Posts Tagged ‘world trade’

Rosie On The Fed’s Intent To Get Everyone Onboard Its All-In Bet On Stocks

Rosie On The Fed’s Intent To Get Everyone Onboard Its All-In Bet On Stocks

Courtesy of Tyler Durden at Zero Hedge

Just in case there is someone living in a cave who still doesn’t understand that the Fed’s one and only mandate (forget that crap about inflation and jobs) is to give everyone one last shove into the all inponzi before the diarrhea hits the HVAC, here is David Rosenberg explaining, for the cheap seats, what the Fed’s terminal intent is.

The Fed’s intent is not to create consumer inflation, but rather asset inflation — primarily in the equity market. By pulling longer-term bond yields lower, the Fed hopes that this will alter how investors value equities relative to the fixed-income market. Moreover, the Fed will be actively pushing up the value of bonds that exist in investor portfolios, and as such the intent is to induce these investors to rebalance their asset mix towards equities in order to maintain their current allocation. The Fed is also trying to incentivize fund flows into the equity market. This in turn would theoretically boost household wealth and as such make consumers, who now feel richer, to go out and spend more. So the theory goes — we shall see how it works in practice.

The Fed’s intent is also to lower both the debt and equity cost of capital so that companies will, at the margin, compare that to expected returns on newly invested capital and begin to spend more on new plant and equipment. The hope here is that the investment spending multiplier will kick in and that stepped-up job creation would occur in tandem with the renewed capex growth.

In essence, the Fed wants to avoid what happened in Japan over the last two decades — have a look at Japan Goes from Dynamic to Disheartened on the front page of the Sunday NYT. The comment in the article to the effect that back in 1991, the consensus was looking for the Japanese economy to begin surpassing the U.S. economy in size by 2010. Nice call. Instead, Japan’s economy has not expanded at all since that time whereas the U.S. economy, despite all its problems, has grown 65%.

That said, the U.S. has already experienced a lost decade in many respects, especially as it pertains to the labour market, while Japan has lost two decades. Also have a


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Paul Farrell Explains Why The Fed-Wall Street Complex Will Self Destruct By 2012

Paul Farrell Explains Why The Fed-Wall Street Complex Will Self Destruct By 2012

Courtesy of Zero Hedge 

Some rather scary predictions out of Paul Farrell today: "It’s inevitable: Wall Street banks control the Federal Reserve system, it’s their personal piggy bank. They’ve already done so much damage, yet have more control than ever.Warning: That’s a set-up. They will eventually destroy capitalism, democracy, and the dollar’s global reserve-currency status. They will self-destruct before 2035 … maybe as early as 2012 … most likely by 2020. Last week we cheered the Tea Party for starting the countdown to the Second American Revolution. Our timeline is crucial to understanding the historic implications of Taleb’s prediction that the Fed is dying, that it’s only a matter of time before a revolution triggers class warfare forcing America to dump capitalism, eliminate our corrupt system of lobbying, come up with a new workable form of government, and create a new economy without a banking system ruled by Wall Street." And just like in the Hangover, where the guy is funny because he’s fat, Farrell is scary cause he is spot on correct.

Handily, Farrell provides a projected timeline of events:

Stage 1: The Democrats just put the nail in their coffin confirming they’re wimps when they refused to force the GOP to filibuster Bush tax cuts for billionaires.

Stage 2: In the elections the GOP takes over the House, expanding its strategic war to destroy Obama with its policy of “complete gridlock” and “shutting down government.”

Stage 3: Post-election Obama goes lame-duck, buried in subpoenas and vetoes.

Stage 4: In 2012, the GOP wins back the White House and Senate. Health care returns to insurers. Free-market financial deregulation returns. Lobbyists intensify their anarchy.

Stage 5: Before the end of the second term of the new GOP president, Washington is totally corrupted by unlimited, anonymous donations from billionaires and lobbyists. Wall Street’s Happy Conspiracy triggers the third catastrophic meltdown of the 21st century that Robert Shiller of “Irrational Exuberance” fame predicts, resulting in defaults of dollar-denominated debt and the dollar’s demise as the world’s reserve currency.

Stage 6: The Second American Revolution explodes into a brutal full-scale class war with the middle class leading a widespread rebellion against the out-of-touch, out-of-control Happy Conspiracy sabotaging America from within.

Stage 7: The domestic class warfare is exaggerated as the Pentagon’s global warnings play out: That by 2020


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The Marriage of Mercantilism and Corporatism: When Free Trade Is Not ‘Free’

The Marriage of Mercantilism and Corporatism: When Free Trade Is Not ‘Free’

Courtesy of JESSE’S CAFÉ AMÉRICAIN

"The consequences of this policy are also stark and simple: in effect, China is taxing imports while subsidizing exports, feeding a huge trade surplus. You may see claims that China’s trade surplus has nothing to do with its currency policy; if so, that would be a first in world economic history. An undervalued currency always promotes trade surpluses, and China is no different." Paul Krugman

And he is exactly right. As regular readers know this matter of Chinese mercantilism and its toleration and acceptance by the West has been a key observation and objection here since 2000. Any economist who does not understand that devaluing and then maintaining an artificially low currency peg with a trading partner distorts the nature of that trade should review their knowledge of algebra.

And yet it was in 1994 during the Clinton Administration that China was permitted to obtain full trading partner "Most Favored Nation" status, while vaguely promising to float their recently devalued currency some day, and address the human rights issues that were endogenous to their non-democratic, totalitarian government.

"From 1981 to 1993 there were six major devaluations in China. Their amounts ranged from 9.6 percent to 44.9 percent, and the official exchange rate went from 2.8 yuan per U.S. dollar to 5.32 yuan per U.S. dollar. On January 1, 1994, China unified the two-tier exchange rates by devaluing the official rate to the prevailing swap rate of 8.7 yuan per U.S. dollar." Sonia Wong, China’s Export Growth

This served Mr. Clinton’s constituents in Bentonville quite well, and has some interesting implications for the Chinese campaign contributions scandals. It supported the Rubin doctrine of a ‘strong dollar’ while facilitating the financialization of the US economy and the continuing decline of the middle class wage earners, under pressue to surrender a standard of living achieved at great cost. "How I Learned to Stop Worrying and Love the Currency Collapse." and China’s Mercantilism: Selling Them the Rope

Not to limit this, George W. ratified the arrangement when he took office, and so it has gone on for almost fifteen years…
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A Series Of Lucky Coincidences Involving Goldman Sachs And BP plc

A Series Of Lucky Coincidences Involving Goldman Sachs And BP plc

Courtesy of Tyler Durden

Earlier, when observing the US AG disclosure of a civil and criminal investigation into BP plc, we noted in passing that BP’s former Chairman, Peter Sutherland, who left the firm is a Chairman of Goldman Sachs International. Mr. Sutherland holds some other interesting titles, including a position on the Trilateral Commission, he was a chairman of the London School of Economics in 2008, he is a UN special representative for migration and development; he was the founding director-general of the World Trade Organisation, he had previously served as director general of GATT since July 1993 and was instrumental in concluding the Uruguay GATT Round Negotiations. Needless to say, we focused on the Goldman relationship. When digging deeper, we uncovered some amusing correlations, most notably between the BP plc sellside ratings by Goldman BP analyst Michelle della Vigna and the Goldman Sachs Asset Management holdings of BP plc. These are summarized on the attached chart.

And in case this is not enough, another way to visualize Goldman’s rating history, together with price targets on BP is presented below, straight from GS itself:

As the first chart above demonstrates, there is an "odd" correlation between Goldman’s sellside sentiment on the stock, and the amount of stock held by Goldman’s asset management arm, especially evident in the days between December 31, 2009 and March 31, 2010, when despite a recent Buy rating attached to the firm, GSAM sold off more than 40% of its stake in the name. On December 31, Goldman held 71 million BP shares, and three months later this number went down 42.5 million. Another oddity is that back in 2008, when GS had the stock at Neutral, GSAM doubled its stake in the firm from 28.8 million shares to 57.3 million days before Ms. della Vigna raised the stock to a Buy, albeit if only for just over a month. Oddly enough, in the half year period when Goldman was telling its clients to Sell the stock, between 3/31/2009 and 10/28/2009, GSAM holdings declined by a whopping -3.9%.

Yet while the fact that GSAM did not follow the recommendations of its very own analyst is not peculiar. We have long pointed out that Goldman does precisely the opposite of what it advises its "clients" to do. What…
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Protectionism On The Rise…..”China Edition”

Courtesy of Jan-Martin Feddersen of immobilienblasen

Protectionism On The Rise….."China Edition"

First the US and now China ( the country with the biggest surplusses ) …… Just what the doctor ordered…… Now combine this with the following chart ( for more more "depressing" charts see A Tale of Two Depressions ) and we all can only hope that this kind of "cancer" isn´t spreading…. But i have some serious doubts…..

Nachdem die USA ja bereits trotz einmal mehr großer Worte von Obama die "Buy American" Klausel in Ihrem Konjunkturpaket haben festschreiben lassen kommt jetzt der nächste Tiefschlag…… Wenn die Weltkonjunktur eines nicht gebrauchen kann dann ist es eine Ausuferung des Protektionismus. Das jetzt ausgerechnet China ( das Land mit den größten Handelsüberschüssen ) genau in diese Richtung marschiert ist mehr als bedenklich und läßt einem bei dem nachfolgenden Chart ( mehr depressive Charts via A Tale of Two Depressions ) noch pessimistischer in die Zukunft blicken…….
 

 

‘Buy China’ policy set to raise tensions  FT

China has introduced an explicit “Buy Chinese” policy as part of its economic stimulus programme in a move that will amplify tensions with trade partners and increase the likelihood of protectionism around the world.

In an edict released jointly by nine government departments, Beijing said government procurement must use only Chinese products or services unless they were not available within the country or could not be bought on reasonable commercial or legal terms.
 

The government also said it was launching an investigation in response to complaints from domestic industry associations which accuse local governments of favouring foreign suppliers in procurement related to the country’s Rmb4,000bn ($585bn, €421bn, £356bn) economic stimulus package.

Just a few months ago Beijing was raging against a proposed “Buy American” clause included in the US economic rescue package.

“Some countries raised clauses to prioritise the purchase of products of their own countries in their economic stimulus packages,” Yao Jian, a Chinese commerce ministry spokesman, told reporters in February. “We express deep concern about these [measures] … under the current financial crisis, measures issued by all countries should not cause negative impacts, and especially they should not send out wrong messages.”

Most economists agree China’s economy is starting to recover as a result of its aggressive


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Zero Hedge

OECD Slashes Global Growth Outlook, Warns Germany Already In Recession

Courtesy of ZeroHedge View original post here.

In one of the most downbeat forecasts on the global economy that we've seen so far this year, the Paris-based organization of wealthy nations known as the OECD - the Organization for Economic Cooperation and Development - warned that the global economy is heading toward a recession, and that governments aren't doing enough in terms of fiscal stimulus to try and boost the economy.

"Escalating trade policy tensions are taking an increasing toll on confidence and investment, adding to policy uncertainty, weighing on risk senti...



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The Technical Traders

Precious Metals Setting Up Another Momentum Base/Bottom

Courtesy of Technical Traders

Just as we predicted, precious metals are setting up another extended momentum base/bottom that appears to be aligning
with our prediction of an early October 2019 new upside price leg.

Recent news of the US Fed decreasing the Fed Funds Rate by 25bp as well as strength in the US stock market and US Dollar as eased fears and concerns across the global markets.  These concerns and fears are still very real as the overnight credit market has continue to illustrate.  Yet, the precious metals have retraced from recent highs and begun to form a momentum base which will likely become the
floor for the next move higher.

The one aspect that many traders ...



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Phil's Favorites

What Are Your Thoughts: Is Anyone Really "Middle Class"?

 

What Are Your Thoughts: Is Anyone Really “Middle Class”?

Courtesy of 

 

On a new edition of What Are Your Thoughts?, Michael Batnick and Josh Brown discuss:

  • The Repo Rate mini-panic
  • Are we ready for the Daniel Jones Era?
  • Does it really take $350,000 a year to live in cities?
  • Standup comics up in arms over political correctness and “cancel culture”
  • People got excited about value stocks recently. Again.
  • More terrible sports takes from Josh
  • Do you need a car...


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Lee's Free Thinking

Federal Reserve Bank of New York Statement On Repurchase Operation - Roll Over Beethoven!

Courtesy of Lee Adler

This is a syndicated repost courtesy of NY | Press Releases | Markets & Policy Implementation. To view original, click here. Reposted with permission.

In accordance with the FOMC Directive issued September 18, 2019, the Open Market Trading Desk (the Desk) at the Federal Reserve Bank of New York will conduct an overnight repurchase agreement (repo) operation from 8:15 AM ET to 8:30 AM ET tomorrow, Friday, September 20, 2019, in order to help maintain the federal funds rate within the target range of 1-3/4 to 2 percent.

–Federal Reserve Bank of New Yo...



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Insider Scoop

Morgan Stanley On Bandwitdh Inc: This Isn't A 'Cheaper Twilio'

Courtesy of Benzinga

Enterprise CPaaS company Bandwidth Inc (NASDAQ: BAND) boasts a cost-effective, flexible and responsive solution platform and counts some of the most "demanding" corporate giants as customers. However, there is a misconception bet...



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Kimble Charting Solutions

Stocks, Oil, and Bond Yields At Critical Bullish Breakout Tests!

Courtesy of Chris Kimble

It’s not often that three asset classes reach similar important trading points all at once.

But that’s exactly what’s happening right now with stocks, crude oil, and treasury bond yields.

And this is occurring on Federal Reserve day no less! Something has got to give.

In the chart above y...



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Chart School

Crude Oil Cycle Bottom aligns with Saudi Oil Attack

Courtesy of Read the Ticker

Do the cycles know? Funny how cycle lows attract the need for higher prices, no matter what the news is!

These are the questions before markets on on Monday 16th Aug 2019:

1) A much higher oil price in quick time can not be tolerated by the consumer, as it gives birth to much higher inflation and a tax on the average Joe disposable income. This is recessionary pressure.

2) With (1) above the real issue will be the higher interest rate and US dollar effect on the SP500 near all time highs.

3) A moderately higher oil price is likely to be absorbed and be bullish as it creates income for struggling energy companies and the inflation shock may be muted. 

We shall see. 

...

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Digital Currencies

China Crypto Miners Wiped Out By Flood; Bitcoin Hash Rate Hits ATHs

Courtesy of ZeroHedge View original post here.

Last week, a devastating rainstorm in China's Sichuan province triggered mudslides, forcing local hydropower plants and cryptocurrency miners to halt operations, reported CoinDesk.

Torrential rains flooded some parts of Sichuan's mountainous Aba prefecture last Monday, with mudslides seen across 17 counties in the area, according to local government posts on Weibo. 

One of the worst-hit areas was Wenchuan county, ...



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Biotech

The Big Pharma Takeover of Medical Cannabis

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

 

The Big Pharma Takeover of Medical Cannabis

Courtesy of  , Visual Capitalist

The Big Pharma Takeover of Medical Cannabis

As evidence of cannabis’ many benefits mounts, so does the interest from the global pharmaceutical industry, known as Big Pharma. The entrance of such behemoths will radically transform the cannabis industry—once heavily stigmatized, it is now a potentially game-changing source of growth for countless co...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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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.

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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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