Tag Archive: Quantitative Easing

Why The Next Powell Pivot Will Destroy Stocks And Drive Metals And Miners Higher

“The Federal Reserve will take it to the point of maximum pain and then they’ll reverse, this is when we’ll see the Powell Pivot.” These are the words of warning from Craig Hemke, this week’s guest on GoldCore TV, interviewed by Dave Russell.

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Weekly Market Pulse: Is This A Bear Market?

I don’t know the answer to the question posed in the title. No one does because the future is not predictable. I don’t know what will happen in Ukraine. I don’t know how much what has already happened there – and what might – matters to the US and global economy. I don’t know if the Fed is making a mistake by (likely) hiking interest rates by an entire 1/4 of 1% this week.

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Weekly Market Pulse: Has Inflation Peaked?

The headlines last Friday were ominous: Inflation Hits Highest Level in Nearly 40 Years. Inflation is Painfully High… Groceries and Christmas Presents Are Going To Cost More. Inflation is Soaring..

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Weekly Market Pulse: Discounting The Future

The economic news recently has been better than expected and in most cases just pretty darn good. That isn’t true on a global basis as Europe continues to experience a pretty sluggish recovery from COVID. And China is busy shooting itself in the foot as Xi pursues the re-Maoing of Chinese society, damn the economic costs.

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Weekly Market Pulse: Time For A Taper Tantrum?

The Fed meets this week and is widely expected to say that it is talking about maybe reducing bond purchases sometime later this year or maybe next year or at least, someday. Jerome Powell will hold a press conference at which he’ll tell us that markets have nothing to worry about because even if they taper QE, interest rates aren’t going up for a long, long time.

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Quantitative Easing: A Boon or Curse?

Central banks’ massive Quantitative Easing (QE) programs have come under scrutiny many times since the central banks fired up the printing press and began quantitative easing programs en masse after the 2008-09 Great Financial Crisis. However, the increase in central bank assets due to quantitative easing programs during the crisis pale in comparison to the QE programs during the Covid pandemic. As economies recovered after the...

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“Monetäre Staatsfinanzierung mit Folgen (Monetary Financing of Government),” Die Volkswirtschaft, 2020

Die Volkswirtschaft, 24 July 2020. PDF. Clarifying the connections between outright monetary financing, QE, the distribution of seignorage profits, the relationship between fiscal and monetary policy, and central bank independence.

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“Wenn die Notenbank den Staat finanziert (When the Central Bank Finances the State),” FAS, 2020

Monetary deficit financing is the norm—after all, central banks distribute their profits. Monetary financing occurs in the context of regular open market operations and QE and, hyper charged, with helicopter drops. The question is not whether monetary policy should finance the government, but why it does so, and to what extent. Fiscal and monetary policy are inherently connected; what constitutes monetary policy is defined by objectives.

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Monthly Macro Monitor: Does Anyone Not Know About The Yield Curve?

The yield curve’s inverted! The yield curve’s inverted! That was the news I awoke to last Wednesday on CNBC as the 10 year Treasury note yield dipped below the 2 year yield for the first time since 2007. That’s the sign everyone has been waiting for, the definitive recession signal that says get out while the getting is good.

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Global Asset Allocation Update:

There is no change to the risk budget this month. For the moderate risk investor the allocation to bonds is 50%, risk assets 45% and cash 5%. Despite the selloff of the last week I don’t believe any portfolio action is warranted. While the overbought condition has largely been corrected now, the S&P 500 is far from the opposite condition, oversold. At the lows this morning, the S&P 500 was officially in correction territory, down 10% from the...

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Bubble Watch: Warning Signs That The Everything Bubble Will Burst in 2018

I believe 2018 will be the year inflation arrives. The reason, as I’ve noted throughout mid-2017, is that multiple Central Banks, particularly the European Central Bank (ECB), Bank of Japan (BoJ) and Swiss National Bank (SNB) have maintained emergency levels of QE and money printing, despite the fact that globally the economy is performing relatively well.

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Global Asset Allocation Update

The risk budget this month shifts slightly as we add cash to the portfolio. For the moderate risk investor the allocation to bonds is unchanged at 50%, risk assets are reduced to 45% and cash is raised to 5%. The changes this month are modest and may prove temporary but I felt a move to reduce risk was prudent given signs of exuberance – rational, irrational or otherwise.

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Is This The Best Way To Bet On The Fed Losing Control Of The Bond Market?

Authored by Kevin Muir via The Macro Tourist blog, Lately, one of my biggest duds of a call has been for the yield curve to steepen. Sure, I have all sorts of fancy reasons why it should steepen, but reality glares back at me in black and white on my P&L run. Sometimes fighting with the market is an exercise in futility.

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Bi-Weekly Economic Review: As Good As It Gets

The incoming economic data hasn’t changed its tone all that much in the last several years. The US economy is growing but more slowly than it once did and we hope it does again. It is frustrating for economic bulls and bears, never fully satisfying either. Probably more important is the frustration of the average American, a dissatisfaction with the status quo that permeates the national debate. The housing bubble papered over the annoying lack of...

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Fed’s Asset Bubbles Now At The Mercy Of The Rest Of The World’s Central Bankers

"Like watching paint dry," is how The Fed describes the beginning of the end of its experiment with massively inflating its balance sheet to save the world. As former fund manager Richard Breslow notes, however, Yellen's decision today means the risk-suppression boot is on the other foot (or feet) of The SNB, The ECB, and The BoJ; as he writes, "have no fear, The SNB knows what it's doing."

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The Secret History Of The Banking Crisis

Accounts of the financial crisis leave out the story of the secretive deals between banks that kept the show on the road. How long can the system be propped up for? It is a decade since the first tremors of what would become the Great Financial Crisis began to convulse global markets. Across the world from China and South Korea, to Ukraine, Greece, Brexit Britain and Trump’s America it has shaken our economy, our society and latterly our politics.

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SNB Balance Sheet, Markets and Economy: As Good As It Gets?

Late 2014/early 2015 will perhaps be the closest to a real recovery from the Great “Recession” we shall see in this cycle.  Q1 2015 marked the peak year over year growth rate of GDP in this recovery at 3.76%. That rate compares quite unfavorably with even the feeble post dot com crash recovery high of 4.41% in Q1 2004.

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Fighting inflation with FX, a real traders market

The much anticipated document (press release and link to full document) released by U.S. Trade Representative Robert Lighthizer said the Trump administration aimed to reduce the U.S. trade deficit by improving access for U.S. goods exported to Canada and Mexico and contained the list of negotiating objectives for talks that are expected to begin in one month.

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Shrinkflation – Real Inflation Much Higher Than Reported

600 new words entered our official lexicon this week as the Oxford English Dictionary announced the latest new additions to their online records.

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Central Banks Buying Stocks Have Rigged US Stock Market Beyond Recovery

Central banks buying stocks are effectively nationalizing US corporations just to maintain the illusion that their “recovery” plan is working because they have become the banks that are too big to fail. At first, their novel entry into the stock market was only intended to rescue imperiled corporations, such as General Motors during the first plunge into the Great Recession, but recently their efforts have shifted to propping up the entire stock...

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