Bed, Bath, and From Beyond
...it always ended with screaming.
"If you don’t have the best hand, it’s hard to win.” - Doyle Brunson
Looks like headline PCE (Putin’s Criminal Effects) came in at 6.35% YOY.
What do you think of that, Citadel Ben?
What a long, strange trip it’s been.
US stocks shed $9tn in 2022 as Fed tightening spooks investors Yeah, I’m not feeling the despair. Just now on CNBS: “What sectors do you like?” This is not a question asked at major bottoms. No one is visibly crying on TV yet. I’m waiting for CNBC to switch formats to a cooking channel.
Are those forces in the room with us right now Jerome?
Good guest today on CNBS: Pantera Capital CEO Dan Morehead - Is the Fed running a Ponzi scheme?
Their first mistake is easily visible in this graph of the real policy rate. The difference between inflation (their mandate) and their policy tool (fed funds) is much larger than at any point in history – including the disastrous 1970s.
Fed policy is as stimulatory as at any point in history – including the dark days of the 1970’s. Real fed funds – the fed funds rate less true core inflation – is as loose as ever…Not sure why all the debate about 25 vs. 50 vs. 75 basis points. They need to raise rates by hundreds.
#2. THE FED’S PONZI SCHEME
That issue is dwarfed by the biggest Ponzi scheme in history – the Fed’s manipulation of the government and mortgage bond markets…In 2020 the Fed decided that controlling the overnight rate was not enough – it wanted to control all rates, all the allocation of capital in the economy.
Good piece (I will overlook Morehead’s praise of Epstein buddy Larry Summers, who - even when he’s right on something - is still a grotesque menace to society.)
"I don't think you can say the whole history of the Fed is disastrous - it wasn't until they really got into the socialization of risks, which has all happened post-Greenspan. He's the real enemy in this." - Bill Fleckenstein, August 2019
'A Tough, Horrible Day For Everybody' At FGMC more than 400 FGMC employees — ranging from senior vice presidents to sales personnel – were terminated during a 10-minute virtual meeting with CEO Aaron Samples held via Microsoft Teams…While the layoffs were a shock to most who were terminated, the former employees said there were earlier signs that FGMC was in trouble. They all pointed first to PIMCO, a California-based investment management firm that acquired a significant stake in FGMC in 2015. PIMCO, however, withdrew its financial support in March, the former employees said
Ah yes, Pimco…
Pimco shook hands with the Fed—and made a killing A Reuters review of more than 14,000 trades by the Federal Reserve Bank of New York and Pimco over the past five years shows that Pimco has consistently been on the money in anticipating the Fed’s actions in the agency MBS market.
April 2020: “US bond fund heavyweights Pimco and Lord Abbett were rocked by heavy outflows last month as investors abandoned fixed income over fears that the coronavirus pandemic would trigger a wave of corporate defaults. Pimco, the largest bond investor in the world, bled a net $27bn in March, its highest monthly redemptions since the departure of co-founder Bill Gross in October 2014.”
Maybe the above is why the Fed had to start squirting trillions into the system.
Pundits ponder why Kashkari quit PIMCO …Mr. Kashkari's celebrity status helped him cut a deal to get managing director rank and partner status, allowing him to share in the firm's profits. Mr. Kashkari was the first non-CEO at PIMCO to earn that status without coming up through the ranks, sources say. Some PIMCO employees were surprised by the Kashkari hire because he had never picked stocks for a living.
Ken Griffin’s best investment ever (April 2015): Ben Bernanke Will Work With Citadel, a Hedge Fund, as an Adviser
Larry Fink’s best investment ever (February 2019): Former Fed Vice Chairman Stanley Fischer to Join BlackRock
This worked out well for BlackRock and Pimco: Big Money Managers Take Lead Role in Managing Coronavirus Stimulus
As part of its role, BlackRock would buy bond ETFs. Fed officials saw this as a way to buoy broad swaths of the market rapidly, said a person with knowledge of their thinking.
Rivals cried foul. Some economists and finance commentators voiced concern the Fed mandate would allow BlackRock to boost its own ETFs.
“If you’re an asset manager working for the Fed, your own funds should be excluded from the purchases,” said Nouriel Roubini, an economics professor at the New York University’s Stern School of Business and chief executive of Roubini Macro Associates.
During a call with analysts April 16, BlackRock’s Mr. Fink bristled at the suggestion the Fed mandate was a bailout for the ETF industry or his firm. “I think it’s insulting,” he said. “What we’re doing with governments is based on great practices.”
As I’ve noted many times, It turns out that "Occupy Wall Street" actually refers to ex and future central bankers.
Home Listings Surge in Turnabout for Supply-Starved US Market
You sort of have the 21st Century encapsulated right here: The Gazprom unit that was seized by the German government in April and given a €10bn taxpayer bailout will continue to pay bonuses to its gas traders
Real Disposable Income Per Capita Down Again in May Over the years I’ve had too many run-ins with econ majors, Bloomberg pundits, Fintwit Fed shills, people with "premium' Twitter accounts and other dregs of society who told me inflation is great. Even the Fed used to understand real wages.
Today’s humor: “A UK investment trust is planning to tear up its performance fee structure after dishing out a £60mn payday to managers last year, just before its valuation plunged following the brutal sell-off in growth stocks. The value of Chrysalis Investment Trust has nosedived 57 per cent over the past 12 months on a total return basis” Reminded me of this. Again, these bonuses were in a year every bank listed here failed and would have gone bankrupt without taxpayer intervention (thanks Neel!):
Streaming now: eurocrisis, the sequel. “The single currency tried monetary policy, now only fragmentation or fiscal policy remain” But first - chee chee!
ECB to Avoid Bond Targets or Thresholds in First Line of Defense Also avoiding reality.
This was interesting: Japanese Yield Curve Control, Oil, & Bitcoin Macro w/ James Lavish
Empire To Expand NATO In Response To War Caused By NATO Expansion Everyone seems to be looking forward to World War 3.
Soaring Inflation to Hit Britain Harder Than Any Other Major Economy, BOE Warns For some background, here’s friend of the show Nicola Duke 2 years ago.
Can Kids Get Monkeypox? Health Experts Say Yes Oh God, not the “health experts.” Can kids get Bubonic Plague? Yes. Yes they can. This whole Monkeypox thing is just too obvious. What do you think, Dennis Meadows?
New York Times Shows How McKinsey “Guided” Major Opioid Players, Causing Even More Deaths Lael Brainard and Tom Barkin spent time at McKinsey, so they’re used to “a complete abdication of responsibility (moral or otherwise) for the courses of action [they] recommend.”
Woman Pushing Baby Stroller Shot Dead on NYC’s Upper East Side In California the shooter would get a stern warning and probation.
Everybody's waiting
Everybody's something
Plastic stress
"I don't think you can say the whole history of the Fed is disastrous".
Just because they call it the Great Depression doesn't mean it was all that swell.
Great content as always. I don’t know how you do it but am very glad you do