Posts Tagged ‘deflation risk’

Enough with This Recovery Talk

Enough with This Recovery Talk

Courtesy of Rom Badilla, CFA – Bondsquawk.com

As Bondsquawkers know, the bigger concern right now should be deflation risk. We preach this because the issue should be paramount on people’s worry list and should be labeled public enemy number one. FT.com’s Money Supply raises the idea of deflation in this recent blog post but suggests that it is not an issue for now (1). The post states:

With the core PCE and the core CPI running much lower than the Fed’s target range, and lower than expected earlier in the year, some within the Fed are clearly getting nervous that a deflationary spiral could be on the horizon if the economy hits another rough patch, which isn’t out of the question given events in the Euro zone.

But most within the US central bank – even excluding the inflation hawks – are probably still reasonably comfortable that such a scenario will not unfold.

The first reason is that in all likelihood as the economy recovers and the output gap closes, inflation will start to rise at a faster rate.

Boston train wreck

The economy has yet to prove that this “recovery” is sustainable. Sure, GDP growth for the past two quarters has been encouraging. The mainstream media, analysts, and politicians were showing a sigh of relief earlier and patting themselves on the back as the financial crash train wreck is an image in the rearview mirror. However, most failed to distinguish the difference between economic growth fueled by increases in innovation and productivity and economic growth fueled by increased spending driven by easy access to money. One is sustainable while the other can run only until your pockets run dry. The fact remains that much of the improvement is derived from stimulus programs which at this point in the game is about to run out.

For arguments sake, let’s assume that GDP remains positive and in line with expectations which is running in the mid to low 3 percent range for both 2010 and 2011. Unemployment recently increased to 9.9 percent in April. If we refer back to Okun’s law (2) (named after economist, Arthur Okun in the early 1960’s), which is the empirical economic relationship between the change in the unemployment rate and the change in output or GDP, we can determine the level of output growth necessary to…
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St. Louis Fed: US Deflation No Longer A Risk

St. Louis Fed: US Deflation No Longer A Risk

Courtesy of Mish

Crowds Gather For New York's Annual Thanksgiving Day Parade

If you think the Fed is a contrarian indicator, your hair may be standing straight up after you read this: James Bullard a voting member of the Fed says US deflation no longer seen as a risk.

The US has escaped the danger of a Japanese-style deflationary trap, according to James Bullard, a voting member of the Federal Reserve’s key policy-setting committee. Mr Bullard, president of the Federal Reserve Bank of St Louis, told the Financial Times in an interview that his preoccupation throughout 2009 had been deflation, but the risk had “passed”.

Last week’s Fed meeting produced a dissenting vote for the first time in a year when Thomas Hoenig, president of the Kansas City Fed and a rate hawk, argued that financial conditions no longer warranted a policy of holding rates at “exceptionally low levels . . . for an extended period”.

Mr Bullard, who is considered a centrist member of the FOMC, said he was happy to continue with the current guidance, but he did have some sympathy for Mr Hoenig’s argument that “if you come off zero and you move up a little bit, it’s still a very easy policy. You’ve still got a very large balance sheet and you’re still at very low interest rates.”

The broader post-crisis economy was “on track” with its recovery, he said. “It’s not a real strong recovery but that’s what we had predicted anyway. But it will be above-average growth for the first half of 2010 and we’ll probably see some positive jobs growth in the first part of 2010 here.”

When the Fed does come to raise rates it may have to switch from its traditional benchmark of targeting the federal funds rate to targeting a repurchase rate because of the upheaval in the two markets over the last two years.

Be prepared for a massive slide and a resumed deflationary credit crunch. If you need a reason, look no further than Massive Layoffs Coming in NYC, Nevada, California, Colorado, Arizona, Everywhere.

Mike "Mish" Shedlock

 


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Zero Hedge

Russian Gold Reserves Surge Above 1900 Tons - 5th Largest In The World

Courtesy of ZeroHedge. View original post here.

Authored by Louis Cammarosano via smaulgld.com,

Russian Gold Reserves

After adding 6,700,000 ounces (208 tonnes) of gold to her reserves in 2015, the Russian Central Bank added 6,400,000 ounces (199 tonnes) in 2016 and ...



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Digital Currencies

How the US Government Could Effectively Use Crypto

The US government could start, or officially endorse an existing crytpo coin. What they would do is build a fee into the software protocol that went to a single address that they control. This is effectively a tax. The fee could be a transaction fee, a percentage of the next block award, or a combination of both. How this works is every single transaction that occurs everywhere wihtin the system, the fee scalped goes directly to this single address that is owned by the IRS, in this case, the "New-IRS." Forget postcards. We're down to a single dude in one office chair in front of one computer. Imagine that being the IRS, because that's where this is going. The consequences of this mechanism are dramatic. First off the IRS is now one guy. Granted, this guy controls the private key for the most valuable thing in the world. This key would be the single most important key right up there with the nuclear launch code, but the system would most definitely still work. More strikingly, the US...

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Phil's Favorites

New Animal Spirits: What it takes to be wealthy

 

New Animal Spirits: What it takes to be wealthy

Courtesy of 

Michael and Ben’s new episode of Animal Spirits is out today, and it’s awesome as usual. If this isn’t part of your weekly routine yet, I don’t even know what to tell you at this point. No one is covering more interesting topics and blowing up like this podcast is.

This week’s topics:

  • Are Jack Bogle and Vanguard actually underrated?
  • Why closet indexing will never die.
  • Why money is flowing out of growth funds even though they’ve outperformed. ...


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Insider Scoop

Benzinga's Daily Biotech Pulse: Insmed Presents Data, Pfenex Pulls Back On Offering, Oncolytics Listing

Courtesy of Benzinga.

Related IBB Benzinga's Daily Biotech Pulse: Melinta, Ardelyx Pull Back On Offerings, Insys Awaits FDA Verdict ...

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Chart School

Wide Market Cycle Review

Courtesy of Read the Ticker.

Lets review some big market cycles, to see where cycle pressure is building or peaking.

Cycles are like long term trend lines and are great for the long term view, of course price action leads (Wyckoff Logic) before cycles.

Lets go ...

US 10 yr: Trending higher to 4% ... Ouch. Inflation moving from Wall Street to Main Street.

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The EURO looks to bottom (USD topping).

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SSEC looks forward to another pump up to save the SP...

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Biotech

Could this be the year for a Canadian Breakthrough Prize in Life Sciences?

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

 

Could this be the year for a Canadian Breakthrough Prize in Life Sciences?

Courtesy of John Bergeron, McGill University

In 2013, Kyoto University’s Shinya Yamanaka was awarded one of the first Breakthrough Prizes in Life Sciences for his discovery of “induced” stem cells that enabled researchers to convert adult cells back into stem cells.

The Breakthrough Prize is not to be sneezed at. Founded in 2013, the prize “honours transformative advances toward understanding living systems and extending human life.” It’s also the most financially attractive aw...



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ValueWalk

Buffett At His Best

By csinvesting. Originally published at ValueWalk.

Bear with me as I share a bit of my history that helped me create SkyVu and the Battle Bears games. The University of Nebraska gave me my first job after college. I mostly pushed TV carts around, edited videos for professors or the occasional speaker event. One day, Warren Buffet came to campus to speak to the College of Business. I didn’t think much of this speech at the time but I saved it for some reason. 15 years later, as a founder of my own company, I watch and listen to this particular speech every year to remind myself of the fundamentals and values Mr. Buffett looks for. He’s addressing business students at his alma mater, so I think his style here is a bit more ‘close to home’ than in his other speeches. Hopefully many of you find great value in this video like I have. Sorry for the VHS...



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Kimble Charting Solutions

The Stock Bull Market Stops Here!

 

The Stock Bull Market Stops Here!

Courtesy of Kimble Charting

 

The definition of a bull market or bull trends widely vary. One of the more common criteria for bull markets is determined by the asset being above or below its 200 day moving average.

In my humble opinion, each index above remains in a bull trend, as triple support (200-day moving averages, 2-year rising support lines, and February lows) are still in play ...



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Members' Corner

Cambridge Analytica and the 2016 Election: What you need to know (updated)

 

"If you want to fundamentally reshape society, you first have to break it." ~ Christopher Wylie

[Interview: Cambridge Analytica whistleblower: 'We spent $1m harvesting millions of Facebook profiles' – video]

"You’ve probably heard by now that Cambridge Analytica, which is backed by the borderline-psychotic Mercer family and was formerly chaired by Steve Bannon, had a decisive role in manipulating voters on a one-by-one basis – using their own personal data to push them toward voting ...



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Mapping The Market

The tricks propagandists use to beat science

Via Jean-Luc

How propagandist beat science – they did it for the tobacco industry and now it's in favor of the energy companies:

The tricks propagandists use to beat science

The original tobacco strategy involved several lines of attack. One of these was to fund research that supported the industry and then publish only the results that fit the required narrative. “For instance, in 1954 the TIRC distributed a pamphlet entitled ‘A Scientific Perspective on the Cigarette Controversy’ to nearly 200,000 doctors, journalists, and policy-makers, in which they emphasized favorable research and questioned results supporting the contrary view,” say Weatherall and co, who call this approach biased production.

A second approach promoted independent research that happened to support ...



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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

NewsWare: Watch Today's Webinar!

 

We have a great guest at today's webinar!

Bill Olsen from NewsWare will be giving us a fun and lively demonstration of the advantages that real-time news provides. NewsWare is a market intelligence tool for news. In today's data driven markets, it is truly beneficial to have a tool that delivers access to the professional sources where you can obtain the facts in real time.

Join our webinar, free, it's open to all. 

Just click here at 1 pm est and join in!

[For more information on NewsWare, click here. For a list of prices: NewsWar...



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All About Trends

Mid-Day Update

Reminder: Harlan 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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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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