William R. White is the chairman of the Economic and Development Review Committee at the OECD in Paris. Prior to that, Dr. White held a number of senior positions with the Bank for International Settlements (“BIS”), including Head of the Monetary and Economic Department, where he had overall responsibility for the department's output of research, data and information services, and was a member of the Executive Committee which manages the BIS. He retired from the BIS on 30 June 2008.
Dr. White began his professional career at the Bank of England, where he was an economist from 1969 to 1972. Subsequently he spent 22 years with the Bank of Canada. In addition to his many publications, he speaks regularly to a wide range of audiences on topics related to monetary and financial stability.
In the following interview he shares his views in a totally personal capacity on the current state of the global economy and related monetary and fiscal policies.
E. Tavares: Dr. White, we are delighted to be speaking with you today. You are recognized as one of the leading central bank economists in the world, and so your perspective is highly valued and appreciated.
Absent the robust central bank intervention in 2008 the world’s financial system would have likely collapsed. However, in a sense the economy looks riskier now: government debt levels as a function of GDP are at record highs; big financial institutions have gotten even bigger; and while we may not have a housing credit crisis brewing in the US, we are seeing stress in many areas, from student loans to energy bank loans to emerging market convulsions. At the same time, income inequality has blown out of proportion as booming asset prices hardly benefited the less privileged in society.
With the benefit of hindsight, can we say that the very loose monetary policy of central banks around the world lulled politicians and investors into a false sense of security and that those unresolved issues from the recent past could still come back to haunt them? Or can they keep things under control with these newly found monetary “bazookas”?
W. White: I think your assessment of where we are at is spot on. What the central banks did in
With US markets failing to hold on to today's "Deutsche Bank" euphoric gains today despite, or rather due to Janet Yellen's Congressional testimony, traders in mainland China remains locked out due to the Lunar New Year holiday, while Japan is mercifully taking a break – mercifully, because otherwise the Nikkei would be crashing. However, one market is back online as Hong Kong traders return to their desks to see carnage around the globe, and most importantly, are unable to hedge arbed exposure between China, Japan and the US.
So, with few options, they are buying the one asset that provides the best cover to central banks losing faith, demonstrated most vividly by the total failure of the BOJ, and as a result just as Yen soars above 113… with USDJPY down a stunning 10 handles from the post-NIRP highs…
.. and Gold has taken out the numerous $1,200 stops…
and is currently surging to levels seen at the end of QE3…
What is causing this mad rush into gold is unclear, but… it's probably something.
Meanwhile, as gold is soaring, its BOJ pair trade equivalent (as described in An Inside Look At The Shocking Role Of Gold In The "New Normal") the USDJPY, just tumbled below 113 for the first time since 2014, and with no support levels until 110, this may just be the final straw not only for Kuroda but for the entire Abenomics house of hollow cards.
In any case, don't expect the gold surge to last too long: our good friend, Benoit Gilson, manning the Bank of International Settlements' gold and FX desk, will be on alert very shortly.
Away from currencies, WTI is also collapsing, to a $26 handle…
Asian equity markets are crashing…
*HANG SENG CHINA ENTERPRISES FUTURES TUMBLE 6.3% AT OPEN
*HONG KONG'S HANG SENG INDEX FUTURES SINK 4.9% AT OPEN
When Barack Obama swept into the White House in 2008, the American electorate was hoping for “change.”
A “change” in the way Republicans and Democrats interacted with one another, a “change” in how the US is perceived by the rest of the world, and a “change” in Washington’s notoriously poor foreign policy in the Mid-East.
Not to put too fine a point on it, but none of that materialized. The US now faces legislative gridlock in Washington as the parties are more divided than ever, the effort to restore America’s international standing backfired in dramatic fashion as allies accuse the US of “leading from behind,” and rather than promoting peace in the Mid-East, Obama helped turn Libya into a lawless wasteland and Syria into “the worst circle of hell” (to quote Ban Ki-Moon).
Meanwhile, relations with Russia have fallen apart completely and the dispute with China over Beijing’s land reclamation efforts in the Spratlys threatens to devolve into a shooting war with each passing “freedom of navigation” exercise conducted by a US warship.
In short, “yes we can” quickly turned into “no we probably can’t” and now, as the Obama presidency draws to a close, we can definitively say “no we didn’t.”
Against this backdrop, some Americans want to send the Nobel Peace Prize winner off with a rather unpleasant parting gift: a referral to the Hague. Below, find a peition that appeared earlier this week on The White House’s official web page calling for the “conviction of the US President and trial in the international criminal court.”
I approach the subject of the physics of energy and the economy with some trepidation. An economy seems to be a dissipative system, but what does this really mean? There are not many people who understand dissipative systems, and very few who understand how an economy operates. The combination leads to an awfully lot of false beliefs about the energy needs of an economy.
The primary issue at hand is that, as a dissipative system, every economy has its own energy needs, just as every forest has its own energy needs (in terms of sunlight) and every plant and animal has its own energy needs, in one form or another. A hurricane is another dissipative system. It needs the energy it gets from warm ocean water. If it moves across land, it will soon weaken and die.
There is a fairly narrow range of acceptable energy levels–an animal without enough food weakens and is more likely to be eaten by a predator or to succumb to a disease. A plant without enough sunlight is likely to weaken and die.
In fact, the effects of not having enough energy flows may spread more widely than the individual plant or animal that weakens and dies. If the reason a plant dies is because the plant is part of a forest that over time has grown so dense that the plants in the understory cannot get enough light, then there may be a bigger problem. The dying plant material may accumulate to the point of encouraging forest fires. Such a forest fire may burn a fairly wide area of the forest. Thus, the indirect result may be to put to an end a portion of the forest ecosystem itself.
How should we expect an economy to behave over time? The pattern of energy dissipated over the life cycle of a dissipative system will vary, depending on the particular system. In the examples I gave, the pattern seems to somewhat follow what Ugo Bardi calls a Seneca Cliff.
One thing that became abundantly clear in the wake of the financial crisis was that everything – and we do mean everything – was being manipulated by Wall Street’s biggest and most systemically important financial institutions.
First we learned that the most important benchmark rate on the planet was nothing more than a tool submitters used to inflate the value of their traders’ books, something we flagged way back in 2009.
Subsequently, all manner of rigging and fixing was discovered across markets from gold, to FX, to ISDAfix. Although chat logs clearly show that there are scores of people who should probably be in jail for conspiring to manipulate markets, the vast majority of those responsible got off scot-free with the notable exception of poor Tom Hayes who was sentenced to 14 years for allegedly serving as the ringleader of a group that colluded to fix LIBOR.
We even found out that banks were rigging the UST market by conspiring to keep the spread between the when issued price and the price at auction as wide as possible.
In short, if it can be manipulated, you can bet Wall Street is manipulating it – or at least they were, until they got caught.
In most cases, the fines leveled against the banks by regulators as punishment for the above are paltry and amount to slaps on the wrist, but when you’re facing a liquidity crunch, just about the last thing you need is to be forced into handing over a few more billion to the government. That’s precisely the situation facing Deutsche Bank, which late last month reported its first annual loss since the crisis along with abysmal quarterly results that have caused the market to question whether Europe’s largest lender may be in trouble.
The reason we bring all of this up is because on Wednesday, we found out that the EU Commission has opened a preliminary investigation into the $1.5 trillion SSA market.
“The commission’s powerful competition department has sent questionnaires to a number of market participants as part of an early-stage probe into possible manipulation of the price of supranational, subsovereign and agency debt,” FT reports. “This market covers a diverse range of debt issuers including organisations such as the European Bank for…
You can’t say you weren’t warned. The writing on the wall that “smart devices” would prove to be manna from heaven for spy agencies and hackers around the word has been obvious for a very long time.
A year ago, I published two articles on this topic. The first highlighted the revelation that Samsung’s Smart TV can and will listen to your conversations, and will share the details with a third party. The second had to do with the release of a high-tech Barbie that will listen to your child, record its words, send them over the internet for processing. If you missed these posts the first time around, I suggest you get up to speed:
Moving along to today’s article, we learn that the Director of National Intelligence, James Clapper, admitted that the government intends to use the “Internet of Things” for spying on the public. As Trevor Timm of the Guardian notes:
If you want evidence that US intelligence agencies aren’t losing surveillance abilities because of the rising use of encryption by tech companies, look no further than the testimony on Tuesday by the director of national intelligence, James Clapper.
As the Guardian reported, Clapper made clear that the internet of things – the many devices like thermostats, cameras and other appliances that are increasingly connected to the internet – are providing ample opportunity for intelligence agencies to spy on targets, and possibly the masses. And it’s a danger that many consumers who buy these products may be wholly unaware of.
“In the future, intelligence services might use the [internet of things] for identification, surveillance, monitoring, location tracking, and targeting for recruitment, or to gain access to networks or user credentials,” Clapper told a Senate panel as part of his annual “assessment of threats” against the US.
Of course, James Clapper is the guy who lied to Congress and faced zero repercussions. As is always the case when it comes to government criminality.
Privacy advocates have known about the potential for government to exploit the internet
There wasn’t a whole lot of change by the close of business, but intraday strength was clawed back in worrisome fashion. The end result was to leave spike highs in markets.
The S&P finished with a MACD ‘sell’ trigger, but on lower volume. The ‘sell’ trigger was below the bullish zero line, which makes it a strong signal.
The Nasdaq closed with a ‘black’ candlestick, which would be more bearish if it occurred at a swing high, but it’s still a warning. Technicals are all in the bear camp.
The Russell 2000 also closed with a spike high and a MACD trigger ‘sell’. The index had attempted a relative advance against the Nasdaq, but this looks ready to turn south. And as the lead index for bears, having touched the January low, it could get ugly real quick.
The semiconductor index lost almost 1%, but it hasn’t yet tagged the August low. As with other indices, it registered a strong ‘sell’ in the MACD, but it also registered a ‘sell’ in the relative performance.
For tomorrow, it will probably come down to the Asian session. A weak overnight with a gap down could see a difficult day ahead. Fresh, strong ‘sell’ triggers in the MACD add to the trouble.
With its markedly ironic title, The Ministry of Truth in George Orwell's dystopian novel, 1984, is one of the most important agencies of the government. For, as enotes.com writes,an uninformed or misinformed populace can be confused, deceived, and directed easily by controlling powers. Keeping the people confused about who is at war with whom and what is the reality of things causes them to become involved in nothing and, therefore, no threat to the power structure.
On Twitter, every voice has the power to shape the world. We see this power every day, from activists who use Twitter to mobilize citizens to content creators who use Twitter to shape opinion.
To ensure people can continue to express themselves freely and safely on Twitter, we must provide more tools and policies. With hundreds of millions of Tweets sent per day, the volume of content on Twitter is massive, which makes it extraordinarily complex to strike the right balance between fighting abuse and speaking truth to power. It requires a multi-layered approach where each of our 320 million users has a part to play, as do the community of experts working for safety and free expression.
That’s why we are announcing the formation of the Twitter Trust & Safety Council, a new and foundational part of our strategy to ensure that people feel safe expressing themselves on Twitter.
As we develop products, policies, and programs, our Trust & Safety Council will help us tap into the expertise and input of organizations at the intersection of these issues more efficiently and quickly. In developing the Council, we are taking a global and inclusive approach so that we can hear a diversity of voices from organizations including:
Safety advocates, academics, and researchers focused on minors, media literacy, digital citizenship, and efforts around greater compassion and empathy on the Internet;
Grassroots advocacy organizations that rely on Twitter to build movements and momentum;
Community groups with an acute need to prevent abuse, harassment, and bullying, as well as mental health and suicide prevention.
We have more than 40 organizations and experts from 13 regions joining as inaugural members of the Council. We are thrilled to work with these organizations to ensure that
Courtesy mostly of Martin Shkreli, 2015 was a horrible year for Bill Ackman and yet, despite being down -20.5% last year (after being up 11% in early August when his NAV peaked at 29.27), his LPs largely stuck with the white-haired hedge funder.
In retrospect they surely regret that because according to the latest update by Pershing Square’s website, as of February 9, just 5 weeks into the new year, Bill Ackman is already 18.6% in the hole at a NAV of17.07%, and down over 40% since the fund’s recent peak in the last summer. Annualized, his 2016 performance comes up, or rather down to -193.4%
How long will the patient LPs watch their money burn, and how long until the “redemption letters on the sidelines” are finally faxed in? For the answer, watch if Ackman’s stocks suddenly take a big swoon lower as what happened to Einhorn late in 2015, when various unknown “traders” tried to force Greenlight to liquidate, happens this time to Ackman.
“One day it started raining, and it didn’t quit for four months” ~ Forrest Gump
What’s especially frustrating right now, besides the fact that the S&P 500 is now in a 13.2% drawdown, is that we’re not seeing any sense of panic. While every bounce attempt is getting smaller in both size and duration, the market has yet to do the proverbial flush that we all seam to be waiting for. The “all clear” moment, if you will.
The last time stocks were selling off like this was the summer of 2011 when the S&P 500 fell 21.58% pea...
The canary in the coalmine of an increasingly desperate energy industry just croaked. With "unusual timing" and at "distressed prices,"Reuters reports that Phillips 66 - the major US refiner owned by Warren Buffett - dumped crude oil for immediate delivery into Cushing storage tonight. This sparked heavy selling of the front-month WTI contract (to a $26 handle) and crashed the 1st-2nd month spread to 5 year lows.
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Throughout the past 30 days of wild volatility, here’s what I didn’t do.
Panic. Worry. Sell.
In fact, the best I did was add to a couple of positions yesterday. The world was already in an uncertain state for the past 3+ years. It’s just that with the market rising, we pushed the issue to the back of our mind and ignored it.
A number of systemic, structural forces are intersecting in 2016. One is the rise of non-state, non-central-bank-issued crypto-currencies.
We all know money is created and distributed by governments and central banks. The reason is simple: control the money and you control everything.
The invention of the blockchain and crypto-currencies such as Bitcoin have opened the door to non-state, non-central-bank currencies--money that is global and independent of any state or central bank, or indeed, any bank, as crypto-currencies are structurally peer-to-peer, meaning they don't require a bank to function: people can exchange crypto-currencies to pay for goods and services without a bank acting as a clearinghouse for all these transactions.
Last year, the S&P 500 large caps closed 2015 essentially flat on a total return basis, while the NASDAQ 100 showed a little better performance at +8.3% and the Russell 2000 small caps fell -5.9%. Overall, stocks disappointed even in the face of modest expectations, especially the small caps as market leadership was mostly limited to a handful of large and mega-cap darlings.
Notably, the full year chart for the S&P 500 looks very much like 2011. It got off to a good start, drifted sideways for...
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Baxter Int. (BAX) is splitting off its BioSciences division into a new company called Baxalta. Shares of Baxalta will be given as a tax-free dividend, in the ratio of one to one, to BAX holders on record on June 17, 2015. That means, if you want to receive the Baxalta dividend, you need to buy the stock this week (on or before June 12).
Back in December, I wrote a post on my blog where I compared the performances of various ETFs related to the oil industry. I was looking for the best possible proxy to match the moves of oil prices if you didn't want to play with futures. At the time, I concluded that for medium term trades, USO and the leveraged ETFs UCO and SCO were the most promising. Longer term, broader ETFs like OIH and XLE might make better investment if oil prices do recover to more profitable prices since ETF linked to futures like USO, UCO and SCO do suffer from decay. It also seemed that DIG and DUG could be promising if OIH could recover as it should with the price of oil, but that they don't make a good proxy for the price of oil itself.
This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible. Feel free to contact me directly at email@example.com with any questions.
Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts. After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.) Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.
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