Posts Tagged ‘national deficit’

Michael Pento Asks If The Fed Ultimately Controls Interest Rates

Michael Pento Asks If The Fed Ultimately Controls Interest Rates

Courtesy of Tyler Durden

NEW YORK - APRIL 28: A trader on the New York Stock Exchange walks by a monitor displaying the federal funds rate made at an afternoon announcement by the Federal Reserve on April 28, 2010 in New York, New York. Following a two day meeting, Fed Chairman Ben Bernanke held the fed funds rate at historic lows near zero in order to keep the economy growing. (Photo by Spencer Platt/Getty Images)

By Michael Pento of Euro Pacific Capital

Does the Fed Ultimately Control Interest Rates?

In forecasting the consequences of current economic policy, many pundits are downplaying the risks associated with the surging national debt and the rapid expansion of marketable Treasury securities. Their comfort stems from the belief that a staggering debt burden will be manageable as long as interest rates remain extremely low; and, as they believe the Fed is in complete control of setting rates across the yield curve, they see no danger of rates ever rising past the point of comfort. Those who subscribe to this fairy tale forget that, in real life, there are many more hands on the interest rate steering wheel.

The Congressional Budget Office estimates that the 2010 deficit will exceed $1.3 trillion and total US debt now stands at $13.4 trillion (92% of GDP). That’s a lot of debt that needs floating. Yet, the 10-year note is yielding 2.8%-- which is 4.5 points below its 40-year average of 7.3%! Experience teaches that even moderately long-term investors should be expecting rising rates. Regardless of the extreme and obvious misalignment of fundamentals and bond prices, the mantra from the dollar shills remains firm: “The US dollar will always be the world’s reserve currency, and the US bond market will always be regarded as the safe-haven depository for global savings.”

With interest rates having been so low for so long, it’s understandable that many people have forgotten that central banks are not ultimately in control of interest rates. It is true that the Fed can be highly influential across the yield curve and can be especially effective in controlling the short end. But, in the end, the free market has the last word on the cost of money.

Although the Fed has certainly created enough new dollars to send prices higher, recessionary forces are, for now, disguising the evidence of runaway inflation. But when inflation finally erupts into the daylight, it will be impossible for borrowing costs to stay low. No one can realistically be expected to loan money below the rate of inflation. To attract buyers, the Treasury will have to offer a real rate of return.

Since our publicly traded debt level is increasing while our personal saving rate is not, we must inevitably…
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Zero Hedge

Coronavirus Kills Man In Shanghai As China Confirms Nearly 2,000 Cases

Courtesy of ZeroHedge View original post here.

Summary
  • First nCoV death reported in Shanghai
  • South Korea confirms third case
  • Toronto health officials to announce first 'presumptive case' of coronavirus in Canada
  • 1975 Cases Worldwide; 56 deaths (still about a 3% mortality rate)
  • 18 Chinese cities - 56 million people - quarantined
  • President Xi said China faces a 'grave situation' as the spread is 'accelerating'
  • US and Russia plan...


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Phil's Favorites

Preparing For Lower Returns

 

Preparing For Lower Returns

Courtesy of 

We’ve been hearing about the prospect of lower future returns for U.S. based investors for years now*. The thesis behind this is fairly straightforward; high recent returns coupled with high valuations in the stock market, and low interest rates in the bond market is not conducive to further above average returns.

Consider the following:

  • A U.S. only 60/40 portfolio has compounded at 10.5% over the last 10 years.
  • The CAPE ratio is at 30.9
  • The ten-year treasury is currently yielding 1.8%

...



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Insider Scoop

BofA Downgrades Wynn Resorts On Wuhan Coronavirus Concerns

Courtesy of Benzinga

After initially dismissing the potential impact of the Wuhan coronavirus on Macau gaming stocks, one Wall Street analyst downgraded Wynn Resorts, Limited (NASDAQ: WYNN) on Monday due to concerns over the virus’ potential impact on Macau travel.

The Analyst

Bank of America analyst Shaun Kelley downgraded Wyn...



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Chart School

Top Patterns for Retail Investors

Courtesy of Read the Ticker

Retail investors are last in line for market leading research, no matter, the retail investor can profit from these secret sauce patterns..

Well not so secret now, the main point is you do not have to climb Mount Everest to be called a mountain climber, there are many other hills to climb to make your mark. Just like stocks.

You do not have to battle with the high frequency traders to win in the markets, there are long and slow methods to do just as well.  

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Some charts from the video


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The Technical Traders

The Wuhan Wipeout - Could It Happen?

Courtesy of Technical Traders

News is traveling fast about the Corona Virus that originated in Wuhan, China. Two new confirmed cases in the US, one in Europe and hundreds in China. As we learn more about thispotential pandemic outbreak, we are learning that China did very little to contain this problem from the start. Now, quarantining two cities and trying to control the potential
outbreak, may become a futile effort.

In most of Asia, the Chinese New Year is already in full swing.  Hong Kong, China, Singapore, Malaysia, India and a host of other countries are already starting to celebrate the 7 to 10 day long New Year.  Millions of people have already traveled hundreds of thousands of miles to visit family...



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Kimble Charting Solutions

Bad News For Crude Oil Should Come From This Pattern, Says Joe Friday

Courtesy of Chris Kimble

It’s a good idea for investors to be aware of key indicators and inter-market relationships.

Perhaps it’s watching the US Dollar as an indicator for precious metals or emerging markets. Or watching interest rates for the economy. Experience, history, and relationships matter. And it’s good to simply add these to our tool-kit.

Today, we look at another relationship that has signaled numerous stock market tops and bottoms over the years, and especially the past several months, Crude Oil.

When crude oil tops or bottoms, it seems that ...



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Biotech

Snakes could be the original source of the new coronavirus outbreak in China

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

 

Snakes could be the original source of the new coronavirus outbreak in China

Chinese cobra (Naja atra) with hood spread. Briston/Wikimedia, CC BY-SA

Haitao Guo, University of Pittsburgh; Guangxiang “George” Luo, Univers...



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Members' Corner

The War on All Fact People

 

David Brin shares an excerpt from his new book on the relentless war against democracy and how we can fight back. You can also read the first, second and final chapters of Polemical Judo at David's blog Contrary Brin.

The War on All Fact People 

Excerpted from David Brin's new book, the beginning of chapter 5, Polemical Judo: Memes...



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Lee's Free Thinking

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

 

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

Courtesy of  

The repo market problem isn’t the problem. It’s a sideshow, a diversion, and a joke. It’s a symptom of the problem.

Today, I got a note from Liquidity Trader subscriber David, a professional investor, and it got me to thinking. Here’s what David wrote:

Lee,

The ‘experts’ I hear from keep saying that once 300B more in reserves have ...



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Digital Currencies

Cryptos Have Surged Since Soleimani Death, Bitcoin Tops $8,000

Courtesy of ZeroHedge View original post here.

Bitcoin is up over 15% since the assassination of Iran General Soleimani...

Source: Bloomberg

...topping $8,000 for the first time since before Thanksgiving...

Source: Bloomberg

Testing its key 100-day moving-average for the first time since October...

...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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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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