Posts Tagged ‘Ben Bernanke’

Edward Harrison, Dylan Ratigan & Bill Fleckenstein: Thoughts on FOOD

Courtesy of EDWARD HARRISON, Credit Writedowns

Bill Fleckenstein was back talking to Dylan Ratigan about the source of rising oil prices. (See the last Fleckenstein video here). Clearly, supply constraints and increased demand in emerging markets play the central role in creating a supply demand imbalance for a commodity where demand is price inelastic. I am not just talking about natural disasters and riots, I am also talking about peak oil, of course. That means prices for oil soar until we hit a recession and the resulting demand destruction.

However, at the margin there are other factors at play, one of which is pro-inflationary central bank policy. I have mentioned this a couple of times in the past. For example, regarding food price inflation, I wrote in November:

[Morgan Stanley Chief Economist Richard] Berner sees four forces at play, pushing up food prices: strong global demand, weather, energy costs, low food stock inventories. You can read the full note at the link below.

My take is a bit different. The rise in food and energy prices should be taken into consideration by government officials conducting pro-inflationary policies. What should be of concern regarding commodity price inflation is how it represents a regressive tax on lower income workers and consumers in emerging markets and developing countries. Lower income consumers spend a much greater percentage of income on food and energy. So when commodity prices increase, it has a disproportionate effect on them. One reason we saw food riots in emerging markets in 2008 has much to do with this.

On Food Price Inflation

Read Edward’s full article here >

Bill Fleckenstein gives his take in the video below.

Visit msnbc.com for breaking news, world news, and news about the economy


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GRAPES OF WRATH – 2011

Excellent article comparing current situation with lead up to the Great Depression.  Well worth reading. – Ilene 

Courtesy of Jim Quinn at The Burning Platform

“And the great owners, who must lose their land in an upheaval, the great owners with access to history, with eyes to read history and to know the great fact: when property accumulates in too few hands it is taken away. And that companion fact: when a majority of the people are hungry and cold they will take by force what they need. And the little screaming fact that sounds through all history: repression works only to strengthen and knit the repressed.” – John Steinbeck – Grapes of Wrath

  

John Steinbeck wrote his masterpiece The Grapes of Wrath at the age of 37 in 1939, at the tail end of the Great Depression. Steinbeck won the Nobel Prize and Pulitzer Prize for literature. John Ford then made a classic film adaption in 1941, starring Henry Fonda.


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Ron Paul slams Fed’s bond-buying program; Political Pressure on Fed Mounts

Courtesy of Mish

MarketWatch reports Paul slams Fed’s bond-buying program

Outspoken Federal Reserve critic Rep. Ron Paul, R-Texas, slammed the central bank’s latest $600 billion bond-buying program on Wednesday, saying it and near-zero interest rates haven’t led to job creation in the United States.

“Over $4 trillion in bailout facilities and outright debt monetization, combined with interest rates near zero for over two years, have not and will not contribute to increased employment,” Paul said at a hearing of a House Financial Services subcommittee he heads.

“Debt monetization” is a reference by Paul and other Fed critics to the Fed’s latest bond-buying program — a characterization rejected by Fed Chairman Ben Bernanke.

In essence, Paul is charging that the central bank is enabling profligate spending by the government. The term “debt monetization” is a buzzword for how some poorer countries conducted policies in the post-World War II era.

Political Pressure on Fed Mounts

WSJ’s Sudeep Reddy reports on concerns the Federal Reserve could be facing political pressure from Congress, as Rep. Ron Paul holds the first hearing of a new Fed oversight committee. Separately, Fed Chairman Bernanke updates Congress on the economy.

If the above YouTube does not play here is a link: Rep. Ron Paul Ignites Fed Worry

Mike "Mish" Shedlock


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Stock World Weekly

Here’s this week’s Stock World Weekly. Enjoy!  Comments welcome.  

Screen shot 2011-01-30 at 1.34.41 AM


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Surprise, It Was Greenspan and Bernanke’s Fault

Courtesy of Jr. Deputy Accountant 

 

 What, Bernanke worry?

The Financial Crisis Inquiry Commission is about to tell us, in 576 pages, what many of us already know:

The majority report finds fault with two Fed chairmen: Alan Greenspan, who led the central bank as the housing bubble expanded, and his successor, Ben S. Bernanke, who did not foresee the crisis but played a crucial role in the response. It criticizes Mr. Greenspan for advocating deregulation and cites a “pivotal failure to stem the flow of toxic mortgages” under his leadership as a “prime example” of negligence.

Anyone else running out tomorrow to get a copy?

Like the 9/11 Commission, we could have saved a whole lot of money and time by simply verifying alternative media claims instead of starting from scratch as if no one knew anything all along.

Oh well. 


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Ambac Accues JP Morgan of Fraud in Ongoing Mortgage Suit

Courtesy of Yves Smith of Naked Capitalism 

One of the big reasons there have been so few fraud charges leveled against what looks like clear and widespread banking industry is that under the law, “fraud” is pretty difficult to prove. Needless to say, that puts commentators in a bit of a bind, because they can be depicted as being hysterical if they use the “f” words, since behavior that is often fraud by any common sense standard may be hard or impossible to prove in court.

The hurdle in litigation and prosecution is proving intent. Basically, the party who is being accused has to not only have done something bad, he has to have been demonstrably aware that he was up to no good. Thus po-faced claims of “I had no idea this was improper, my accountants/lawyers knew about it and didn’t say anything” or “everyone in the industry was doing it, so I had not reason to think this was irregular” is a “get out of jail free” card. Similarly, even if lower level employees knew that their company was up to stuff that stank, if the decision-makers can plausibly claim ignorance, again they can probably get away with it.

So it is gratifying in a perverse way to see a case in which the perp not only looks to have engaged in chicanery, but the facts make it pretty hard for him to say he didn’t know he was pulling a fast one. And even more fun, it involves JP Morgan, which has somehow managed to create the impression that it was better than all the other TARP banks, when on the mortgage front, there is plenty evidence to suggest that all the major banks have been up to their eyeballs in bad practices.

The case involves the bond insurer Ambac and the mortgage company EMC, which was the Bear Stearns conduit for buying mortgages to securitize and now thus part of JP Morgan. In 2010, reports surfaced that EMC had been falsifying mortgage data to keep its pipeline moving as fast as Bear wanted and contain costs.

But a suit by bond insurer Ambac alleges far more serious misbehavior. The discovery process in outstanding putback litigation has unearthed a scheme to defraud investors and Ambac and led the bond insurer to add fraud charges to its complaint. The Atlantic, which broke the 2010 story, gives a
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Stock World Weekly

Here’s the newest: Stock World Weekly Newsletter. Comments welcome! – Ilene 

Jobs Cartoon

Archives here. 


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Food Inflation Comes To America: General Mills, Kraft And Kellogg Hike Prices On Selected Food Products

Courtesy of Tyler Durden at Zero Hedge

After denying for months that surging food prices will eventually come to the consumer, hoping that instead food companies could absorb the margin drop, sellside research is finally capitulating to the reality of what is really happening in the retail store. In a note discussing General Mills, Goldman Sachs says the company raised prices on snack bars some 7% last week. Goldman further clarifies that "this reportedly followed a comparable increase taken by K on its snack bars in mid-December. In addition, KFT has reportedly announced a 6% increase on select Planters branded nut products. We expect more price increases to be announced by the food  companies in the coming weeks." Maybe, but the Chairman sure doesn’t. And the Chairman is always 100% correct.

Other observations from Goldman on what are now seen as inevitable price increases across numerous food verticals.

These pricing actions support our Food sector view that price momentum will continue to build as 2011 progresses, driven by easing promotional spending and list price increases (see our 1/5 report, Time to embrace inflation; Upgrade Food to Neutral, GIS to buy). This should drive top-line acceleration and margin stabilization over the course of 2011. Evidence of the progression is already apparent in retail scanner data (see our 1/11 report, Progression to a ‘less bad’ promo environment continues). Scanner data is likely to continue to show a measured pace of price growth. That said, we acknowledge that the growth is likely to build gradually as the pass-through of list price hikes to retail shelves lags and the reduction of promotional spend takes time to execute.

As a reminder, in December, the food component of the CPI increased by 0.1%, the lowest amount since July…

And just to complete the circus, Goldman now views price pass throughs as a good thing. See: it resolves the margin issue. Uh, yeah. But someone should explain to Goldman that when calculating revenue, one multiples Price (P) by Volume (V). And in a stagflationary economy, and increase in P results in a more than commensurate decline in V, offsetting all margin boosts.

GIS (Buy) remains our top Food pick and snack bar price hikes reinforce our conviction. To our knowledge, Mills has now executed price increases in categories that account for roughly half of its US retail portfolio (and we think there may


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Settling Prosecutions For Pennies on the Dollar Is a Type of Bailout

Courtesy of Washington’s Blog 

The following is an excerpt of my much longer roundup of the many covert ways the government is bailing out the giant banks.

Fraud As a Business Model

If you stop and think for a moment, it is obvious that failing to prosecute fraud is a bailout.

Nobel prize-winning economist George Akerlof demonstrated that if big companies aren’t held responsible for their actions, the government ends up bailing them out. So failure to prosecute directly leads to a bailout.

Moreover, as I noted last month: 

Fraud benefits the wealthy more than the poor, because the big banks and big companies have the inside knowledge and the resources to leverage fraud into profits. Joseph Stiglitz noted in September that giants like Goldman are using their size to manipulate the market. The giants (especially Goldman Sachs) have also used high-frequency program trading (representing up to 70% of all stock trades) and high proportions of other trades as well). This not only distorts the markets, but which also lets the program trading giants take a sneak peak at what the real traders are buying and selling, and then trade on the insider information. See this,thisthisthis and this.

Similarly, JP Morgan Chase, Bank of America, Goldman Sachs, Citigroup, and Morgan Stanley together hold 80% of the country’s derivatives risk, and 96% of the exposure to credit derivatives. They use their dominance to manipulate the market

Fraud disproportionally benefits the big players (and helps them to become big in the first place), increasing inequality and warping the market.

[And] Professor Black says that fraud is a large part of the mechanism through which bubbles are blown.

***

Finally, failure to prosecute


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“The Fed No Longer Even Denies that the Purpose of Its Latest Blast of Bond Purchases … Is To Drive Up Wall Street”

Courtesy of Washington’s Blog

The stated purpose of quantitative easing was to drive down interest rates on U.S. treasury bonds.

But as U.S. News and World Reported noted last month:

By now, you’ve probably heard that the Fed is purchasing $600 billion in treasuries in hopes that it will push interest rates even lower, spur lending, and help jump-start the economy. Two years ago, the Fed set the federal funds rate (the interest rate at which banks lend to each other) to virtually zero, and this second round of quantitative easing--commonly referred to as QE2--is one of the few tools it has left to help boost economic growth. In spite of all this, a funny thing has happened. Treasury yields have actually risen since the Fed’s announcement.

The following charts from Doug Short update this trend:

Click to View

Click to View

Click to View

 
Of course, rather than admit that the Fed is failing at driving down rates, rising rates are now being heralded as a sign of success. As the New York Times reported Monday:

The trouble is [rates] they have risen since it was formally announced in November, leaving many in the markets puzzled about the value of the Fed’s bond-buying program.

***

But the biggest reason for the rise in interest rates was probably that the economy was, at last, growing faster. And that’s good news.

“Rates have risen for the reasons we were hoping for: investors are more optimistic about the recovery,” said Mr. Sack. “It is a good sign.”

Last November, after it started to become apparent that rates were moving in the wrong direction, Bernanke pulled a bait-and-switch, defending quantitative easing on other grounds:


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Kimble Charting Solutions

Gold is Knocking on a Key Breakout Level

Courtesy of Chris Kimble.

For the past 5 years, Gold prices have traded sideways. There were plenty of “trades” to be made, but that type of price action tends to grind out long-term bulls and bears.

You can see this in today’s “monthly” closing chart for Gold (shown below).

Gold bulls caught a break recently when Gold broke out above its multi-year downtrend line at (1) and (2). This spurred a big advance in metals & mining stocks.

Can Gold bugs and bulls keep the momentum going? We should find out shortly.

Gold is currently knocking on a key breakout resistance level (3). A bullish message will be sent to bulls if Gold can breakout above the 2017 m...



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Phil's Favorites

Senator Bernie Sanders Should Be Taken Very Seriously as a Presidential Candidate

Courtesy of Pam Martens.

Presidential Candidate, Senator Bernie Sanders, Delivers a Major Policy Speech on Reforming Wall Street on January 5, 2016

On Tuesday, Senator Bernie Sanders of Vermont declared his candidacy to seek the Democratic nomination for President of the United States.

Wall Street On Parade endorsed Senator Sanders over Hillary Clinton in 2016 because Clinton was effectively running as Wall Street’s candidate and as Obama&#...



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Zero Hedge

Trump: "I Want 5G, Or Even 6G, Tech In The US As Soon As Possible"

Courtesy of ZeroHedge. View original post here.

President Trump has finally hit upon the real issue at the center of the US government's battle with Huawei: It's all about the technology. To wit, one reason why US allies and the UK and Germany have been so hesitant to cut ties with the Chinese telecoms giant is that, as its founder pointed out in a recent interview with Western media, there is no real alternative. US telecoms like Verizon still lag their Chinese rivals when it comes to 5G.

So, in a series of tweets sent Thursday morning, President Trump exclaimed that "I want 5G, and even 6G technology in the United States as soon as ...



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ValueWalk

Liquid Technology Clinches Bid To Dispose Theranos IT Assets

By Jacob Wolinsky. Originally published at ValueWalk.

Liquid Technology Provides Theranos With Post-Shutdown Equipment Processing and Recycling

Theranos [Public domain], via Wikimedia CommonsThe Company Spearheaded the Biotech Start-Up’s Task of Decommissioning and Reselling of Thousands of Unneeded IT Assets

Q4 hedge fund letters, conference, scoops etc

...

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Insider Scoop

Seaport Global Initiates Bullish Coverage On A Dozen Cannabis Stocks

Courtesy of Benzinga.

Seaport Global turned bullish on cannabis stocks Thursday, initiating coverage on a dozen names. However, some of the most popular U.S. cannabis stocks are not among the firm’s top picks.

The Analyst

Seaport Global analyst Brett Hundley initiated coverage of the following cannabis stocks with Buy ratings:

  • Aphria Inc (NYSE: APHA), $18 target.
  • Hexo Corp...


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Chart School

RTT browsing latest..

Courtesy of Read the Ticker.

Please review a collection of WWW browsing results. The information here is delayed by a few months, members get the most recent content.



Date Found: Thursday, 02 August 2018, 07:48:20 PM

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Comment: $600 BN interest payments for US gov, print baby print



Date Found: Sunday, 05 August 2018, 09:22:26 PM

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Comment: Hire FED interest rates always brings double trouble



Date Found: Monday, 06 August ...

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Digital Currencies

Cryptos Are Surging: Bitcoin, Ethereum Hit One-Month Highs As Institutions Dip Toes

Courtesy of Zero Hedge

Cryptocurrencies are surging while the US equity markets take the day off. Ethereum is up over 18% from Friday's 'close' and the rest of the crypto space is a sea of green. While no immediate catalyst (headline or technical level) is clear, increasing chatter over institutional investors dipping their toes in the space have prompted an extension of the positive trend.

A sea of green...

Source: Coin360

Ethereum is leading the charge follow...



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Biotech

Cancer: new DNA sequencing technique analyses tumours cell by cell to fight disease

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

 

Cancer: new DNA sequencing technique analyses tumours cell by cell to fight disease

Illustration of acute lymphoblastic leukaemia, showing lymphoblasts in blood. Kateryna Kon/Shutterstock

Courtesy of Alba Rodriguez-Meira, University of Oxford and Adam Mead, University of Oxford

...

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Members' Corner

Why Trump Can't Learn

 

Bill Eddy (lawyer, therapist, author) predicted Trump's chaotic presidency based on his high-conflict personality, which was evident years ago. This post, written in 2017, references a prescient article Bill wrote before Trump even became president, 5 Reasons Trump Can’t Learn. ~ Ilene 

Why Trump Can’t Learn

Donald Trump by Gage Skidmore (...



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Mapping The Market

Trump: "I Won't Be Here" When It Blows Up

By Jean-Luc

Maybe we should simply try him for treason right now:

Trump on Coming Debt Crisis: ‘I Won’t Be Here’ When It Blows Up

The president thinks the balancing of the nation’s books is going to, ultimately, be a future president’s problem.

By Asawin Suebsaeng and Lachlan Markay, Daily Beast

The friction came to a head in early 2017 when senior officials offered Trump charts and graphics laying out the numbers and showing a “hockey stick” spike in the nationa...



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OpTrader

Swing trading portfolio - week of September 11th, 2017

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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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

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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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