The Continuum (monthly 30yr yield with the 100-month EMA ‘limiter’) simply states that the economy was weakening, as were inflation expectations, before 2020. In early 2020 we got a real deflationary jolt from which asset markets are still clawing back, with full frontal inflationary support from a Federal Reserve desperate to keep asset owners whole (and further enriched) and to further punish savers and those without the means to invest in the racket.
They called Ben Bernanke “the Hero” but he was actually the perpetrator of the next debt-backed inflation that would further ruin the country, primarily by greatly increasing the divide between asset owners and everyone else. If we had taken the pain in 2008 and 2009 we’d be on a new system now. Instead, we are riding the Greenspan>Bernanke>Powell continuum. Yellen is omitted because nothing egregious happened under her watch. She slipped in between the cycles and fell through the cracks.
Racism? Scapegoating? Xenophobia? Paranoia? Polarization? Caricature of the truth and of the debate? It’s all in there and it’s all in one way or another compliments of the rigged monetary system promoted by the Fed and whatever party happens to be in power at any given time (let’s remember that Bernanke’s ‘rich richer, poor poorer’ scheme was cooked up under a supposed socialist president). The public is filled with political bias and hatred but is relatively ignorant about where the wheels of injustice actually turn. Continue reading "The Big Picture Continuum"→
“If I had a world of my own, everything would be nonsense. Nothing would be what it is, because everything would be what it isn’t. And contrary wise, what is, it wouldn’t be. And what it wouldn’t be, it would. You see?”–Alice in Wonderland
Silver out performs gold as both rise with Treasury bonds, which are in turn rising with stocks, as Junk bonds hit new recovery highs while USD remains firm as inflation expectations are out of the picture. This is highly atypical, maybe even unprecedented.
Some, deeply dug into their particular disciplines and biases, might say it is dysfunctional, as this backdrop simply does not make sense using conventional methods of analysis. Why again did I name this service Notes From the Rabbit Hole?
When the S&P 500 was robo rising month after month, year after year as it did from 2011 to 2015, you did not need the market report with the funny name because all was linear and as it should be. The same actually, could be said for gold. It was linear and as it should be in its relentless downtrend. Casino patrons simply ride the trends!
But today things are making sense simply because we don’t have a need to make them make sense as linear thinkers would do; we go with the indicators and charts. Continue reading "Wonderland"→
The BOJ Governor, Haruhiko Kuroda, never disappoints when it comes to producing a juicy headline for the newswires. Last time, if you will recall, it was the surprise addition of new stimulus. This time around, in his speech to the Shūgiin, Japan's House of Representatives last week, Governor Kuroda exclaimed that "the Yen is fairly valued." He then continued to outline how the merits of monetary policy have limits.
And what was investors take on Kuroda's message? Clearly fearful. That was evident by the avalanche of investors who failed to consider the underlying message and quickly switched to crowded Yen buying. The USD/JPY move was brutal, with the pair taking a nose dive of 300 pips. Of course, soon after, analysts and experts provided their own take. Opinions ran from "The remarkable rise of the USD/JPY has finally come to an abrupt end" to "the BOJ will not add more stimulus." In fact, big bets on more and more stimulus are now well off the table. But, before you decide to follow the crowd, take a moment to stop, ponder and try to see this for what it very well may be. Simply put, perhaps the spike in the Yen's value is actually an opportunity to sell it high.
Kuroda Vs Bernanke
Markets are looking at Kuroda's speech as the BOJ saying, essentially, that shorting the Yen from here on out might not be such a good idea. It might also suggest that if the BOJ is pleased with the current value of the Yen, that they might then be less accommodative. Of course, no one knows what exactly goes through the governor's head except Kuroda himself, yet we can speculate. Before I do that, let me first draw a comparison to another central banker, Ben Bernanke, the now retired chairman of the Federal Reserve Bank. Continue reading "Yen Spike: An Opportunity in the Making?"→
Former Federal Reserve Chairman, Ben Bernanke, was addressing the National Investment Center for Seniors Housing and Care conference in Chicago on Thursday and said that, "I recently tried to refinance my mortgage and I was unsuccessful in doing so." He went on to explain that lenders "may have gone a little bit too far on mortgage credit conditions" according to the Bloomberg report.
I thought I would ask you the same question today....
As always, I would love to hear you thoughts on the subject. Please take a moment to vote and leave a comment.
If a 2011 SMU paper entitled "Housing's Contribution to Gross Domestic Product (GDP)" is right, nothing moves the economic needle like housing. It accounts for 17% to 18% of GDP.
And don't forget that home buyers fill their homes with all manner of stuff—and that homeowners have more skin in insurance on what's likely to be their family's most important asset.
All claims to the contrary, the disappointing first-quarter housing numbers expose the Federal Reserve as impotent at influencing GDP's most important component.
The Fed: Housing's Best Friend
No wonder every modern Fed chairman has lowered rates to try to crank up housing activity, rationalizing that low rates make mortgage payments more affordable. Back when he was chair, Ben Bernanke wrote in the Washington Post, "Easier financial conditions will promote economic growth. For example, lower mortgage rates will make housing more affordable and allow more homeowners to refinance."