Federal Reserve

Podcast

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Daniel Nevins: Economics for Independent Thinkers

It's time we stop trusting the 'experts'
Wednesday, February 28, 2018, 6:03 PM

Economists are supposed to monitor and analyze the economy, warn us if risks are getting out of hand, and advise us on how to make things runs more effectively -- right?

Well, even though that's what most people expect from economists, it's not at all how they see their role, warns CFA and and behavioral economist Daniel Nevins.

In short, they are the wrong people to advise us, Nevins claims, as they have no clue how the imperfect world we live in actually works.

 
Insider

Off The Cuff: The Bond Market Will Have A Rude Awakening Soon

Higher interest rates will unleash a world of trouble
Thursday, February 22, 2018, 8:54 PM

In this week's Off The Cuff podcast, Chris and Wolf Richter discuss:

  • The Coming Rude Awakening For Bonds
    • Spiking yields are about to crash prices
  • Multi-TrillIon Dollar Deficits
    • The US is spending much more than it admits to
  • Kryptonite For The Housing Market
    • Higher interest rates & unfavorable tax code changes
  • Pension Woes
    • Most pension plans will soon be in a world of pain

Chris and Wolf marvel at the bond market's apparent indifference so far to rising rates. Rising rates, of course, mathematically mean bond prices should lower -- but that hasn't happened much yet. With the 10-year Treasury nearly at 3% now, that resistance can't last for long. Especially if the Fed proceeds with its declared program of quantitative tightening this year.

Wolf explains the ticking time bond in the bond market thusly...

Click to listen to a sample of this Off the Cuff Podcast or Enroll today to access the full audio and other premium content today.
Insider

It's Even Worse Than You Think

A massive price correction is both inevitable & overdue
Friday, February 16, 2018, 8:58 PM

Executive Summary

  • Just how rampant is the fraud in today's markets?
  • How last week's volatility spike nearly crashed the system
  • Why a massive price correction is both necessary, inevitable & overdue
  • Why the future of our democracy itself hangs in the balance

If you have not yet read Part 1: The Worst Threat We Face Is Right Here At Home, available free to all readers, please click here to read it first.

As I recently wrote, what broke in early February was volatility itself.  The volatility trade is one where tremendous firepower is concentrated because of a massive concentration of computer trading strategies that are all keyed off of volatility.

One of them is the so-called “risk-parity” trade, where computers are balancing and rebalancing a blended portfolio of stocks and bonds based entirely off of what the volatility index is doing.

So if volatility is falling, these algorithms are buying stocks.  Said another way, if you wanted to rig the cash market to go higher, you could either buy a huge amount of stocks directly, or you could buy a much smaller amount of index futures. Or you buy sell an even tinier amount of volatility.

If you sold volatility, you're be said to be “short volatility.” 

And who is “short volatility”, as revealed in their most recently released meeting notes? The Federal Reserve.

This is critically important because...

 

Blog

The Worst Threat We Face Is Right Here At Home

The Federal Reserve is ruining us
Friday, February 16, 2018, 8:58 PM

The Federal Reserve has done far more self-inflicted harm to long-term US interests than anything that Russia has been accused of, let alone been proven to have done. At this point, there’s no contest between the two. 

The worst threats we face are right here at home. » Read more

Podcast

traderscommunity.com

Danielle DiMartino Booth: Don't Count On The Powell Fed To Rescue The Markets

The new Fed Chair may break from his predecessors
Sunday, February 11, 2018, 4:29 PM

The recent gut-wrenching drop in asset prices began on the first day of the job for new Federal Reserve Chairman Jerome Powell.

How is Mr. Powell likely to react to a suddenly sick-looking market? Will he step in forcefully to reassure investors that there's a "Powell put" in place as a backstop?

To address these questions, former analyst at the Federal Reserve Bank of Dallas, Danielle DiMartino Booth, returns to the podcast this week. In her opinion, having studied Powell's previous statements, she thinks those expecting him to continue the market support his predecessors provided will likely be quite disappointed.

Powell appears to be no large fan of continued quantitative easing, and has long been on the record as concerned about the eventual pain its unwind will cause. He very well may resist riding to the market's rescue at this time, allowing natural market forces to finally have their way: » Read more

Blog

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Red Screen At Morning, Investor Take Warning

It's time for safety. And it's beginning to pay better, too
Friday, February 9, 2018, 9:12 PM

Growing up as I did in coastal New England, this old rhyme was drilled into us as children:

Red sky at night, sailor's delight;

Red sky at morning, sailor take warning.

I'm reminded of this rhyme because the markets are giving us a clear "red sky" warning right now. One that comes after (too) many years of uninterrupted fair winds and smooth sailing.

 
Blog

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What The Crypto Crash & Stock Market Plunge Have In Common

Only one thing matters in bubble markets: sentiment
Monday, February 5, 2018, 5:57 PM

Did the stock market bubble just pop, just as the cryptocurrency one has? » Read more

Insider

Dreamstime

Is This It?

Has the next Great Financial Crisis just started?
Friday, February 2, 2018, 9:58 PM

Executive Summary

  • The significance of the recent spike in interest rates
  • Is the US dollar weakness a sign of other countries walking away from the US?
  • Are rising oil prices serving to pop the market bubble (as predicted)? Where are they headed from here?
  • Is this it? Is the top in? And if so, what should concerned investors do right now?

If you have not yet read Part 1: The Central Bank’s Reign of Error, available free to all readers, please click here to read it first.

Is this it then?  Is the top in?  The last few days have been extremely turbulent in the markets with the Dow Jones declining nearly 1,000 points in just this week.

Given the smoke swirling around the global rise in interest rates, I’m certain there’s something afoot.  The real question is whether or not the central banks are going to step in here to rescue everything again.

Alas, I don’t have access to that information but a betting person would say “yes.”  Everything they’ve done over the past 10 years has communicated quite clearly that the central banks are terrified of the Franken-Markets they’ve created.  Specifically, they are terrified of them going down and revealing the extent of the fraud.

However, we have to remain alert to the idea that the markets are indeed larger than the central banks, at least when they begin to move in earnest, and that the central banks have not been able to alter the laws of reality.  Resources matter.  Debt levels matter.  Leverage matters.  Well, eventually they do, and maybe that time has come?

If so, we all need to be ready for a very rocky ride ahead because... » Read more

Blog

Reuters

It's Looking A Lot Like 2008 Now...

Did today's market plunge mark the start of the next crash?
Friday, February 2, 2018, 9:57 PM

Economic and market conditions are eerily like they were in late 2007/early 2008.

Remember back then? Everything was going great. Home prices were soaring. Jobs were plentiful.

The great cultural marketing machine was busy proclaiming that a new era of permanent prosperity had dawned, thanks to the steady leadership of Alan Greenspan and later Ben Bernanke. And only a small cadre of cranks, like me, was singing a different tune; warning instead that a painful reckoning in our financial system was approaching fast.

It's fitting that I'm writing this on Groundhog Day, as to these veteran eyes, it sure has been looking a lot like late 2007/early 2008 lately... » Read more

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pressano.com

How To Avoid The Pain Of The Coming Market Downturn

The 9 steps to increase your true wealth
Thursday, January 18, 2018, 9:35 PM

Executive Summary

  • Bubble markets short-circuit our assessment of risk
  • Bubble markets are hard to resist, and wear down your resolve
  • How to avoid the pain of the coming market downturn
  • The 9 steps to increase your true wealth

If you have not yet read Part 1: Believing The Impossible, available free to all readers, please click here to read it first.

I truly despise the many bubbles the central bankers have blown. I consider them ill-advised and distracting at a critical moment of history.

Where we should be attending to serious matters -- like accelerating ecosystem destruction, reigning in the practice of borrowing more than can ever be paid back, and transitioning rapidly off of fossil fuels -- people instead cheer the latest new shiny Dow Jones price record. Folks are just too distracted to have any interest in acknowledging the sobering predicaments we face.

It’s all rather cartoonish. The thinking, if I can call it that, goes like this; “But if any of your concerns were indeed true, certainly we’d not all be getting rich in the stock markets?”

Rising prices seem to be all the comfort these folks need to conclude that everything is A-OK.

“Your arguments are invalid because I'm richer today than I was yesterday.” As if a few more printed-up claims on wealth were the same thing as a better future.

So the prime reason that I hate the central banker-created bubbles is that they short-circuit the important conversations we should be having.

Rising equity prices coupled with the endless cheerleading they receive on the TV and in the press blunt people’s sense that we maybe should be doing things differently. And there is so much we need to be doing differently right now -- in the long run to secure a prosperous future, and in the immediate term, to protect against the inevitable destruction when these bubble markets burst.

Specifically, we need to... » Read more