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Posts Tagged ‘central bank’

SUPREME COURT RULES FED MUST RELEASE ALL BAILOUT DATA

Courtesy of The Daily Bail

Video – The Fed has 5 days to release all data.

March 21 (Bloomberg) — The Federal Reserve must disclose details of emergency loans it made to banks in 2008, after the U.S. Supreme Court rejected an industry appeal that aimed to shield the records from public view.  The justices today left intact a court order that gives the Fed five days to release the records, sought by Bloomberg.

A huge win for transparency.

Statement from Matthew Winkler, editor in chief of Bloomberg News:

As a financial crisis developed in 2007, "The Federal Reserve forgot that it is the central bank for the people of the United States and not a private academy where decisions of great importance may be withheld from public scrutiny.  The Fed must be accountable to Congress, especially in disclosing what it does with the people’s money."

“The board will fully comply with the court’s decision and is preparing to make the information available,” said David Skidmore, a spokesman for the Fed.

The order marks the first time a court has forced the Fed to reveal the names of banks that borrowed from its oldest lending program, the 98-year-old discount window. The disclosures, together with details of six bailout programs released by the central bank in December under a congressional mandate, would give taxpayers insight into the Fed’s unprecedented $3.5 trillion effort to stem the 2008 financial panic.

“I can’t recall that the Fed was ever sued and forced to release information” in its 98-year history, said Allan H. Meltzer, the author of three books on the U.S central bank and a professor at Carnegie Mellon University in Pittsburgh.

Continue reading at Bloomberg… 


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Philly Fed’s Plosser Goes Off the Reservation, Admits Monetary Policy is Impotent

Courtesy of Jr. Deputy Accountant

That’s not omnipotent, that’s impotent as in the f**kers are shooting blanks and don’t even know it. Well Chuck Plosser knows it but if he keeps this up they’re going to drag him off and sequester him in the bunker they reserve for bad central bankers who can’t keep their mouths shut.

See The Scope and Responsibilities of Monetary Policy from Santiago, Chile yesterday:

Most economists now understand that in the long run, monetary policy determines only the level of prices and not the unemployment rate or other real variables.2 In this sense, it is monetary policy that has ultimate responsibility for the purchasing power of a nation’s fiat currency. Employment depends on many other more important factors, such as demographics, productivity, tax policy, and labor laws. Nevertheless, monetary policy can sometimes temporarily stimulate real economic activity in the short run, albeit with considerable uncertainty as to the timing and magnitude, what economists call the “long and variable lag.” Any boost to the real economy from stimulative monetary policy will eventually fade away as prices rise and the purchasing power of money erodes in response to the policy. Even the temporary benefit can be mitigated, or completely negated, if inflation expectations rise in reaction to the monetary accommodation.

Nonetheless, the notion persists that activist monetary policy can help stabilize the macroeconomy against a wide array of shocks, such as a sharp rise in the price of oil or a sharp drop in the price of housing. In my view, monetary policy’s ability to neutralize the real economic consequences of such shocks is actually quite limited. Successfully implementing such an economic stabilization policy requires predicting the state of the economy more than a year in advance and anticipating the nature, timing, and likely impact of future shocks. The truth is that economists simply do not possess the knowledge to make such forecasts with the degree of precision that would be needed to offset the economic shocks. Attempts to stabilize the economy will, more likely than not, end up providing stimulus when none is needed, or vice versa. It also risks distorting price signals and thus resource allocations, adding to instability. So asking monetary policy to do what it cannot do with aggressive attempts at stabilization can actually increase economic instability rather than reduce it.

I know you’re dying to know what footnote 2 is.…
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QE2 is not only a mistake “it’s criminal” says Vitaliy Katsenelson: Tech Ticker

The Treasury market is rebounding Thursday. Yields have fallen from a six-month high, reached Wednesday, but are still up from where they were earlier in the week. Yields on the 10-year are trading at 3.23% today.

This is not what the Federal Reserve had in mind when the central bank announced the plan to purchase $600 billion in Treasury bonds — a move that was hoped would lower rates and stimulate the U.S. economy.

Of course, there are many critics of the Fed who say the second round of quantitative easing is wrong and even harmful. "The failure of QE2 doesn’t worry me, it’s the success that worries me," says Vitaliy Katsenelson of Investment Management Associates.

"I think it’s criminal," he tells Aaron in the accompanying clip. "They’re forcing people that should not be taking risk to take risk."  The fear is the Fed is repeating its past mistakes — helping to build an asset bubble that will eventually burst with grave consequences.

More here: qe2 is not only a mistake "it’s criminal" says vitaliy katsenelson: Tech Ticker, Yahoo! Finance.


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IS THE ECB ABOUT TO GO NUCLEAR?

IS THE ECB ABOUT TO GO NUCLEAR?

Bikini Bomb

Courtesy of The Pragmatic Capitalist 

The ECB is in a most unenviable position.  As the EMU begins to falter they are confronted with few tools with which to fight this battle.  The market called their bluff yesterday with the Greek bailout and is clearly looking past Greece at Portugal and Spain while daring the ECB to make a move on either country.  The bond “vigilantes” are betting on the fact that the ECB has overplayed their hand with the Greek bailout.  At this point, it looks like the vigilantes are correct.  The ECB put a gun on the table and it turns out to have been nothing more than a water pistol.  Unfortunately for the vigilantes the ECB is not out of tricks.  They have a Hank Paulson like bazooka in their option to buy bonds on the secondary market.  But can they use it?   RBS analysts believe they should not hesitate in acting:

“The ECB should not wait for a renewed deterioration of the periphery before acting. It should regain its leadership in tackling the crisis following a complete communication and coordination failure amongst euro area fiscal authorities around the Greek crisis. Should contagion reappear, there will probably not be enough time to go through a similar backstop facility to that of Greece for the next country. There simply will not be enough time. Better breaking the rule-book than breaking up the euro area!”

Unfortunately, the decision is a bit more complex than the Fed’s decision to buy assets directly from the U.S.banks – what many refer to as “quantitative easing”.  As we’ve previously explained, the Euro is flawed primarily because it is one currency housed under several economies with multiple governments.  They are not truly unified because their economic strategies differ which make their inherent monetary needs different.  Using the same currency for economies as different as Germany and Greece is truly forcing a square peg in a round hole.

Where are the potential roadblocks to QE?   First of all, the program would have to be massive.  Credit Suisse estimates that the cost to bailout Spain, Portgual and Greece could be as high as $600B.  The program would almost certainly have to be as large in order to quell any and all market fears.  But the bigger roadblock is the Maastricht treaty.  Although the ECB could technically…
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IMPLICATIONS OF THE DISCOUNT RATE HIKE

IMPLICATIONS OF THE DISCOUNT RATE HIKE

Courtesy of The Pragmatic Capitalist  

Bloomberg’s Scott Lanman reports on the Federal Reserve Board’s decision to raise the discount rate to banks for direct loans by a quarter point to 0.75 percent. The Fed said the move will encourage financial institutions to rely more on money markets rather than the central bank for short-term liquidity needs.

Source: Bloomberg  


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Duck Tales inflation lesson

Duck Tales inflation lesson

Courtesy of Tim Iacono at The Daily Bail

Even though this is a cartoon, it provides a pretty good explanation of what goes on in a pure fiat money system where trust is placed in the central bank and the government to not abuse the power that they and only they have to create money.
 

Spotted over at The Daily Bail where there seems to be an inexhaustible supply of interesting things to watch on YouTube.

 


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Japan’s New Kamikaze Central Banker and the Nikkei’s Awakening

Japan’s New Kamikaze Central Banker and the Nikkei’s Awakening

Courtesy of Joshua M Brown, The Reformed Broker

"There are a lot of voices in the business world saying that the dollar around Y95 is appropriate in terms of trade…in cooperation with the Bank of Japan, I will make efforts to…bring the exchange rate to appropriate levels."

- New Japanese Finance Minister, January 7th 2010

Ignore Japan’s new central banker at your own risk, because he’s on a mission to blow up the Yen.

This is a developing story and I am hardly an expert on Japanese stocks, but I have to believe that Japanese bankers have taken notice of the weak dollar-led recovery in US asset prices and may want to make moves of their own.

By now, most market players are keenly aware of the dollar’s current (mostly inverse) relationship to stock prices.  They should also consider that the Yen makes up about 13.5% of the US Dollar Index (USDX), nowhere near the weighting of the Euro cross (58%) but more significant than any of the other currencies.

Below is the Nikkei 225 index over the last 40 years:

Nikkei

The Nikkei is currently selling at a 75% discount to its 1989 high (38,000) and the country is desperate to avoid another dip as well as to stop the deflationary cycle and put an end to its two Lost Decades.  The strategy, according to new Finance Minister (and deputy PM) Naoto Kan, is an orchestrated debasing of the Yen.  This will help inflate assets and, more importantly, get exports going via more competitive pricing.

Kan stepped in to the role yesterday when his predecessor stepped away for health reasons; he is the sixth Japanese finance minister since August 2008.

Unlike our disingenuous Treasury officials, who pretend to stand for a strong dollar, Kan has spent his first day on the job publicly stating he’d like a weaker Yen.

Japanese stocks just took out a 15 month high on Kan’s opening remarks as Japanese analysts expressed their bullishness:

"Upward momentum for Japanese stocks is becoming apparent and that will likely continue, due to a recovery in the global economy, the weaker yen and receding worries about equity financing by banks," said Hiroichi Nishi, general manager of equity marketing at Nikko Cordial Securities.

The Nikkei is currently trading at…
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Economists Opposing Fed Audit Have Undisclosed Fed Ties

Ryan Grim is the senior congressional correspondent for the Huffington Post, former staff reporter with Politico.com and Washington City Paper, and author of the book, "This Is Your Country on Drugs." Ryan won the 2007 Alt-Weekly Award for best long-form news-story. – Ilene

Economists Opposing Fed Audit Have Undisclosed Fed Ties

Courtesy of Ryan Grim

Article appears originally in the Huffington Post

As the debate over an audit of the Federal Reserve intensifies in the House, one camp is trotting out eight academics that it calls a "political cross section of prominent economists."

A review of their backgrounds shows they are anything but.

In a letter to the House Financial Services Committee earlier this month, all eight wrote that they support the type of amendment now being introduced by Rep. Mel Watt (D-N.C.). Watt’s approach purports to increase Fed transparency while it actually would tighten restrictions on any audits that could go forward.

The letter was sent around Wednesday by Watt’s staff to members of the committee in advance of a vote scheduled for Thursday.

Watt’s measure is in competition with an amendment cosponsored by Reps. Ron Paul (R-Texas) and Alan Grayson (D-Fla.), which would repeal the restrictions that Watt leaves in place.

But far from a broad cross-section, the "prominent economists" lobbying on behalf of the Watt bill are in fact deeply involved with the Federal Reserve. Seven of the eight are either currently on the Fed’s payroll or have been in the past.

The Fed connections are not outlined in the letter sent around to committee members on Wednesday, but are publicly discernible through a review of their resumes, which are all posted online.

In September, Huffington Post reported that the Federal Reserve has accomplished a soft form of effective control over the field of monetary economics simply by employing — and being the means for career advance — for an overwhelming proportion of the discipline.

Now that the Fed is locked in a legislative battle on the Hill, it can call on those economists to give their "unvarnished" opinions to lawmakers.

The connections that the seven economists lobbying Congress have to the Fed are not incidental and four of them maintain current positions.

Let’s run the traps:

Frederic Mishkin is a former board member, having served from 2006-2008. His career at the Fed…
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Preliminary Q3 2009 Bank Stress Test Results

Preliminary Q3 2009 Bank Stress Test Results

Courtesy of Damien Hoffman of Wall St. Cheat Sheet

A female doctor performing a stress test on a man

This is a guest post by the Institutional Risk Analyst.

“It is now almost twenty years since J.P. Morgan and Company, its associates and its satellites attempted to induce Congress to create a central bank of issue instead of the Federal Reserve System. They were determined that control of the national purse should remain in New York. The theory underlying the proposed system that the several sections of the country should control their own finances was preposterous. To them it was anathema. Ten short years later the same group, represented by the same agent who had led their lost cause in Washington, took charge of the Federal Reserve System. For practical purposes the system was transformed into a central bank, and was manipulated to the very ends that its authors had sought to guard against.”

The Mirrors of Wall Street, Clinton Gilbert, 1933

We want to update our readers on the preliminary Stress Index results for the US commercial banking industry in Q3 2009. Last week, when The IRA Bank Monitor had gathered some 5,000 bank CALL reports from the FDIC’s central data repository, the Stress Index stood at just 6.45 vs. the preliminary stress level of 6.7 last quarter. That preliminary result for Q2 2009 was when we had some 7,000 bank CALL reports gathered, just before the FDIC press conference.

stress_test

Since we initiated our automated tool for gathering FDIC CALL reports and grinding preliminary stress ratings, we’ve cut three weeks off of the wait time to access our Stress Ratings. But today, with 6,936 FDIC bank CALL reports in the house, we have a preliminary Stress Index score of 7.46 for Q3 2009, significantly higher than the Q2 2009 preliminary results, like 10% higher. The seemingly favorable Stress Index number last week for Q3, when we had just 5,000 banks in hand, was a head fake.

In fact, the far worse result for our Stress Index survey vs. Q2 suggests that levels of stress in FDIC insured banks are continuing to build, from multiple factors, even as the subsidies that make the large banks look less risky are being withdrawn. In Q2 2009, when we added the largest banks and all thrifts to the ratings survey,…
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The Economic Recovery is an Illusion

The Economic Recovery is an Illusion

The Bank for International Settlements (BIS) Warns of Future Crises


 

Courtesy of Global Research, by Andrew Gavin Marshall

War is Peace, Freedom is Slavery, Ignorance is Strength, and Debt is Recovery

In light of the ever-present and unyieldingly persistent exclamations of ‘an end’ to the recession, a ‘solution’ to the crisis, and a ‘recovery’ of the economy; we must remember that we are being told this by the very same people and institutions which told us, in years past, that there was ‘nothing to worry about,’ that ‘the fundamentals are fine,’ and that there was ‘no danger’ of an economic crisis.
 
Why do we continue to believe the same people that have, in both statements and choices, been nothing but wrong? Who should we believe and turn to for more accurate information and analysis? Perhaps a useful source would be those at the epicenter of the crisis, in the heart of the shadowy world of central banking, at the global banking regulator, and the “most prestigious financial institution in the world,” which accurately predicted the crisis thus far: The Bank for International Settlements (BIS). This would be a good place to start.
 
The economic crisis is anything but over, the “solutions” have been akin to putting a band-aid on an amputated arm. The Bank for International Settlements (BIS), the central bank to the world’s central banks, has warned and continues to warn against such misplaced hopes.
 
What is the Bank for International Settlements (BIS)?
 
The BIS emerged from the Young Committee set up in 1929, which was created to handle the settlements of German reparations payments outlined in the Versailles Treaty of 1919. The Committee was headed by Owen D. Young, President and CEO of General Electric, co-author of the 1924 Dawes Plan, member of the Board of Trustees of the Rockefeller Foundation and was Deputy Chairman of the Federal Reserve Bank of New York. As the main American delegate to the conference on German reparations, he was also accompanied by J.P. Morgan, Jr.[1] What emerged was the Young Plan for German reparations payments.
 
The Plan went into effect in 1930, following the stock market crash. Part of the Plan entailed the creation of an international settlement organization, which was formed in 1930, and


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Zero Hedge

United States Of Newspeak - Obama Spins Executive Orders As "Presidential Memoranda" To Avoid Scrutiny

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by Mike Krieger via Liberty Blitzkrieg blog,

If there’s one thing we have learned about Barack Obama, it’s that he is a master of deception and absolutely loves to lie to the public. He seems to enjoy conning the plebs to such a degree, I think he actually receives blasts of dopamine every time he does it. The bigger the lie, the better the rush.

The latest example relates to his issuance of executive orders, or lack thereof, something that Obama Inc...



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Phil's Favorites

Competitive Theories: "Deflation Warning" vs. "Inflation is Nearly Everywhere"

Courtesy of Mish.

Theory #1: Break-Even Rates Provide "Deflation Warning"

Bloomberg is sounding a Deflation Warning as 2-Year Break-Even Rates Go Negative.

Break-even rates are the difference between treasuries and the same-duration Treasury Inflation-Protected Securities (TIPS). The break-even rate turned negative yesterday for the first time since 2009.

In theory, break-even rates reflect investors’ expectations for inflation over the life of the securities.

When break-even rates are negative, it's an indication investors expect price deflation for the duration, in this case for two years.

From Bloomberg ...
The drop in the break-even rate followed a Labor Depart...



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All About Trends

Mid-Day Update

Reminder: David is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Chart School

Relief Bounce in Markets

Courtesy of Declan.

Those who took advantage of markets at Fib levels were rewarded.  However, this looked more a 'dead cat' style bounce than a genuine bottom forming low.  This can of course change, and one thing I will want to see is narrow action near today's high. Volume was a little light, but with Christmas fast approaching I would expect this trend to continue.

The S&P inched above 2,009, but I would like to see any subsequent weakness hold the 38.2% Fib level at 1,989.


The Nasdaq offered itself more as a support bounce, with a picture perfect play off its 38.2% Fib level. Unlike the S&P, volume did climb in confirmed accumulation. The next upside c...

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Digital Currencies

Chart o' the Day: Don't "Invest" in Stupid Sh*t

Joshua commented on the QZ article I posted a couple days ago and perfectly summarized the take-home message into an Investing Lesson. 

Chart o’ the Day: Don’t “Invest” in Stupid Sh*t

Courtesy of 

The chart above comes from Matt Phillips at Quartz and is a good reminder of why you shouldn’t invest in s...



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OpTrader

Swing trading portfolio - week of December 15th, 2014

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Sabrient

Sector Detector: Energy sector rains on bulls' parade, but skies may clear soon

Reminder: Sabrient is available to chat with Members, comments are found below each post.

Courtesy of Scott Martindale of Sabrient Systems and Gradient Analytics

Stocks have needed a reason to take a breather and pull back in this long-standing ultra-bullish climate, with strong economic data and seasonality providing impressive tailwinds -- and plummeting oil prices certainly have given it to them. But this minor pullback was fully expected and indeed desirable for market health. The future remains bright for the U.S. economy and corporate profits despite the collapse in oil, and now the overbought technical condition has been relieved. While most sectors are gathering fundamental support and our sector rotation model remains bullish, the Energy sector looks fundamentally weak and continues to ran...



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Stock World Weekly

Stock World Weekly

Newsletter writers are available to chat with Members regarding topics presented in SWW, comments are found below each post.

Here's this week's Stock World Weekly.

Click here and sign in with your user name and password. 

 

...

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Option Review

SPX Call Spread Eyes Fresh Record Highs By Year End

Stocks got off to a rocky start on the first trading day in December, with the S&P 500 Index slipping just below 2050 on Monday. Based on one large bullish SPX options trade executed on Wednesday, however, such price action is not likely to break the trend of strong gains observed in the benchmark index since mid-October. It looks like one options market participant purchased 25,000 of the 31Dec’14 2105/2115 call spreads at a net premium of $2.70 each. The trade cost $6.75mm to put on, and represents the maximum potential loss on the position should the 2105 calls expire worthless at the end of December. The call spread could reap profits of as much as $7.30 per spread, or $18.25mm, in the event that the SPX ends the year above 2115. The index would need to rally 2.0% over the current level...



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Market Shadows

Official Moves in the Market Shadows' Virtual Portfolio

By Ilene 

I officially bought 250 shares of EZCH at $18.76 and sold 300 shares of IGT at $17.09 in Market Shadows' Virtual Portfolio yesterday (Fri. 11-21).

Click here for Thursday's post where I was thinking about buying EZCH. After further reading, I decided to add it to the virtual portfolio and to sell IGT and several other stocks, which we'll be saying goodbye to next week.

Notes

1. th...



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Pharmboy

Biotechs & Bubbles

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

Well PSW Subscribers....I am still here, barely.  From my last post a few months ago to now, nothing has changed much, but there are a few bargins out there that as investors, should be put on the watch list (again) and if so desired....buy a small amount.

First, the media is on a tear against biotechs/pharma, ripping companies for their drug prices.  Gilead's HepC drug, Sovaldi, is priced at $84K for the 12-week treatment.  Pundits were screaming bloody murder that it was a total rip off, but when one investigates the other drugs out there, and the consequences of not taking Sovaldi vs. another drug combinations, then things become clearer.  For instance, Olysio (JNJ) is about $66,000 for a 12-week treatment, but is approved for fewer types of patients AND...



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Help One Of Our Own PSW Members

"Hello PSW Members –

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 jennifersurovy@yahoo.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.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

Thank you for you time!




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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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