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17 мая, 23:50

Stockman Warns This Is A "Look Ma, No Hands!" Market

Authored by David Stockman via The Daily Reckoning blog, The Deep State is escalating its war on President Trump but the Wall Street partiers apparently couldn’t care less until today's relatively modest drop. When the machines tagged 2402 on the S&P 500 yesterday, it was surely a historic case of “look ma, no hands!” It’s hard to imagine what more will be needed to ignite an eruption of fear and panic in the casino amidst Wall Street’s record and wholly irrational state of somnolence. After all, the Fed is sidelined and out of dry powder. The Red Ponzi is tottering. The U.S. retail sector is descending into an apocalypse. The giant auto bubble is fracturing. The Trump Stimulus is dead in the water, and Washington is heading for an extended stretch of complete dysfunction and acrimonious combat. And if that isn’t that enough to upset the applecart — there are a lot more headwinds coming down the pike. But the point is the insane governance process in Washington, which is completely unhinged, is combined with a level of insane complacency on Wall Street. Which is literally off the charts. It would be one thing if our current fantastically inflated financial markets were reflective of a gusher of private sector growth, investment and productivity. That is, something like a new gilded age of invention and raw capitalist energy like occurred in the 1880s or 1920s. The opposite is more likely the case, however. We have a mutant outbreak of financialization, debt, falsified financial prices and biblical levels of speculation and money shuffling — artificial economic conditions which are absolutely dependent upon agencies of the state. Without treasury bailouts and endless central bank credit infusions, today’s massive financial bubbles would have splattered long ago. Stated differently, with Washington heading into terminal breakdown, the boys and girls and robo-machines on Wall Street are now home alone. When they discover that there are no more bailouts and stimulus injections coming down the pike, they will panic like it’s October 1987 and then some. The Fed’s persistent and drastic falsification of interest rates and all other financial asset prices has caused a monumental mis-allocation of capital and other economic resources into unproductive speculation and money shuffling. That’s the long-run consequence of “pump-priming” with permanent deficit-financed tax cuts under both GOP and Democrat administrations since the 1980s. Unfortunately, The Donald seems to be falling for the same Keynesian sludge “pump-priming” with deficits. While cutting taxes is always a good idea in theory — that’s only true in practice if you pay for it (and “earn” it politically) with off-setting spending cuts or a more benign form of taxation. And tax cutting is also likely to be more timely and potent if the tax burden has been steadily creeping higher. The Federal tax burden today is no higher than it was in 1977 under Jimmy Carter.  The Federal tax extraction was 17.5% of GDP in 2016 — the same level as in 1979. As it happened, real GDP grew by only 1.8% last year compared to 6.0% in 1979. So it just might be the case that too high taxes are not the main roadblock holding back the economy in 2017. In fact, I think deficit-financed tax cuts are being peddled by the Donald not based on any rational analysis at all. But mainly because Wall Street is very desperate for a new Stimulus fix to supplant the Fed’s sidelined printing presses. There can be little doubt that the Donald’s advocacy of this old Keynesian snake oil has been foisted upon him by Gary Cohn, the Goldman Sachs heavy assigned to this particular White House. Needless to say, Goldman has long been a source of powerful agents for the Keynesian Stimulus panacea — from Bob Rubin through Hank Paulson and William Dudley at the New York Fed. But it also goes without saying that Goldman’s perma-stimulus advocacy has nothing at all to do with economic logic or historical evidence. It’s just the carrot they hang in front of the mule to keep it buying Goldman’s (marked-up) inventories of “risk assets.” What is wildly different today than in 1977, however, is that the headroom for Wall Street-pleasuring Stimulus has been all used up on both the fiscal and monetary fronts. The Goldman folks just haven’t bothered to inform the Donald. Perhaps that’s because their marching orders are to keep it a secret as long as possible — the better to call the retail sheep to the final slaughter. In any event, the fiscal equation went to hell in a hand basket when the old time GOP lost its religion of fiscal rectitude. Accordingly, the GOP’s most potent political weapon — mobilizing the middle class against Washington spend, tax and borrow policies — was unilaterally surrendered to the permanent beltway establishment. In fact, during the past 40 years, the public debt soared by 29X (from $675 billion to $19.8 trillion), and from 32% of GDP to 106%. And based on built-in tax and spending policies it is destined to reach $35 trillion and 145% of GDP over the next decade — before taking into account a single dollar of the Donald’s planned additional spending. The day of reckoning has been forestalled by massive monetization of the Federal debt during the interim. Some 40 years ago, the Fed’s balance sheet was just $100 billion. And it had taken its first six decades of existence to get there. At $4.5 trillion today, the Fed’s balance sheet has grown 45X during the last four decades or by about 10% per year. The truth is, you cannot pump money that long at that rate with impunity. So the Donald is now confronted by the worst of all possible worlds. That is, an economy that has been ruined by debt and massive financial inflation, but one that would actually be made worse by attempting to spend even more. That’s because the U.S. economy has become saturated by debt in every sector. Compared to roughly 150% of GDP and $2.5 trillion back in 1977, total credit market debt — business, household, government and financial — is now $64 trillion and 350% of GDP. Accordingly, even small increases in interest rates would cause huge dislocations throughout the economy. The skunk in the woodpile, of course, is that the worlds’ the central banks are finally out of dry powder. The monumental fraud of government debt and securities monetization that has been conducted during the last several decades for all practical purposes is finally over and done. Therefore, attempting to add more debt under present conditions will actually blow the casino sky high. Even the Donald’s Goldman handlers don’t really understand that — but the Great Disrupter is surely fixing to prove the case in spades. I’d tell you to get out of the casino immediately. But if you haven’t so far, I doubt I can convince you today.

12 мая, 01:20

В ФРС выступили против протекционизма в США

Глава Федерального резервного банка Нью-Йорка Уильям Дадли заявил о том, что протекционизм может иметь краткосрочные преимущества, но негативно скажется на экономике в долгосрочной перспективе.

12 мая, 01:20

В ФРБ выступили против протекционизма в США

Глава Федерального резервного банка Нью-Йорка Уильям Дадли заявил о том, что протекционизм может иметь краткосрочные преимущества, но негативно скажется на экономике в долгосрочной перспективе.

11 мая, 10:06

Links for 05-12-17

R-Star and the Draghi rules - VoxEU Trump and Sinclair's Art of the Deal - ProMarket The problem of ignorant voters - Stumbling and Mumbling The Link Between Inequality and Economic Development – IMF Blog Getting Fiscal Stimulus and Central...

08 мая, 15:49

Key Events In The Coming Week: Inflation, Spending In The Spotlight

With the French election now finally in the rearview mirror, this week's focus is on global inflation releases, with the spotlight falling on the US and China, as well as retail sales in the US. We also have BoE and RBNZ rates meetings. In other data we note industrial production in the Eurozone, UK and Norway along with US retail sales and Fed speakers. Key developed market events Thursday, May 11: New Zealand, RBNZ meeting. GS 1.75%, consensus 1.75%, last 1.75%. Looking to the May meeting, while the RBNZ is likely to remain on hold for now, we expect upgrades to the Bank's inflation forecasts and—possibly—a more constructive description for the global growth outlook. Thursday, May 11: United Kingdom, BOE meeting. GS 0.25%, consensus 0.25%, last 0.25%. We expect no change in Bank Rate or in other policy settings, yet for the MPC to express some skepticism about the flatness of the forward curve for UK rates. Friday, May 12: United States, CPI (Apr). Core: +0.21% mom, consensus +0.2% mom, last -0.1% mom. We expect a 0.21% increase in April core CPI following last month’s outright decline, reflecting a relatively large state-level tobacco tax increase as well as the waning drag from Verizon unlimited data plans. Friday, May 12: United States, Retail sales (Apr). Core: +0.4% mom, consensus +0.4% mom, last +0.6% mom. We estimate core retail sales (ex-autos, gasoline, and building materials) rose 0.4% in April, reflecting improving sales in mall-based discretionary categories after tax refund-related weakness in February and a likely drag in March from unseasonably cold and snowy weather. At the same time, preparations for Winter Storm Stella likely boosted food and beverage sales (+0.5% in March), and we look for sequential softness in that category. In emerging markets, there is a presidential election in South Korea, as well as rates meetings in Malaysia, Peru and the Philippines. Rating reviews in Egypt, Hungary, Poland, Ukraine and Oman. Tuesday, May 9: Korea, Presidential election. According to various opinion polls, Mr. Moon, Jae In of the largest left-wing party (The Minjoo) has consistently been the front-runner in the race. On implications of the election result—we do not expect any major legislative breakthrough that could change the governance structure dramatically in the short term, nor do we see clear implications of the election for monetary policy and the KRW. Election platforms of all major candidates are largely based on fiscal prudence, which has widely been accepted by all major parties. Once elected, a new government might attempt to undertake counter-cyclical fiscal policy more actively but political and legal barriers would likely remain high. We hence expect a modest supplementary budget of less than 1% of GDP. (For more discussion please refer to our report Korea Views: The presidential election on May 9—key policy issues and market implications, May 5, 2017) Thursday, May 11: Peru, Monetary Policy Committee meeting. GS: 4.25%, consensus: 4.25%, last: 4.25%. Despite the dovish message from the March MPC meeting statement, we expect the central bank to keep the policy rate on hold in order to better anchor inflation expectations, which have risen above the 3.0% target upper limit for the first time since June 2016. We believe the medium-term balance of risks supports a moderate easing cycle in the near term and recognize the risk of a preemptive rate cut in May, but we see a greater likelihood of the first cut taking place at the June meeting. Friday, May 12: India, CPI (Apr). GS +3.3% yoy, consensus NA, last +3.8% yoy. We forecast headline CPI inflation to decelerate to 3.3% yoy in April from 3.8% in March due to favorable base effects. On a seasonally adjusted sequential basis, we expect headline CPI index to rise by 0.3% mom. Daily data on retail food prices suggest some (although limited) reversal post-demonetization. An appreciating INR will likely keep imported oil inflation low. We expect core inflation to remain unchanged at 4.9% yoy and core inflation excluding transport (RBI’s preferred measure of core inflation) to increase slightly on the back of rising household inflation expectations. Friday, May 12: Malaysia, Bank Negara Malaysia meeting. GS 3.00%, consensus 3.00%, last 3.00%. We expect Bank Negara Malaysia (BNM) to keep the policy rate unchanged at 3% at its meeting next week. While headline inflation surged in March on rising domestic fuel prices, core inflation remained unchanged at 2.5% yoy. Overall, the BNM does not expect this cost factor to put significant upward pressure on broader price trends given stable domestic demand conditions, as recently noted by BNM governor Muhammad Ibrahim. We continue to expect the central bank to remain on hold at its upcoming meeting, maintaining our view that full-year growth will improve slightly to 4.3% in 2017 from 4.2% in 2016, with a modest upside risk given strength in 1Q activity. Deutsche Bank's Jim Reid breaks down this week's main events on a daily basis, starting with Monday when the only data in the US is the April labour markets conditions index. Kicking off Tuesday will again be Germany where March trade and industrial production data is due. In France we’ll also get the Bank of France business sentiment reading while in the US in the afternoon it is quiet again with the April NFIB small business sentiment reading, March JOLTS job openings and March wholesale inventories the only data due. Kicking off Wednesday is China where we’ll get April CPI and PPI prints. In France trade data and industrial and manufacturing production reports are due. Over in the US on Wednesday we will get the April import price index reading and April monthly budget statement. In Asia on Thursday the lone release is from Japan where we get  the March trade balance. In the UK we then get industrial and manufacturing production for March along with the latest trade balance. The Economic Commission is also due to release its latest economic forecasts while around lunchtime we’ll get the BoE policy meeting outcome and latest inflation report. In the US on Thursday we are due to get PPI and initial jobless claims data. It’s a busy end to the week on Friday. In Germany we get Q1 GDP and April CPI while Euro area industrial production for March is also scheduled. We finish the week in the US with the April CPI report, April retail sales figures and first look at the May University of Michigan consumer sentiment reading. * * * Finally, here is Goldman with a focus on the US where the key economic releases this week are the retail sales and CPI reports on Friday. In addition, there are several scheduled speaking engagements by Fed officials this week. Monday, May 8 08:35 AM St. Louis Fed President Bullard (FOMC non-voter) speaks: Federal Reserve Bank of Louis President James Bullard will speak at a policy session at the 22nd Annual Financial Markets Conference hosted by Federal Reserve Bank of Atlanta in Fernandina, Florida. The topic of the conference is “Shifting Sands of Low Interest Rates.” Audience Q&A is expected. 08: 45 AM Cleveland Fed President Mester (FOMC non-voter) speaks: Cleveland Federal Reserve President Loretta Mester will give a speech on the economic outlook and monetary policy at the Chicago Council on Global Affairs Public Breakfast Program in Chicago, Illinois. The title of her remarks is “From Main Street to Wall Street: Economic Growth, Monetary Policy, and the Federal Reserve.” Audience and media Q&A is expected. 02:00 PM Senior Loan Officer Opinion Survey, 2017Q2: The Fed will release its quarterly Senior Loan Officer Opinion Survey. The 2017Q1 release showed unchanged lending standards on commercial and industrial loans while standards on CRE loans continued to tighten. Demand for residential mortgages as well as construction and multifamily residential loans all declined. In past research, we have found the survey to be a valuable predictor of upcoming business investment growth. Tuesday, May 9 06:00 AM NFIB small business optimism, April (consensus 104.0, last 104.7) 09:00 AM Minneapolis Fed President Kashkari (FOMC voter) speaks: Minneapolis Federal Reserve President Neel Kashkari will give a speech at the Minnesota High Tech Spring Conference. Audience Q&A is expected. 10:00 AM JOLTS job openings, March (last 5,743k) 10:00 AM Wholesale inventories, March final (consensus -0.1%, last -0.1%) 01:00 PM Boston Fed President Rosengren (FOMC non-voter) speaks: Boston Federal Reserve President Eric Rosengren will give the keynote speech at the Risk Management for Commercial Real Estate Conference at NYU Stern School of Business in New York, New York. 04:15 PM Dallas Fed President Kaplan (FOMC voter) speaks: Dallas Federal Reserve President Robert Kaplan will give a speech at the Dallas Regional Chamber Lower Middle Market Investment Summit in Dallas, Texas. Audience and media Q&A is expected. Wednesday, May 10 08:30 AM Import price index, April (consensus +0.2%, last -0.2%) 10:00 AM Atlanta Fed business inflation expectations, April (last +1.9%) 12:00 PM Boston Fed President Rosengren (FOMC non-voter) speaks: Boston Federal Reserve President Eric Rosengren will give the keynote speech at a luncheon jointly hosted by the Lake Champlain Regional Chamber and Central Vermont Chamber of Commerce in South Burlington, Vermont. Audience Q&A is expected. 02:00 PM Monthly budget statement, April (consensus +$177.0bn, last -$176.2bn) Thursday, May 11 06:25 AM New York Fed President Dudley (FOMC voter): New York Federal Reserve President William Dudley will give a speech on the “Benefits and Challenges from Globalization” at an event hosted by the U.S. India Business Council, the Confederation of Indian Industry, and the Bombay Stock Exchange Limited in Mumbai, India. Audience Q&A is expected. 08:30 AM PPI final demand, April (GS +0.2%, consensus +0.2%, last -0.1%): PPI ex-food and energy, April (GS +0.1%, consensus +0.2%, last flat); PPI ex-food, energy, and trade, April (GS +0.1%, consensus +0.2%, last +0.1%): We estimate that headline PPI rose 0.2% in April, reflecting moderately higher energy prices. We estimate PPI ex-food, energy and trade services rose by 0.1%. The March producer prices report was softer than expected, reflecting softer core final demand inflation and lower energy prices. However, March core finished goods prices and upstream input costs continued to firm. 08:30 AM Initial jobless claims, week ended May 6 (GS 250k, consensus 245k, last 238k): Continuing jobless claims, week ended April 29 (consensus 1,975k, last 1,964k): We estimate initial jobless claims rebounded 12k to 250k, as we expect the level normalized toward the recent trend following two weeks of volatility, itself likely related to the timing of Good Friday and school holidays. Continuing claims – the number of persons receiving benefits through standard programs – have trended down in recent weeks, suggestive of additional labor market improvement that we expect to continue. Friday, May 12 08:30 AM CPI (mom), April (GS +0.24%, consensus +0.2%, last -0.3%); Core CPI (mom), April (GS +0.21%, consensus +0.2%, last -0.1%); CPI (yoy), April (GS +2.3%, consensus +2.3%, last +2.4%); Core CPI (yoy), April (GS +2.0%, consensus +2.0%, last +2.0%): We expect a 0.21% increase in April core CPI following last month’s outright decline, reflecting a $2-per-pack tobacco tax increase in California, as well as a smaller drag from Verizon unlimited data plans. We also expect a favorable swing in the weather to boost apparel prices, following a particularly snowy March. On the negative side, we expect only modest reacceleration in owners’ equivalent rent inflation – which fell to +0.17% in March from +0.26% in February– reflecting emerging oversupply issues in multifamily housing. We estimate a 0.24% rise in headline CPI reflecting rising food prices and mixed energy quotes. This would be consistent with the year-over-year rate slowing by one tenth to 2.3%. 08:30 AM Retail sales, April (GS +0.5%, consensus +0.6%, last -0.2%); Retail sales ex-auto, April (GS +0.5%, consensus +0.5%, last flat); Retail sales ex-auto & gas, April (GS +0.5%, consensus +0.4%, last +0.1%); Core retail sales, April (GS +0.4%, consensus +0.4%, last +0.6%): We estimate core retail sales (ex-autos, gasoline, and building materials) rose 0.4% in April, reflecting improving sales in mall-based discretionary categories following tax refund-related weakness in February and a drag from unseasonably cold weather in March. At the same time, preparations for Winter Storm Stella likely boosted food and beverage sales in March (+0.5% mom sa), and we look for some payback in that category in April. We estimate a firmer 0.5% increase in the ex-auto ex-gas component, as improving weather should boost sales in both the building materials and food services categories. We also estimate a 0.5% increase in both the headline and ex-auto components, reflecting a small month-to-month pullback in gas prices and modest rebound in auto SAAR (mom sa). 10:00 AM University of Michigan consumer sentiment, May preliminary (GS 97.3, consensus 97.0, last 97.0): We estimate the University of Michigan consumer sentiment index rose 0.3pt to 97.3 in May, after pulling back 1.0pt in the April final reading (relative to the preliminary measure from the first half of the month). Our forecast reflects some sequential improvement in higher frequency consumer surveys as well as an expected boost from rebounding stock prices. Gas prices in early May were little changed relative to their April averages, suggesting little scope for an impact on the report’s measure of 5- to 10-year ahead inflation expectations, which at 2.4% in April was at the low end of its recent range. 09:00 AM Chicago Fed President Evans (FOMC voter) speaks: Chicago Federal Reserve President Charles Evans will participate in a panel discussion on current economic conditions and monetary policy at the 56th ACI Financial Markets Association World Conference in Dublin, Ireland. Audience and media Q&A is expected. 12:30 PM Philadelphia Fed President Harker (FOMC voter) speaks: Philadelphia Federal Reserve President Patrick Harker will give a speech on the economic outlook at the Drexel University Urban Economics Policy Conference in Philadelphia. Audience and media Q&A is expected. Source: BofA,Barclays, DB, Goldman

17 апреля, 22:32

"Hell To Pay"

Authored by Economic Prism's MN Gordon, via Acting-Man.com, Behind the Curve Economic nonsense comes a dime a dozen.  For example, Federal Reserve Chair Janet Yellen “think(s) we have a healthy economy now.”  She even told the University of Michigan’s Ford School of Public Policy so earlier this week.  Does she know what she’s talking about?   Somehow, this cartoon never gets old… If you go by a partial subset of the ‘official’ government statistics, perhaps, it appears she does.  The unemployment rate is at 4.5 percent, which is considered full employment.  What’s more, inflation is ‘reasonably close’ to the Fed’s 2-percent inflation target.  But what does this mean, really? According to Fed Chair Yellen, it means that now’s the time to tighten up the nation’s monetary policy.   Behold this display of awesomeness, citizen. Doesn’t it prove that central planning “works” after all? Unfortunately the ointment is never entirely fly-free, especially when one is pondering statistical aggregates – click to enlarge.   By now you’ve likely seen this upcoming – choice – quote from Yellen.  Nonetheless, we can’t resist repeating its remarkable idiocy.  For Yellen, who was in the greater Detroit metropolitan area, was kind enough to humor us all with a nifty automotive analogy to explain how to go about normalizing monetary policy.  Here Yellen elaborates with a variety of technical terms: “Whereas before we had our foot pressed down on the gas pedal trying to give the economy all the oomph we possibly could, now allowing the economy to kind of coast and remain on an even keel – to give it some gas but not so much that we are pressing down hard on the accelerator – that’s a better stance of monetary policy.  We want to be ahead of the curve and not behind it.” As far as we can tell, Yellen’s merely huffing and blowing gas.  What curve she wants to stay ahead of is unclear.  We assume she’s referring to the inflation curve, although this does seem a bit out of context. By our account, inflation of the money supply is, indeed, inflation.  Hence, the Fed fell behind the curve between September 2008 and December 2014 when it inflated its balance sheet from $905 billion to $4.5 trillion. By our back of the napkin calculation that tallies up to nearly a 400 percent inflation of the Fed’s balance sheet.  But what do we know?   The broad true US money supply TMS-2 vs. assets held by the Federal Reserve since the GFC. A few points worth noting: TMS-2 expanded by ~140% between January 2008 and January 2017. One way of looking at this statistic is “in the entire history of the US, an amount X of money was created until early 2008. Since then, the amount of money in the economy has increased by 2.4 times”. The money supply had doubled by November 2014, so it took a little less than six years to print as much money in the US than in its entire preceding history. Yes, this is quite a bit of inflation. The fact that it has “bought” the weakest recovery of the entire post WW2 era is apparently considered a surprise by many people, but it shouldn’t be (the capital theory of the Austrian School provides answers). Also noteworthy: since peaking at ~$12.64 trillion in January 2017, TMS-2 has actually declined by roughly $110 billion. Whether this trend will continue remains to be seen, but if it does, the weak recovery will turn into an outright bust – click to enlarge.   Economic Flatline Apparently, the Fed is so thrilled with the economy’s health that it wants to start shrinking its balance sheet later this year.  In fact, New York Fed President William Dudley wants to execute balance sheet shrinkage by ending reinvestment of maturing principal.  Easy come easy go, right? Unfortunately, Dudley’s plan ain’t gonna be easy.  When it comes down to it, it’s unlikely the Fed will ever be able to shrink its balance sheet in any meaningful way.  Quite frankly, both the economy and financial markets simply can’t afford it. Sure Yellen says that “we have a healthy economy now.”  However, the economy may not be nearly as healthy as she believes.  This becomes much more evident when looking beyond just the unemployment rate. In particular, as of 4th quarter 2016, GDP is increasing at a lethargic 2.1 percent.  Yet that’s not the half of it.  As of April 7, the Federal Reserve Bank of Atlanta’s own GDPNow model forecast for real GDP growth in the first quarter of 2017 is just 0.6 percent.  By the time you read this they’ll have published an update. The point is, in the face of 0.6 percent GDP growth, Yellen’s statement that we have a healthy economy is patently absurd.  For all practical purposes, 0.6 percent GDP growth is at economic flatline. Clearly, it’s not the type of growth that will lighten the load of today’s massive public and private debt burden.  Nor is it the type of growth that propels first term presidents into a second term in high office.   Fresh from the Atlanta Fed: the latest GDP Now forecast for Q1 2017 stands at a paltry 0.5%. Keep in mind that GDP is a measure of economic activity that leaves a lot to be desired, but as is generally the case with such macroeconomic aggregates, it does give us a rough idea of general growth trends. It remains to be seen if the forecast turns out to be correct, but this particular model has so far worked quite well, so we would not dismiss it.   Hell To Pay President Trump doesn’t want 0.6 percent GDP growth.  He wants 4 percent GDP growth.  He demands it.  He’s even promised it. But promising something and then delivering on it are two entirely different things.  One takes cheap blather.  The other takes hard work, persistence, tenacity, and good luck. Like many of President Trump’s promises, we are certain the promise of 4 percent GDP growth will be broken.  But Trump’s only fault in the matter is promising it to begin with.  It’s been over 13 years since the U.S. economy had a single year of 4 percent GDP growth.  The simple fact is, the U.S. economy’s too larded over with debt and intervention to attain it. On top of that, Trump has the cards stacked against him.  The Fed’s plans to increase the federal funds rate and shrink its balance sheet, either simultaneously or in sequence, will likely be counterproductive to President Trump’s GDP target.  As the price of credit becomes more expensive, less borrowing and spending will occur.   A giant inflationary illusion: total credit market debt, federal debt, stocks and GDP (no points are awarded for guessing what comes dead last). A little aside: the Fed has stopped updating total credit market debt in late 2015. But fear not, the underlying data set keeps being updated. Thanks for nothing guys – now we will have to reconstruct this chart manually if we want to keep publishing it (if we understand this correctly, they simply removed one equation from their spreadsheet – the only effect is to make it more difficult to track, chart and compare this aggregate number. Honni soit qui mal y pense) click to enlarge.   Of course, over the long-term, less borrowing and spending is precisely what the economy and financial markets need.  Contracting credit.  Deflating asset prices.  Bankruptcy and default of marginal businesses.  Most of all, default of U.S. government debt.  Liquidate it all.   That’s just the federal debt bomb – and it’s less than a third of the total.   These are the solutions to an economy that’s been distorted so far out of balance – where a median income job doesn’t buy a median priced home.  This is also the solution to a government that’s gotten too big for its britches.  Cutting off the government’s overdrawn credit line will be the surest way to shrink it down to right size. No doubt, there’s hell to pay for 100 years of ever escalating financial insanity.  Take it in stride.  The downside is here and it’s not going away any time soon.

16 апреля, 08:55

Кредитное сжатие продолжается. ФРС планирует поднять ставку. Again. (Константин)

Недавно Трамп посетовал на сильный доллар и что его де надо бы понизить. На это купились некоторые (даже у нас на форуме), доллар и правду упал ненадолго после этого. Правда сейчас он уже отыграл 3/4 своего падения. ФРС тем не менее, заявляет совершенно обратное президенту США. Джаннет Йеллен, выступая в Детройте, прозрачно намекнула, что ФРС поднимет ставку "прекратив давить на газ". Президент ФРБ Нью-Йорка Уильям Дадли намерен сократить баланс ФРС, прекратив реинвестировать средства, поступающие после погашения облигаций.30 комментариев

14 апреля, 01:01

Dow 30 Stock Roundup: Microsoft Buys Cloud Tech Firm, Disney's "Beauty and the Beast"

The index experienced an eventful and holiday shortened week, marked by growing geopolitical tensions.

12 апреля, 23:44

The Coming Red Line That Can't Be Crossed

Authored by Mark St.Cyr, We’re hearing a lot about red lines this week. And when those “lines” are posed at a near incessant pace coming from every corner of the media while including other items such as: chemical weapons, missiles, carrier group, troop movements, and more. It’s easy to see how one gets desensitized. It seems for anyone trying to actually pay attention to world events the task gets harder by the day. It makes one think that maybe Timothy Leary was on to something, but I digress. However with the above noted there is one “red line” which is currently below the horizon and has the potential to disrupt the globe in ways that everyone currently believes has been avoided. And much like the carrier group now steaming its way towards the Korean peninsula, it has the same amount of potential “firepower” to escalate things in ways we all hope can be avoided. That “red line” is not a military one, but rather, a “market” one. And if crossed everything changes, and I do mean everything. To wit: (chart source) The above is a weekly chart of the S&P 500™ as of Wed. before the opening bell. As you can see we have been in a near vertical assent since the election. It’s important to put these things into perspective for reasons as I highlighted on the above. First, as you can see there are two horizontals containing blue fields. Why is this area of importance? Because this area represents where we bounced within, incessantly, for months. Where the headlines of “New record highs!” dominated the mainstream financial/business media for months on end. That is, until about Aug. of that same year (2015.) As you can see that range which allowed for the generating of all those “headlines” and “great vibes” that poured out of every next in rotation fund manager, economist, or Fed. speaker suddenly became null-and-void when the “markets” began to nosedive, seemingly out of nowhere. (e.g., the resulting aftermath of the overnight devaluation of the Yuan.) That didn’t stop until Fed. officials (along with a note in James Cramer’s pocket) took to any media venue they could to shout from the skies on “the wings of doves” that they were “at the ready” with whatever new iteration of money printing may be needed. The “cooing” was always at its loudest as the “markets” approached (again, and again, and again) that now monikered “bottom.” This was, and has been, the BTFD genius trade in spades. For every-time the “markets” rolled over? The Fed. has scrambled to assure their dovish tones, and deeds, were standing at the ready. This (once again) was played (and I presume continues to be played) by Wall Street as I mentioned before – “in spades.” For if you look at that chart you’ll notice the “markets” were about to (once again) breach that all too familiar line and possibly resume its now familiar pattern of “It’s all falling apart! Someone do something!!!” And as the above shows (once again) a Fed official did just that when the Chair herself made what is now deemed one of the most contradictory speeches as to what the Fed. might be contemplating with her insinuation that running a “high pressure” policy may be the only way to alleviate the damage still residing within the economy. We were, as the above shows, once again, looking as to repeat the same old, same old. Some might be asking what’s so contradictory? Hint: “High pressure” insinuates a far more “dovish” monetary stance. (i.e., “Don’t worry boys, we’ll make sure Christmas isn’t cancelled.) This was in October. Within about 60 days of that speech Ms. Yellen would become the undisputed leader of the now gathering flock of “hawks are us.” The only thing that changed during that time besides the Fed’s posture? The election, imagine that. Since the election the “markets” have been on a one way trajectory, straight up, into record-breaking, after record-breaking, closes. In my opinion: Nosebleed territory is an understatement. Yet, what one must remember is this… The Fed. has seemingly done all it can other than openly scream, “We’re serious here, and still relevant!” about their intentions of further, and faster hiking, and/or their balance sheet reduction ideas. And so far, it’s all fallen on deaf ears. The “markets” currently are (possibly were) only concerned with the “Trumpflation” trade. i.e., If the economy gets what Trump promised as in: meaningful tax cuts, Obamacare repeal, incentives for manufacturing and more – the Fed. doesn’t matter. Only the economy and resulting GDP does, as it should. But there’s a problem. Suddenly it looks like all that campaign promising and rhetoric is turning into just that – rhetoric, and promises that can’t be kept. And the “markets” ears are now beginning to wonder if all that “screaming” about further hikes, balance sheet rundown, and more coming out of the Fed. which is emanating no longer on the “wings of doves” but rather from a concerted group of “hawks” should be given more thought. So “noticed” in fact, it seems to have taken the Fed. itself by surprise when none other than N.Y. Fed. president William Dudley after a speech where he expressed he favored gradual tapering of the balance sheet felt the need to take to the airwaves (sorry but, once again) only days later as to clarify what he meant by the word “pause” because of the adverse reaction given by Wall Street. Yes, the Fed. got it’s wish – Wall Street is once again “all ears.” And with that the Fed. suddenly found itself like that old joke of someone shouting over the ambient noise at a party to suddenly find the music stopping mid sentence while they’re still screaming. So comical was this knee-jerk reaction via a Fed. speaker as to make sure they clarified what “pause” truly implied, I nearly spit my coffee when I heard one of the hosts on Bloomberg™ make the observation: “Is this what its all come to? Needing to clarify the meaning of ‘pause?'” Yes, yes it has. However it’s been that way for quite some time, just no one cared to listen other than those of us relegated to mocking as the “doom crew” or “tin foiled” types. The real problem is – we’ve been right. It’s just that most are just beginning, including the media to catch on. The issue that goes with that hand-in-hand is this: possibly far too late. And here’s why… As I said in the beginning there’s a “red line” that needs to not be crossed in my opinion. I’ve marked on the above chart that line is, or about, the 2130ish area (give or take) on the S&P. If that line is crossed there will be a battle which I’ve delineated as the “battlefield area.” I would assume we will ping-pong back and forth (i.e., 2130 – 2085 respectively) within this area until the break of where we’re heading in the near future is made. If it breaks lower? All bets are off. And I mean just that: All. For this rally to hold and further gains to be promising that 2130 line needs to be avoided at all costs. Especially with the Fed’s current stance and policy implications. Much like a kinetic war, this “market” and monetary battle may have just as harsh ramifications if certain red lines are breached. The issue at hand is this: Just as fast, and unrelenting as the “Hopium” trade of reflation has been. It can reverse with the same characteristics as it started, and we could end up at that “moment of truth” before we know it. If we do start barreling there out-of-the-blue, and with some momentum? Your first signs for concern will be when you suddenly hear hawks cooing. Though that process (or metamorphosis) might already be underway. See Mr. Dudley for clues. Now it’s time to see how the “market” reacts. Or more importantly: Is the damage of 2 rate hikes in 90 days, and relentless jawboning for balance sheet reduction, along with the realization of potential reflation trade DOA damage already done?

10 апреля, 17:38

Stock Market News for April 10, 2017

Benchmarks declined only marginally on Friday, dragged down by weaker-than-expected March jobs data and President Trump???s surprise attack against an airbase near Homs, Syria

10 апреля, 15:40

Обзор европейской сессии: евро умеренно ослаб

Были опубликованы следующие данные: (время/страна/показатель/период/предыдущее значение/прогноз) 08:30 Еврозона Индикатор уверенности инвесторов от Sentix Апрель 20.7 20.1 23.9 12:15 Канада Число закладок новых фундаментов Март 210.2 216 254 Евро снизился против доллара в понедельник, что было вызвано нервозностью по поводу предстоящих президентских выборов во Франции, так как инвесторы подытожили недавние опросы, показывающие ужесточение гонки. За кампанией внимательно следят инвесторы, так как один из соперников - ультраправый кандидат Ле Пен - пригрозила вывести Францию ​​из Евросоюза, если она выиграет, подогревая проблемы развала блока после голосования в Великобритании о выходе из ЕС в прошлом году. «Есть общее беспокойство, которое... мы видим на (французских) опросах общественного мнения, что гонка, кажется, затягивается», - сказал Алвин Тан, валютный стратег в Societe Generale в Лондоне. Опросы в течение недель показали, что Ле Пен и центрист Эммануэль Макрон на пути к выходу из первого тура голосования 23 апреля и перейдут ко второму туру 7 мая. Волатильность пары евро/доллар от одной недели до одного года коснулась самого высокого уровня с момента сразу после голосования Брексита в Великобритании. Небольшую поддержку евро оказали данные по доверию инвесторов в еврозоне. Доверие инвесторов в еврозоне повысилось до самого высокого уровня почти за десятилетие в апреле, показали в понедельник данные опроса Sentix. Индекс настроений инвесторов неожиданно вырос до 23,9 в апреле с 20,7 в марте. Ожидалось, что показатель упадет до 20,2. Это был самый высокий балл с августа 2007 года. В апреле усилилась оценка текущей ситуации, а также ожиданий. Показатель текущих условий улучшился до 28,8 с 23,8. Это был четвертый рост подряд и достиг максимального уровня с января 2008 года. Аналогичным образом, индекс ожиданий составил 19,3 против 17,8 месяцем ранее. Доллар немного снизился в ходе европейской сессии после того, как коснулся трехнедельного максимума против корзины валют в Азии. Аналитики говорят, что движение в Азии стало продолжением пятницы, когда официальный представитель ФРС США подтвердил обязательство центрального банка продолжать повышать процентные ставки. Президент Федеральной резервной системы Нью-Йорка Уильям Дадли заявил, что ФРС может избежать повышения процентных ставок в то же самое время, когда она начнет сокращать свой баланс, что приведет лишь к «небольшой паузе» в планах повышения ставок центрального банка. Геополитическая напряженность в Азии также была в центре внимания после решения США о переносе ударной группы ВМС на Корейский полуостров после провокационного испытания ракет Северной Кореей. «На заднем плане все еще существуют геополитические проблемы, такие как сирийская ситуация, и нет никаких новых стимулов или причин покупать доллар», - говорит Кумико Ишикава, аналитик валютного рынка в Sony Financial Holdings в Токио. EUR/USD: в течение европейской сессии пара снизилась до $1.0569 GBP/USD: в течение европейской сессии пара выросла до $1.2406 USD/JPY: в течение европейской сессии пара снизилась до Y111.18 В 14:00 GMT США представит индекс условий на рынке труда за март. В 20:00 GMT с речью выступит глава ФРС Джанет Йеллен. Информационно-аналитический отдел TeleTradeИсточник: FxTeam

10 апреля, 08:47

Дадли полагает, что ФРС избежит чрезмерного ужесточения финансовых условий

Глава ФРБ Нью-Йорка Уильям Дадли полагает, что Федеральная резервная система избежит чрезмерного ужесточения финансовых условий. По его словам, Федрезерв может взять небольшую паузу в увеличении ставки по федеральным бондам, когда начнет сокращать баланс активов, поскольку такое сокращение заменит повышение краткосрочных ставок. Кроме того, Дадли отметил, что настало время пересмотреть ряд правил, включая правило Волкера, а также ежегодные стресс-тесты американских банков. По мнению Дадли, нецелесообразно применять правила, которые использовались в период финансового кризиса.

10 апреля, 08:17

Дадли полагает, что ФРС избежит чрезмерного ужесточения финансовых условий

Глава ФРБ Нью-Йорка Уильям Дадли полагает, что Федеральная резервная система избежит чрезмерного ужесточения финансовых условий. По его словам, Федрезерв может взять небольшую паузу в увеличении ставки по федеральным бондам, когда начнет сокращать баланс активов, поскольку такое сокращение заменит повышение краткосрочных ставок. Кроме того, Дадли отметил, что настало время пересмотреть ряд правил, включая правило Волкера, а также ежегодные стресс-тесты американских банков. По мнению Дадли, нецелесообразно применять правила, которые использовались в период финансового кризиса.

07 апреля, 08:18

События сегодняшнего дня:

В 09:00 GMT Губернатор Банка Англии Марк Карни выступит с речью В 12:00 GMT Встреча Еврогруппы В 12:00 GMT Встреча совета министров финансов стран Евросоюза В 16:15 GMT Член FOMC Уильям Дадли выступит с речью В 17:00 GMT Число работающих буровых установок в США, по данным Baker Hughes Информационно-аналитический отдел TeleTradeИсточник: FxTeam

06 апреля, 22:20

BIS: Центробанкам необходим совместный план на случай нового кризиса финансирования

Основные центральные банки мира должны заранее планировать и работать более тесно вместе, чтобы обеспечить достаточное финансирование мирового банковского рынка в случае очередного финансового кризиса. Об этом в четверг заявил Банк международных расчетов (BIS). В новом отчете от BIS были определены восемь областей, которым необходимо уделить внимание, чтобы помочь уменьшить рыночную суматоху, и шесть из них касались более тесного сотрудничества и связи. Первым было то, что центральным банкам необходимо решить, какой из них отвечает за банки с операциями в нескольких странах. Остальные варьировались от обмена информацией, залога и валютных вопросов. "Основная идея всего доклада заключается в том, что нам необходимо подготовится в спокойное время, чтобы быть в состоянии эффективно оказывать помощь ликвидности в периоды стресса", - сказал представитель Федеральной резервной системой США Уильям Дадли, который возглавлял рабочую группу BIS на эту тему. "Одним из осложнений при предоставлении банкам финансирования на суммы миллиардов долларов или евро, что делали ФРС, ЕЦБ, Банк Японии и другие банки во время финансового кризиса, является то, что деньги могут затем "перетекать" куда угодно. Общий урок, который получен из обзора недавнего опыта центрального банка, заключается в том, что необходимо быть готовым к новым ситуациям, где может потребоваться помощь ликвидности", - сообщили в Банке международных расчетов. Информационно-аналитический отдел TeleTradeИсточник: FxTeam

04 апреля, 23:25

The Fed Has Shifted (And The Market Missed It)

Authored by Kevin Muir via The Macro Tourist blog, The Fed has a new message. So far the market is not listening, but it should be, as the shift will have a profound effect on financial markets. It started with the dissent at the last FOMC meeting from Neel Kashkari. In an unusual move, Kashkari published a blog piece explaining his dissent. Although he presented plenty of the usual reasons for not going along with the hike (mostly centered around the whole idea of the 2% inflation being a target, not a ceiling), Kashkari introduced the idea the Fed should be thinking about unwinding its balance sheet. Proving that stopped clocks are right twice a day, I have written about the possibility the Fed would shift their tightening bias through traditional Fed Funds raises, to balance sheet wind down - (The End of Calm Bond Markets). Continuing to raise rates while maintaining the large balance sheet could create a negative cash flow situation for the Federal Reserve. Given this worry, it makes no sense for them to tighten policy through rates when they can accomplish the same thing through the unwinding of their balance sheet. It looks as if the Fed has taken this idea to heart. From Business Insider: Today it was New York Fed President William Dudley’s job to hammer home the message. He’s one of the most influential members on the policy-setting Federal Open Market Committee. His New York Fed deals with the securities that are on the Fed’s balance sheet as a result of QE. And he said the Fed might start reversing QE this year. With this call to shrink the Fed’s balance sheet, he is following in the footsteps of other Fed heads, including Cleveland Fed President Loretta Mester, San Francisco Fed President John Williams, and most notably Boston Fed President Eric Rosengren – a former “dove” who has been publicly fretting about bubbles in commercial real estate and housing and the risks they pose to “financial stability.” So this theme unraveling QE, not in the foggy future but this year, is picking up momentum. I disagree with Business Insider that the theme is picking up momentum. The Fed is bashing the message over our heads with a stick. That’s not momentum, that’s a pedal to the metal press. The Federal Reserve is signaling that although they are not retracting the guidance for 3 hikes this year (meaning two more as we have already done one), any further tightening will be done from the unwinding of the Fed’s balance sheet. We had QE. Now we are going to have reverse QE. From Business Insider again - quoting NY Fed President Bill Dudley: “It wouldn’t surprise me if sometime later this year or sometime in 2018, should the economy perform in line with our expectations, that we’ll start to gradually let securities mature rather than reinvesting them.” “If we start to normalize the balance sheet, that’s a substitute for short-term rate hikes because it would also work in the direction of tightening financial conditions.” “If and when we decide to begin to normalize the balance sheet we might actually decide at the same time to take a little pause in terms of raising short-term interest rates.” BAM! There it is. The Fed will stop raising rates, and will instead start using the balance sheet to tighten policy. I can’t say I disagree with anything good old Bill has said so far, but then he trotted out this gem: And he is “not that worried that the markets are going to react to the changes in our balance sheet in a violent way because it’s already factored in.” Bullshit. This policy is not factored in at all. Not even close. This whole Fed communication push is the first attempt to have the market understand the policy shift. So what does it mean? And more importantly, how do we profit from it? Let’s start with the obvious trade. If the Federal Reserve shifts from tightening monetary policy through Fed Funds rate hikes to balance sheet wind down, short rates will not rise as much as would otherwise be the case. At its extreme, the Federal Reserve would also be selling long dated securities. All of this adds up to a steeper yield curve. Since Yellen has taken over as Fed Chairperson, the yield curve has been continually flattening as she has steadily withdrawn monetary accommodation. Market participants are convinced the Fed will continue with this policy for some time to come. Speculators have never been more short 3 month Eurodollar futures contracts. These contracts are not foreign exchange contracts and have nothing to do with the European currency, but instead represent the best way to hedge US dollar short term rates. So let me get this straight. Speculators are betting heavily on higher US short term rates, meanwhile, the Federal Reserve is signaling they might slow down rate hikes and replace it with balance sheet reduction? There are many different ways to play this potentail unwind, but I certainly wouldn’t want to be short any US dollar fixed income instrument shorter than five years. Yet yield curve shifts aren’t the only opportunities offered up from the Fed’s policy change. The Federal Reserve owns $2.4 trillion of US Treasuries and $1.8 trillion in mortgage backed bonds. If I were a member of the FOMC board, I would push to wind down the mortgage back bonds first, but even if they choose a pro-rata wind down, the Fed will no longer be purchasing a large amount of mortgage backed securities that they were previously rolling. Mortgage backed securities are different from US Treasuries. As rates decline, more homeowners refinance, so the mortgage instrument’s duration declines - right when you want the opposite to happen. When rates rise, fewer homeowners refinance, so the duration extends - again, right at the worse time. Mortgages are therefore negative volatility securities. When the Fed was buying mortgages, they were removing volatility from the bond market. Conversely, when they sell, they would be demanding volatility. This is a good argument for owning fixed income volatility, but there is another aspect to the Fed’s change that might present an even better opportunity. Ben Melkman from Light Sky Macro was recently interviewed on RealVision TV. There have been some really smart people on RealVision, but I think Ben might be at the top of my list. Instead of trying to rehash his point, here is his argument from that interview: “The Fed has been a whole flow of mortgages for many years. And when the Fed buys mortgages, they don’t hedge any of the extension duration characteristics of mortgages… If the Fed stops buying mortgages, the private sector will have to start buying those mortgages, just as yields are going higher (ie: away from the average coupon). As you do that, those mortgages extend pretty quickly in duration. In that environment, those private sector holders have to hedge that duration extension risk by paying swap. So not only is the Fed making the private sector buy more duration as the mortgages extend that increases rapidly, and so I think two things happen. The curve sells off and steepens, and this becomes a good catalyst for what has been a very distorted swap spread curve (usually swaps trade at a lower yield than bonds, LIBOR risk should trade at a higher risk than government risk.)” I have spoken about the strange anomalies in the swap market before - “How many other could never happens are out there?”. Heck, I even chronicled how, like an idiot, I was buying the swap spread “Only for the bravest and stupidest” Back then I didn’t have a reason to bet on a return to normalcy except that negative swap spreads were dumb. But now I have a catalyst. The Fed’s shift in policy should cause the previously negative swap spreads to expand back to more normal levels. Not only that, but there is another tailwind that Melkman did not mention. Theoretically swap spreads should never go negative. The counter party risk of the bank on the other side of the swap is higher than the risk free US treasuries. It makes no sense for swaps to trade lower than Treasuries. Yet they did. Although no one knows with certainty the reasons, the lack of bank balance sheet availability was definitely a contributing factor. After the great credit crisis 2008, as regulations tightened, banks were less willing to extend credit for swap trades. Therefore demand for swaps outpaced supply, pushing the yield below Treasuries. With Trump’s victory, it is safe to say that regulation is only headed one way. Banks are already opening up their balance sheets. And when combined with the recent rate rises, swaps have finally started to trade at levels more appropriate. US 5 year swap spreads have even gone from negative to positive levels once again. That means the US 5 year swap rate is above the 5 year treasury yield. Professor Malkiel can once again put that portion of the swap curve back into his lesson plan of efficient markets. Farther out the curve, swap spreads are doing their best, but have not yet crossed out of “illogical” levels. But, at the long end of the curve, the streams are still crossed. Putting it all together, with the Fed signaling a move away from rate hikes as their preferred method of removing accommodation towards letting their balance sheet wind down, this should mean a steeper yield curve with widening swap spreads. Buying the 5/30 steepener, but instead of shorting 30 year Treasuries, replacing it with short 30 year swaps, means you can pick up an extra 40 basis points (for us hacks that don’t have ISDA’s, there is a swap future you can trade. See my previous post about swaps to learn how to hedge it properly.) The Fed is communicating a big shift in policy. So far the market has not responded, but that just means there is more opportunity for those who understand how to profit from it.

04 апреля, 13:00

Президент ФРБ Нью-Йорка предупреждает о растущем студенческом долге

Высокопоставленный чиновник ФРС предупредил в понедельник о долгосрочных последствиях влияния долгов студентов на владение недвижимостью, а также потребительские расходы, заявив, что доля студенческих кредитов с просроченными платежами оставалась на упорно высоком уровне. Президент ФРБ Нью-Йорка Уильям Дадли заявил, что просрочки по студенческим кредитам в США сейчас выше, чем в любой другой категории домохозяйств: они выросли до 11.2% в течение последних трех месяцев 2016 года. Следующая категория в зоне риска - долги по кредитным картам с 7.1%. Серьезным нарушением по долгу считается просрочка на 90 дней и более. Совокупный объем студенческого долга составляет $1.3 трлн., таким образом, это прирост на 170% с 2006 года из-за того, что студенты стали получать более крупные кредиты после сокращения финансовой поддержки колледжей. Проблемы с выплатами особенно остро чувствуются в регионах с низким уровнем дохода. Дадли отказался комментировать какие-то конкретные действия в отношении государственной политики, однако заявил, что доступность кредитования на обучение для домохозяйств с средним доходом все же принесет свои плоды в будущем. Комментарии чиновника последовали за обрушившимся шквалом негодования на администрацию Трампа, когда они стали разворачивать усилия прошлой администрации по облегчению бремени студенческого долга. В прошлом месяце департамент образования намекал на то, что может перестать следовать программе прощения кредитов для госслужащих эпохи Буша по всем кредитам. Заемщикам говорили, что они подпадают под программу прощения кредитов после 10 лет работы в госсекторе, однако стали появляться судебные иски, из которых становится понятно, что департамент отказывается от выполнения этой программы. New York Fed chief warns on US student debt, FT, Apr 4Источник: FxTeam

04 апреля, 10:16

Рынок не верит в фантазии ФРС

Представители Федеральной резервной системы с завидной регулярностью появляются на публике и рассказывают о дальнейшем ужесточении свое политики, а также о том, как хорошо себя чувствует экономика. Но в это почти никто не верит.

04 апреля, 10:16

Рынок не верит в фантазии ФРС

Представители Федеральной резервной системы с завидной регулярностью появляются на публике и рассказывают о дальнейшем ужесточении свое политики, а также о том, как хорошо себя чувствует экономика. Но в это почти никто не верит.

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03 апреля, 22:55

New York Fed's Dudley Admits Fed-Inspired Student Debt Bubble Is Headwind For Economy

Having confessed to the fact that Fed "forecasts" are as useless as any other guess (and not commitments), NY Fed's Bill Dudley admitted this morning that the Fed-inspired student-loan bubble is a debt overhang that both inhibits home ownership and is a headwind to economic growth. “If you look at the Summary of Economic Projections, it’s a forecast” and not a commitment, New York Fed President William Dudley says in New York at press conference on trends in household borrowing and student debt. We would tend to suggest it was not even that Mr. Dudley...   But the real headlines were for the research report his PhDs had created that suggested - shock, horror - that gorging one's self on cheap credit in the short-run to get an education that is worth less each day (because any Tom, Dick, or Dufus can now get to college - because it's fair and just and right) is potentially a bad thing and could hamper the long-run economy. No shit, we hear you cry. But let's let the PhDs explain... Student debt has more than doubled over the past decade to $1.3 trillion. But a significant minority of borrowers are defaulting on their student loans and in turn harming their credit and ability to purchase homes, the report shows. More than 1 in 10 borrowers are at least 90 days behind on their student debt. The delinquency rate for student loans is far higher than it is for other forms of credit, including mortgages, credit cards and auto loans.   Only about 5% of student-loan borrowers owe more than $100,000. But they account for almost a third of all outstanding student debt. Borrowers on average leave school owing about $34,000, up nearly 70% from a decade ago. Student debt appears to dampen homeownership rates among those with the same level of education, the report said. ...our analysis shows that for any given level of educational attainment, those with student debt are less likely to own a home in their early thirties than those who completed their education without taking on as much—or any—debt.   To the extent that the statistical associations we uncovered reflect a causal impact of debt on homeownership, they have important implications for the housing market and future spending behavior.   Homeownership represents an important means of wealth accumulation, with housing equity being the principal form of wealth for most households.   So, changes in the way we finance higher education, with an increased reliance on student debt, may have important implications for the housing market and the distribution of wealth. We expect to report new findings from ongoing research on this topic in the future. So after driving down rates to 5000 year record lows to force cheap credit on the world to inspire some as-yet-unsighted animal spirits real recovery, The Fed now suddenly sees the light and realizes that burdenning people with excess debt may not be the best idea after all. As far as Mr. Dudley's sudden discovery of the common-sense lobe of his brain, we have one word... "brilliant"

12 октября 2015, 23:05

ФРС может опустить ставки ниже 0% при новом кризисе

В руководстве Федеральной резервной системы рассматривают возможность использования отрицательных процентных ставок, в случае если американская экономика вновь столкнется с серьезным кризисом.