The Federal Reserve has been determined to create “Wealth Effects” throughout the economy since 2008, which has left the majority of Main Street on the sidelines.
The Fed’s objective was to make American households feel wealthier by pushing up the valuations of stocks and bonds. However, this paper wealth mentality has worked beautifully for Wall Street and the 1% but has destroyed much of the middle class as wealth inequality continues to skyrocket.
In fact, former Federal Reserve Chairman Alan Greenspan has gone on record to warn of a massive bond and stock bubble thanks to historic low-interest rates. I guess, the idea of rising paper wealth to drive a wave of renewed borrowing and spending hasn’t quite worked out as planned.
A surging LIBOR-OIS now back to the pre EU Periphery Crisis Levels is now beginning to be felt in the high yield market.
Kommer Facebooks förehavanden att leda till reglering av vissa tech bolag och därmed mindre investeringar i sektorn
It shows the percent of companies in the S&P 500 that would fall into Minsky’s “Ponzi unit” category. Specifically, Bianco Research defines these “zombies” as companies whose interest expense is greater than their 3-year average EBIT (earnings before interest and taxes). Currently, we face the greatest percentage of “Ponzi units” in at least 20 years.
Yield kurva fortsätter att plana ut. Obligationsmarknaden verkar inte speciellt optimistiska om framtida ekonomin
) The Federal Reserve continues to hike interest rates on the short-end pressuring the yield-curve flatter which has never ended well for investors.
Ökade skulder leder till lägre BNP och med räntor som knappt existerar visar att vi nått slutet på detta monetära system
Russia's 5Y CDS exploded by the most since June 2013 (a 34% spike in default risk in 3 days) this week as US sanctions and now direct threats have escalated geopolitical tensions globally.
As Bloomberg notes, President Donald Trump’s warning for Russia to “get ready” for missiles on Syria sent investors rushing for protection.
The cost of insuring sovereign debt against default for five years using credit-default swaps jumped to 162 on Wednesday, the highest since Aug. 1.
There are troubling signs in the US economy, not the least of which is the lowest YoY growth in US automobile registrations (non-recession) since 1989.
It is imperative that Powell get his Committee on board with recognizing that inflation is an immediate threat before it’s too late, which is not yet the case. Focus in on the blue line which is barely above the Fed’s 2% target.
That represents nondiscretionary inflation – the prices of what you have to buy to put food on the table, stay healthy and keep the roof over your head. The green line is inflation for what you want – another pair of red-soled shoes, a bigger curved-screen TV, tickets to the Final Four – you know, discretionary spending.
In recessionary times, the prices for what you need completely disconnect from the prices of what you want – that’s why they are miserable times for the economy.
It’s no secret that home prices are choking off buyers though rising mortgage rates are doing a bang-up job of getting the hesitant to rush to buy. Applications to buy a home are at a seven-year high even as home prices are up 5.9%, triple the rate of inflation. That helps explain why first-time homebuyers made up all of 29% of buyers in February, a level disturbingly close to the cycle’s 26% record low.
Danielle’s concusion: “If the sensible man in Powell has no wish to ever allow interest rates to fall to the zero bound on his watch, he might want to get the fed funds rate above 2% before the economy hits recession.”
Her conclusion that the Fed will be out of bullets at the next recession makes sense to me. The last time the Fed was out of bullets was last cycle, after 5 1/2% of cuts. It did three rounds of QE and one Operation Twist.
What the Fed does to counteract the next recession is anyone’s guess.
BERLIN (Reuters) - German exports plunged unexpectedly in February, posting their biggest monthly drop in 2-1/2 years and narrowing the trade surplus, data showed on Monday, in a further sign that growth in Europe’s biggest economy could have reached its peak.
A Reuters poll had pointed to exports edging up by 0.2 percent on the month and imports rising by 0.3 percent.
“As it looks, we have surpassed the top of the economic upswing,” HSBC Trinkhaus analyst Lothar Hessler said, adding that the stronger euro was probably to blame for the weak export figures.
“The German economy will continue to grow, but with less momentum,” Hessler said.
Japanese investors dump record amount of U.S. bonds in February
TOKYO (Reuters) - Japanese investors sold a record amount of U.S. dollar bonds in February as the soaring cost of currency-hedging undercut yields while they extended their purchases of euro-denominated bonds, government data showed on Monday.
Investors sold 3.924 trillion yen ($36.68 billion) of U.S. dollar bonds in February but scooped up 1.059 trillion yen (8.06 billion euros) of euro-denominated bonds - which offer higher yields after currency hedging.
It was their fifth consecutive month of euro-denominated debt purchases.
Since October, investors offloaded 7.675 trillion yen ($71.72 billion) of dollar bonds and bought 4.079 trillion yen (31.06 billion euros) of euro bonds.
Handelsbalansen för USA visar högre underskott än väntat vilket ökar risken för tullar och andra pålagor
With so much attention focused on trade data in recent weeks, Trump will hardly be happy to learn that not only did the US trade deficit grow by 1.6% in February from $56.7BN to $57.6BN, missing expectations of a $56.8BN print, but was the highest monthly trade deficit going back ten years to 2008.
Finally, if you want to get Trump really mad, tell him that when stripping away petroleum products - which recently saw record US exports thanks to shale - the US trade deficit has never been greater.
Construction i USA fortsätter söderut, CNBC brukar skylla på vädret som måste vara extremt dåligt under en mycket lång tid
Are YOU Ready for the Economic Collapse? Video – Blackstone Intelligence Network
Financial storm clouds are on the horizon. Are YOU ready? In this episode, I teach some basic terminology and how to better understand financial reports that you hear on the news.
M2 money stock is comprised of business and consumer liquid cash accounts. Savings, checking, money market. They are the accounts, if you’re not spending with debt, you first tap to spend or invest.
This indicator is commonly known as a ‘one-year-out’ recession warning when its growth level falls below 2%. Which it just did, after being over 6% as recently as 2016.