Posts Tagged ‘Excess Reserves’

Rep. Suzie Bassi: “Illinois in Utter Crisis, Next to Bankruptcy, $13bn Hole in a $28bn Budget”; Ambrose Evans Pritchard Inflicted with FIV

Rep. Suzie Bassi: "Illinois in Utter Crisis, Next to Bankruptcy, $13bn Hole in a $28bn Budget"; Ambrose Evans Pritchard Inflicted with FIV

Courtesy of Mish 

French mime artist Marcel Marceau's items auctioned at Drouot in Paris

Ambrose Evans-Pritchard has the right facts but the wrong cure in Don’t go wobbly on us now, Ben Bernanke, an article detailing the problems in many US states, notably Illinois.

Barack Obama’s home state of Illinois is near the point of fiscal disintegration. "The state is in utter crisis," said Representative Suzie Bassi. "We are next to bankruptcy. We have a $13bn hole in a $28bn budget."

The state has been paying bills with unfunded vouchers since October. A fifth of buses have stopped. Libraries, owed $400m (£263m), are closing one day a week. Schools are owed $725m. Unable to pay teachers, they are preparing mass lay-offs. "It’s a catastrophe", said the Schools Superintedent.

In Alexander County, the sheriff’s patrol cars have been repossessed; three-quarters of his officers are laid off; the local prison has refused to take county inmates until debts are paid.

Florida, Arizona, Michigan, New Jersey, Pennsylvania and New York are all facing crises. California has cut teachers salaries by 5pc, and imposed a 5pc levy on pension fees.

This is not to pick on America. Belt-tightening is the oppressive fact of 2010-2012 for half the world. Hungary, Ukraine, the Baltics and the Balkans are already under the knife. Latvia’s economy may contract by 30pc from peak to trough as it carries out an "internal devaluation", ie wage cuts, to hold its euro peg.

The eurozone’s fiscal squeeze is well advanced in Ireland. Brussels has told Greece to cut by 10pc of GDP in three years, Spain by 8pc, Portugal by 6pc. Britain must slash soon, or face a gilts strike.

The Bank for International Settlements says Britain needs a primary surplus of 5.8pc of GDP for a decade to stabilise debt at pre-crisis levels, given the ageing crunch as well. The figure is 6.4pc for Japan, 4.3pc for the US and France. It warns of "unstable dynamics", posh talk for a debt spiral. "Action is needed now."

The West risks a slow grind into debt-deflation unless central banks offset fiscal tightening with monetary stimulus – QE, of course – to keep demand alive. Yet the Fed and the European Central Bank are letting credit contract.

So why has Bernanke broken ranks with King and…
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Money Markets are the New Suspenders

Money Markets are the New Suspenders

By EB, courtesy of Zero Hedge

The Financial Times recently reported on the Fed’s latest exit strategy to eventually contain the inflation zombie:

 During the crisis, the Fed created roughly $800bn of additional bank reserves to finance asset purchases and loans. This total is likely to rise in the coming months as the central bank completes its asset purchases and the Treasury unwinds financing it provided to the Fed. Fed officials think they could raise interest rates even with this excess supply of reserves by offering to pay banks to deposit their surplus funds with it rather than lend them out. However, they also want to use reverse repos in tandem to soak up some of the excess reserves. Policymakers call this a “belt and braces approach”. [The latter, clearly a nod to the great Gekko.]

nice suspenders, zero hedgeTD touched on this last Thursday, and we will expand upon it here as it is particularly relevant to our ongoing theory that it is the proceeds from permanent open market operations (POMOs) and their close cousins that are driving equities.  Though this may be received wisdom to ZH readers, the Fed has done us the favor of providing additional evidence through the FT story.  A bit of background, as we are new contributors to this forum:

Money Supply:  Based on our previous research on the effects of swings in M2 non-seasonally adjusted money supply (M2) on the stock market, we were a bit surprised in July 09 by the resiliency of the rally, which continued in the face of such a dramatic contraction in M2.  The dismal Durable Goods report from last Friday confirms that the capital goods sector is still under significant pressure as a result of a lack of money in the general economy.  With banks not lending to normal businesses and consumer credit contracting equally as violently, what is the basis for this rally and from where does the never-ending flow of equities juice flow? 

Bank Non-Borrowed Excess Reserves:  The Fed statistic that most closely correlates with the 2009 equities run-up appears to be bank non-borrowed excess reserves (bank NBER), which


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Zero Hedge

"Mega Find" - 5,000 Classic Motorcycles Stashed In Barns 

Courtesy of ZeroHedge View original post here.

The Federal Reserve's quantitative easing and Treasury's fiscal stimulus have resulted in the greatest monetary experiment of all time. The result of trillions of dollars pumped into the economy has lifted prices of all assets, everything from the stock market to homes to baseball cards to crypto to classic cars and motorcycles. 

Last week, readers were one of the first to know about a rare 1955 Porsche 550 Spyder found in an ol...



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Phil's Favorites

Pandemic recovery will take more than soaring growth - to fuel a more equitable economy, countries need to measure the well-being of people, too

 

Pandemic recovery will take more than soaring growth – to fuel a more equitable economy, countries need to measure the well-being of people, too

Researchers have long been searching for a more comprehensive way to assess national progress than GDP. erhui1979 via Getty Images

Courtesy of Bas van Bavel, Utrecht University and Auke Rijpma, Utrecht University

...

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Digital Currencies

"You'd Have To Shut Down The Internet" To Ban Bitcoin, Says SEC's Hester Peirce

Courtesy of ZeroHedge

Any government efforts to ban Bitcoin would be “foolish,” said Hester Peirce (aka “Crypto Mom”), a very Bitcoin-friendly commissioner at the U.S. Securities and Exchange Commission (SEC), during a MarketWatch virtual conference earlier this week, according to Cryptoslate reporter Liam Frost.

"I think we were past that point very early on because you’d have to shut down the Internet,” Peirce said, adding, “I don’t see how you could ban it. Y...



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Chart School

Gold Gann Angle Update

Courtesy of Read the Ticker

The Biden Yellen team have made their play, and it is not US dollar friendly.

Janet Yellen speech named "International Priorities — Remarks to The Chicago Council on Global Affairs" (here) can be summed to (via Luke Gromen) :


The US is accelerating a move away from "subjugating the US middle and working class to support the USD", to "subjugating the USD to support the US middle and working classes".



Well the above is true, but as we all know large US deficits and the trend of the US dollar are joined at the hip, and that trend is down '...

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ValueWalk

2021 Sohn Investment Conference Featuring Einhorn, O'Shaughnessy And More

By Jacob Wolinsky. Originally published at ValueWalk.

The 2021 Sohn Investment Conference will be held virtually on May 12, 2021 and Valuewalk will be covering the event. Stay tuned for our in-depth coverage!

Q4 2020 hedge fund letters, conferences and more

Check out our coverage of the 2020 Sohn Hong Kong Conferences here.

All proceeds from The 2021 Sohn Investment Conference will be directed to Rockefeller University, which will provide unrestricted funding for scientists working on some of the highest-risk, highest-reward projects primed to advance the treatment of pediatric...



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Biotech/COVID-19

How worried should you be about coronavirus variants? A virologist explains his concerns

 

How worried should you be about coronavirus variants? A virologist explains his concerns

A COVID-19 patient in an ICU unit in a hospital in Capetown, South Africa, in December 2020. A variant emerged in South Africa that has since spread to other parts of the world. Other new variants could emerge elsewhere. Rodger Bosch/AFP via Getty Images

Courtesy of Paulo Verardi, University of Connecticut

Spring has sprung, and there is a sense of relief in the air. After one year of lockdowns and social distancing, mor...



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Politics

For autocrats like Vladimir Putin, ruthless repression is often a winning way to stay in power

 

For autocrats like Vladimir Putin, ruthless repression is often a winning way to stay in power

Russian police officers beat people protesting the jailing of opposition leader Alexei Navalny, Jan. 23, 2021 in Moscow. Mikhail Svetlov/Getty Images)

Courtesy of Shelley Inglis, University of Dayton

Russian dissident Alexei Navalny, sick with a cough and ...



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Kimble Charting Solutions

Gold; Load Up The Truck Upon Hitting This Level

Courtesy of Chris Kimble

Gold has created lower highs since peaking last summer. Is Gold near a low? Where would a nice entry point come into play?

This chart looks at Gold ETF (GLD) on a weekly basis over the past few years. GLD hit the top of this rising channel at (1) last summer, as it was above moving averages and relative strength was hitting lofty levels.

The decline over the past 7-months has GLD creating a death cross. Warren Buffett sold his Gold holding before this death cross took place!

Where would one want to pick up some GLD at a nice risk/reward price point?

If GLD reaches rising channel support at (2), w...



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Mapping The Market

Suez Canal: Critical Waterway Comes to a Halt

 

Suez Canal: Critical Waterway Comes to a Halt

Courtesy of Marcus Lu, Visual Capitalist

The Suez Canal: A Critical Waterway Comes to a Halt

On March 23, 2021, a massive ship named Ever Given became lodged in the Suez Canal, completely blocking traffic in both directions. According to the Suez Canal Authority, the 1,312 foot long (400 m) container ship ran aground during a sandstorm that caused low visibility, impacting the ship’s navigation. The vessel is owned by Taiwanese shipping firm, Evergreen Marine.

With over 2...



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Promotions

Phil's Stock World's Weekly Webinar - March 10, 2021

Don't miss our latest weekly webinar! 

Join us at PSW for LIVE Webinars every Wednesday afternoon at 1:00 PM EST.

Phil's Stock World's Weekly Webinar – March 10, 2021

 

Major Topics:

00:00:01 - EIA Petroleum Status Report
00:04:42 - Crude Oil WTI
00:12:52 - COVID-19 Update
00:22:08 - Bonds and Borrowed Funds | S&P 500
00:45:28 - COVID-19 Vaccination
00:48:32 - Trading Techniques
00:50:34 - PBR
00:50:43 - LYG
00:50:48 - More Trading Techniques
00:52:59 - Chinese Hacks Microsoft's E...



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The Technical Traders

Adaptive Fibonacci Price Modeling System Suggests Market Peak May Be Near

Courtesy of Technical Traders

Our Adaptive Fibonacci Price Modeling system is suggesting a moderate price peak may be already setting up in the NASDAQ while the Dow Jones, S&P500, and Transportation Index continue to rally beyond the projected Fibonacci Price Expansion Levels.  This indicates that capital may be shifting away from the already lofty Technology sector and into Basic Materials, Financials, Energy, Consumer Staples, Utilities, as well as other sectors.

This type of a structural market shift indicates a move away from speculation and towards Blue Chip returns. It suggests traders and investors are expecting the US consumer to come back strong (or at least hold up the market at...



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Lee's Free Thinking

Texas, Florida, Arizona, Georgia - The Branch COVIDIANS Are Still Burning Down the House

 

Texas, Florida, Arizona, Georgia – The Branch COVIDIANS Are Still Burning Down the House

Courtesy of Lee Adler, WallStreetExaminer 

The numbers of new cases in some of the hardest hit COVID19 states have started to plateau, or even decline, over the past few days. A few pundits have noted it and concluded that it was a hopeful sign. 

Is it real or is something else going on? Like a restriction in the numbers of tests, or simply the inability to test enough, or are some people simply giving up on getting tested? Because as we all know from our dear leader, the less testing, the less...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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