Posts Tagged ‘exit strategy’

ECB Reflections on THE Exit Strategery

Courtesy of Chopshop writing at Zero Hedge 

ECB Reflections on THE Exit Strategy

To: inflationistas hyperventilating about hyperinflation

From: Austrians & Socionomists versed in historical precedent, with actual methodology and an analytic-leg to stand on

Before delving into Lorenzo Bini Smaghi’s noteworthy speech, chock full of ECB insight, please permit a wee bit of deflationist rant ‘Through the Looking-Glass‘ of social mood as per:

[1]  the management of inflation expectations; 

[2]  the implications within central bank (CB) exit strategery; and

[3]  ‘what Alice is likely to find’ in Mr. Market’s immediate future.

inflation? Let me know when and where you find it in the US, ok ?

3/13 month M2, staggered M3, hell recreate your own M5 … you simply cannot counter with a valid argument that does not shortly resort to:

‘yeah, but. it’s coming. somewhere.  you’ll see.  just you wait. in a flash.  soon.’

What is so difficult to see / understand about how targeted inflationary pressures can be used as simple (Gulliver) ropes to hold back the brunt of crushing deflation while obfuscating underlying ‘realities’ of econometric measurement … everywhere ?

I suppose it is the all-encompassing belief in the power of the shiny, yellow metal (gold) that you can’t eat and which has zero intrinsic value outside of that which is imbued upon it … by what ~ how you / we feel about its prospects.

Look: Tiny Tim (Geithner) is decent enough, no Hanky Panky from the Farm at 85 Broad, but certainly decent enough; and Greenspan was a true hustler’s hustler (suggest examining Al’s statements of the past few years a wee bit closer); but Bernake … ohhh, sweet Uncle Ben was born & bred for this very role.

Bernanke’s entire modern career has been spent fostering a rock-solid avatar of Textron-ity; he gave himself his own nickname!  Ben has everyone so thoroughly confused / misdirected as to his Intermediate intention (and the underlying motif within official policy direction) as per the $USD & QE 2.0 tightening that he has done his job; and masterfully so.  Such is his job; the BoE’s Mervyn King explicitly outlined such obfuscatory CB playbook strategery almost a decade ago

Fed policy is a battleship that takes time to turn, especially since the Fed doesn’t actually steer the ship … they just talk about alleged “reasons” (like the “news”), while keeping…
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Fed Raises Discount Rate, Dollar Soars, Equity Futures Sink, What’s It Really Mean?

Fed Raises Discount Rate, Dollar Soars, Equity Futures Sink, What’s It Really Mean?

Courtesy of Mish 

The Fed has been talking about its "exit strategy" for quite some time. Few believed he would pull the trigger on anything soon. Yet, Bernanke, unexpectedly raised the discount rate headed into options expiration.

Please consider the Federal Reserve Discount Rate Announcement released after the market close on February 18, 2010.

The Federal Reserve Board on Thursday announced that in light of continued improvement in financial market conditions it had unanimously approved several modifications to the terms of its discount window lending programs.

Like the closure of a number of extraordinary credit programs earlier this month, these changes are intended as a further normalization of the Federal Reserve’s lending facilities.

The changes to the discount window facilities include Board approval of requests by the boards of directors of the 12 Federal Reserve Banks to increase the primary credit rate (generally referred to as the discount rate) from 1/2 percent to 3/4 percent. This action is effective on February 19.

In addition, the Board announced that, effective on March 18, the typical maximum maturity for primary credit loans will be shortened to overnight. Finally, the Board announced that it had raised the minimum bid rate for the Term Auction Facility (TAF) by 1/4 percentage point to 1/2 percent. The final TAF auction will be on March 8, 2010. ….

The increase in the discount rate announced Thursday widens the spread between the primary credit rate and the top of the FOMC’s 0 to 1/4 percent target range for the federal funds rate to 1/2 percentage point. The increase in the spread and reduction in maximum maturity will encourage depository institutions to rely on private funding markets for short-term credit and to use the Federal Reserve’s primary credit facility only as a backup source of funds. The Federal Reserve will assess over time whether further increases in the spread are appropriate in view of experience with the 1/2 percentage point spread.

Unsustainable Course

That move comes on the heels of St. Louis Fed President Hoenig saying policy was on an unsustainable course as noted in "Three Paths Forward" – Kansas City Fed on Current U.S. Fiscal Imbalance, Hyperinflation, Printing.

From Hoenig …

No Short Cuts

Finally, there are no short-cuts. We currently must adjust from a misallocation of resources. There is no way


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When Monetizing 12% Percent Of GDP Isn´t Enough…….

When Monetizing 12% Percent Of GDP Isn´t Enough…….

Courtesy of Jan-Martin Feddersen at Immobilienblasen

Not quite an "Exit Strategy"……. This Cartoon on "Green Shoots" is spot on…..  As long as the pound & gilts are not crashing this will continue…..I´m pretty sure Bernanke is watching the market reaction very closely…. Especially with the Fed running low on ammo….. Read A 300-year-old example of quantitative easing…. John Law, Alan Greenspan, Ben Bernanke… via The Mess That Greenspan Made as a reminder what can happen…

trillions of dollars

The governor’s insatiable appetite for QE FT Alphaville

The Governor invited the Committee to vote on the proposition that:

Bank Rate should be maintained at 0.5%;

The Bank of England should finance a further £50 billion of asset purchases by the creation of central bank reserves, implying a total quantity of £175 billion of such asset purchases. The Bank should seek to complete the additional purchases within the next three months.

Six members of the Committee (Charles Bean, Paul Tucker, Kate Barker, Spencer Dale, Paul Fisher and Andrew Sentance) voted in favour of the proposition. Three members of the Committee (the Governor, Tim Besley and David Miles) voted against, preferring to increase the size of the asset purchase programme by £75 billion to a total of £200 billion.

Yep, Mervyn King, together with Besley and Miles wanted the rate of monetary stimulus increasing, not just extending at the current rate of £50bn-a-quarter. That was good for half a cent off sterling versus the dollar and a third of a cent v the euro on Wednesday morning. Gilts, of course, spiked higher.

Somebody stop me Alice Cook from the great blog UK Bubble

The extraordinary thing about UK monetary policy today is how close it is shadowing fiscal policy. This year, the Bank of England printing presses will produce roughly the same amount of new money as this year’s fiscal deficit. Or to put it more bluntly, the private sector have, on a net basis, stopped lending money to the government.

The Casey Report

> The estimated issuance is based on this "optimitic" forecast…. Especially compared to the IMF, OECD, Bloomberg


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Phil's Favorites

Rabobank: "A Dangerous Moment"

Courtesy of ZeroHedge

By Michael Every of Rabobank

The markets have started a new week of trading in risk off mode (when this note was heading to press) amid fading expectations that the US Congress will pass another fiscal package. With just 8 days left until the presidential election, both sides may not have a sufficient incentive to reach an agreement. Even if there is no deal in the coming days, a fiscal stimulus is still likely to be agreed after the election to support businesses and households as the US is struggling to contain the coronavirus pandemic. In fact, President Trump’s chief of staff openly admitted that the US is “not going to control” the pandemic and instead will focus on “proper mitigation factors”, such as vaccines and treatments. Former Vice President Biden s...



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Zero Hedge

Rabobank: "A Dangerous Moment"

Courtesy of ZeroHedge

By Michael Every of Rabobank

The markets have started a new week of trading in risk off mode (when this note was heading to press) amid fading expectations that the US Congress will pass another fiscal package. With just 8 days left until the presidential election, both sides may not have a sufficient incentive to reach an agreement. Even if there is no deal in the coming days, a fiscal stimulus is still likely to be agreed after the election to support businesses and households as the US is struggling to contain the coronavirus pandemic. In fact, President Trump’s chief of staff openly admitted that the US is “not going to control” the pandemic and instead will focus on “proper mitigation factors”, such as vaccines and treatments. Former Vice President Biden s...



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ValueWalk

Trump Will Deliver Stunning Upset: Polls Are Tightening

By insidermonkey. Originally published at ValueWalk.

This is my second follow-up article about the presidential election polls and predictions about Donald Trump losing and the election results. You can read the last article here.

Polls are usually accurate in predicting the outcome of presidential elections. There are two exceptions. When the outcome of the election depends on the results of a single state like Florida and there are only a few thousand votes separating the both candidates. The other exception is when the respondents of a poll don’t reveal their true intentions to the pollsters. This is what happened four years ago. Poll aggregators like Fivethirtyeight failed miserabl...



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Biotech/COVID-19

An epidemiologist explains the new CDC guidance on 15 minutes of exposure and what it means for you

 

An epidemiologist explains the new CDC guidance on 15 minutes of exposure and what it means for you

A girl wearing a mask walks down a street in the Corona neighborhood of Queens on April 14, 2020 in New York City. Johannes Eisele/AFP via Getty Images

Courtesy of Ryan Malosh, University of Michigan

The Centers for Disease Control and Prevention has new guidance clarifying what exactly “close cont...



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Politics

How to track your mail-in ballot

 

How to track your mail-in ballot

Make sure you know when your ballot is arriving, and whether it’s been accepted for counting back at your election office. erhui1979/DigitalVision Vectors via Getty Images

Courtesy of Steven Mulroy, University of Memphis

Many voters who want to participate in the election by mail are concerned about when they’ll receive their ballot – and whether it will get back in time to be counted.

The pandemic has caused interest in ...



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Kimble Charting Solutions

Doc Copper/Gold Indicator Breaking Out Again?

Courtesy of Chris Kimble

The Doc Copper/Gold ratio broke above a 2-year falling channel back in 2016 at (1). Following this breakout, it rallied for the next year. During that year, Copper related assets did very well!

The ratio peaked in the summer of 2018 and created a series of lower highs over the past two years.

The strength of late has the ratio attempting to break above dual resistance at (2).

If the ratio continues to push higher and succeeds in breaking out, Copper, Basic Materials (XLB), and ...



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Chart School

Dow Gann Angle Update

Courtesy of Read the Ticker

Time to see what happens to the Dow post US elections.

The Dow Gann Angle Target 3 (from 2007 top) is on the table, and what a ride that will be. The FED went BRRRRR is all the fundamental news you need to know. Gann angles are very good tool to see how the masses are pushing price.


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The last two US elections saw Bitcoin and the DOW rally well for 6 months, due to stimulus. The most bearish 2020 US Election case for the markets is a Biden win with the Senate and Congress controlled by the Democrats, somehow this blog feels that is very unlikely. So what could go wrong!


...

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Digital Currencies

Bitcoin: the UK and US are clamping down on crypto trading - here's why it's not yet a big deal

 

Bitcoin: the UK and US are clamping down on crypto trading – here's why it's not yet a big deal

Where there’s a bit there’s a writ. Novikov Aleksey

Courtesy of Gavin Brown, University of Liverpool

The sale and promotion of derivatives of bitcoin and other cryptocurrencies to amateur investors is being banned in the UK by the financial regulator, the Financial Conduct Authority (FCA). It is a...



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Mapping The Market

COVID-19 Forces More Than Half of Asset Management Firms to Accelerate Adoption of Digital Marketing Technology

By Jacob Wolinsky. Originally published at ValueWalk.

There is no doubt that the use of technology to support client engagement initiatives brings both opportunities and threats but this has been brought into sharp focus this year with the COVID-19 pandemic.

The crisis has brought to the fore the need for firms to enable flexibility in client engagement – the expectation that providers will communicate to clients on their terms, at their speed and frequency and on their preferred channels, is now a given. This is even more critical when clients are experiencing unparalleled anxiety from both market conditions and their own personal circumstances.

...

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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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Feb. 26, 1pm EST

Click HERE to join the PSW weekly webinar at 1 pm EST.

Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

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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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