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Powell Is Promoting A Public Perception Of Inflation That Is False: Fed Admits It In New ForecastsJun 18, 2021 - 10:02:25 PDT
Unfortunately, this is not an academic debate as policymakers allow this to play out in real-time, with huge economic and financial risks if they are wrong. Investors forewarned.
They'll never unwind this. Ever. They can’t even bring themselves to slow down purchases without a big handwringing production. At least they're not even pretending they will unwind this.
Jun 18, 2021 - 09:58:25 PDT
The Fed sold a record $756 billion in Treasury securities this morning in exchange for cash via overnight “reverse repos.” This was up by a stunning 45% from yesterday’s operations of $521 billion. There were 68 counterparties involved. Yesterday’s overnight reverse repos had matured and unwound this morning, to be more than replaced by today’s Fed Flood. The result? The Fed’s balance sheet tops $8 trillion!
Monetary policy is likely to be a delicate game—a tightening ahead of schedule can lead to a slowdown, while a delay may mean inflationary expectations getting unhinged, leading to volatility in financial markets and an eventual dip in growth.
A reversal in the 10-year yield and a move back into growth stocks both suggest the growth outlook has deteriorated.
Italian Prime Minister Mario Draghi made a bold call for more economic stimulus in European countries to help bring growth back to pre-pandemic levels. “Protracted uncertainty means that the case for monetary and fiscal expansion remains compelling,” the former European Central Bank chief said in speech in Barcelona on Friday. “We will not reach this objective...
Jun 18, 2021 - 08:41:05 PDT
The Fed is continuing QE to the tune of $120 billion a month but just took back over six months of it.
The Fed’s growing interventions in non-economic-policy areas could impede its efficacy.
The world’s richest nations have set the stage for a revolution in corporate taxation, but they still have their work cut out to actually achieve that overhaul.
AftertheCOVIDcrisis,thequestionofpublicdebtsustainabilityiscentral:ifitisnotensured,thereisnoquestionthatdebtcriseswillreturn.Butthedebtsustainabilityconditionmustbecalculatedcorrectly,soastobeabletomaketherightfiscalpolicychoices.Wehaveshownthestepstofollow:-Takeintoaccounttheportionofthepublicdebtthatisheldbythecentralbank;-Estimatetheeffectofdifferentpublicspendingonpotentialgrowth;-Correctlycalculatethedebtsustainabilitycondition,takinguncertaintyintoaccount;-Gettheprimaryfiscalsurplustothedesiredlevelwithoutworseningtheeconomy’sstructuralsituation.
However, Gold with RSI’s getting close to oversold, thereby signaling a potential slowdown in capitulation selling, the $1800 to $1770 range is now an area that needs to hold in order to avoid a return to the March lows. Relative safety is not achieved until a move back above $1825 or, more importantly, the mentioned 200-day moving average of $1838.
A guy made a comment about my article highlighting Chipotle's recent decision to raise menu prices in order to cover some of the cost of higher wages, pointing out that the CEO made some $38 million last year, noting "I doubt he needs it."The first thought that popped into my head was "how exactly do you know what Brian Niccol needs?" My second thought was what does that have to do with anything? And my third thought was "dude, you don't have a clue how business works."
As Stimulus Fades From the System, Decline in Money Supply Is Only One of Reasons Deflation ArrivesJun 18, 2021 - 07:08:01 PDT
You can't create permanent economic growth and inflation from the artificial stimulus. The biggest problem for the Fed remains deflation.
The debt crisis is the biggest problem facing the Fed. They are trapped and they know it. Even nominally raising rates has the potential to lead to a crisis across the country. Transitory inflation is a double edged sword.
The Federal Reserve wrapped up its June meeting this week. The markets are convinced Jerome Powell has gone hawkish. Has he though? In this episode of the Friday Gold Wrap podcast, host Mike Maharrey talks about the messaging coming out of the FOMC meeting and reaches a completely different conclusion. He also compares and contrasts three competing narratives about the trajectory of Fed monetary policy.
St. Louis Federal Reserve President James Bullard told CNBC that he sees an initial interest rate increase happening in 2022 as inflation picks up.
US equity futures were already sliding this morning as option expirations loomed, but when St.Louis Fed Chair Jim Bullard appeared on CNBC and admitted that "it's natural that [The Fed] has tilted a little bit more hawkish," losses accelerated...
Gold is now trading at $1785/oz while silver has moved to $26.17/oz. One of the big stories from yesterday's session was the drop in palladium. The precious metal moved 11.26% lower. In the rest of the commodities complex...
Bitcoin Has 3 Flaws — And That Could Set the Stage for Other Alternatives, Says Cornell Economist 7Jun 18, 2021 - 05:36:32 PDT
Bitcoin has a few flaws and it's triggered other digital currencies to come up with more viable options, says Eswar Prasad, a professor at Cornell University.
A growing group of lawmakers and the White House haggled over how to finance a roughly $1 trillion infrastructure proposal, awaiting feedback from President Biden. Meanwhile, Democrats began discussions on a separate package that could cost up to $6 trillion.