates and inflation during the early and mid-1970's, gold actually fell ~50%. Remember, 1975 we had the increase in government spending as noted above. In addition, we had close to negative real rates.It seems that the direction of the real yield and the general direction of inflation actually caused gold prices to fall despite the absolute level of inflation was still high. 1985 - 1996 Moving on to the next time bucket. 1985-1996 saw a rally in gold from 1985 to 1988 coming out of the bear market. 1986 - 1987 saw a small pocket of breakeven inflation going higher, potentially triggering gold higher as well. Interestingly as nominal rates continue to fall in the beginning of the 1990's - real rates roughly stay the same. Gold did not trade closely with real rates in this scenario and instead tracked breakeven inflation as both kept getting squeezed lower. Lastly, you had meaningful moves in nominals and real yield first higher, then lower in 1994 to 1996. Gold ultimately did not care as it stayed tightly range bound.1996 - 2009A quick side note: of the 4 rates charts in the real vs nominal screenshot above, this regime's chart actually has the red line as the real yield and blue as the nominal - sorry for any confusion.Continuing with the decrease in government spending and generally low inflation of the mid-1990's - gold continues to slide, goes nowhere.Then, when we hit the 2000's, we started to see both nominals and real yield go lower. This move was roughly in tandem so I don't think breakevens were moving much. With a slight expansion of breakevens and inflation itself not really trading directionally despite lower rates and increased government spending, gold's reaction was to steadily build into a bull market.In my opinion, this move in gold in the 2000's could be explained by persistently lower real yield. Inflation had risen slightly but it was nothing significant and definitely dwarfed by the move in gold.Lastly, we have 2008 - 2009. Real yields spiked higher while inflation collapsed - gold subsequently sold off, tracking both inflation and real yields pretty well.2009 - PresentPost GFC, the most interesting period of time was late 2011 to 2013. Nominals started to bottom out while real yield continued to march lower. We began building higher lows in breakevens as inflation looked poised to go higher. This actually proved to be the peak in gold. As real yields spiked higher in what was later deemed the taper tantrum with gold going into bear market ever since.Conclusion 2: After all that rambling, here's to summarize: I think gold is probably less of an inflation hedge than some might think. Although it does follow inflation to an extent - gold also seems to be very sensitive to real yield moves. If you believe real yields are set to rise along with inflation - then gold might not necessarily do very well - for example, 1981-1982, gold kind of topped out despite the fact that there was still pretty high inflation simply because real yields were rising.But then, you have scenarios such as the early/mid-2000's with low and steady inflation, with a consistently lower real yield, where we also witnessed the foundation of a huge gold bull market.And ultimately, there are scenarios of higher nominal yield and lower real yield - usually, they are ephemeral, lasting only a few months. However, we saw a meaningful one that lasted from 1978 to 1980. Keep in mind as with many things in the market, it seemed that direction mattered more often than level. For example, when the widening of real and nominal rates in 1980 hit its zenith, gold was already peaking. Other miscellaneous charts for your musings:Here's FED and ECB assets vs. spot gold priceHere's gold vs the VIXI think our own Macro Man did a little bit of analysis on that one as well. I'm sure all the readers have seen that one, but in case you haven't, here it is - linked here.And that's all I got this go-round, guys.Hope everyone has a wonderful day and weekend. Stay warm out there!
Несмотря на длительное ралли фондового рынка США и рост показателей по ВВП, в американском обществе за последние годы заметно усилились негативные настроения, во многом благодаря которым к власти пришел президент, разделяющий антиутопические взгляды.