Econ Majors Guessing The Future.

Dot Plot = Dolt Top

"The Fed is in the business of price-fixing.
It fixes interest rates and then tries to predict the future. "

- Jim Grant

The U.S. Federal Reserve system is cutting about 300 people from its payroll this year, a small but rare reduction in headcount…due to fall by more than 500 positions from 2022 to 2023, from 24,428 to 23,895 (2.1%).

Note the above excludes the thousands that work at the Eccles Building in Washington D.C. Bloomberg had to sue to get that information years ago. Fed transparency you know...

"Everyone who said inflation would be transitory and contributed to these policy errors - I'm sure they all work at the Fed still, so there's really no accountability."

Joseph Wang

Friend of the show Zerohedge had a headline: “With Most Central Banks Ending Their Tightening Cycle, The BOJ Remains Too Terrified To Even Start”

Various 1-Month Government Yields

(As of around 9/22/23 - note that the timeframes are not identical below)

Japan - still negative!

Live Feed of the Bank of Japan

---

Almost Daily Grant’s, January 15, 2021

Bloomberg noted yesterday that the Sherman Ratio, (named after the inventor, DoubleLine’s deputy chief investment officer Jeffrey Sherman) which measures the amount of yield on offer for each unit of duration, reached a record low of 0.1968 on Dec. 31, down nearly half from the 0.3468 seen at the start of 2020. In other words, as Bloomberg’s Brian Chappatta put it yesterday, “investors were more susceptible to losses from a move higher in interest rates than at any time in history.” 

Since these words were written, the TLT ETF has lost 43.7%, and has given up all share price gains since 2012.

---

I’m planning on writing something soon just on LTCM, which was 25 years ago this month. Also going to take a look at how the stock market does once rate cuts start, and dig into my growing backlog of housing and CRE-related stories.

---

Another ZH headline: Quantitative Tightening Is Not Biggest Threat To Global Yields

I like to look at the PDF’s Yardeni puts out on the balance sheets.

So below you can see just the QE from the Fed, ECB and BOJ (No China, UK, Canada etc.) We shot up from around $2.5 trillion in 2008 to around $25 trillion at the peak just a year ago. No wonder we had/have the biggest (financial) bubble in the history of the Universe.

No wonder rates went down! Throw $22.5 trillion at an asset class (e.g., bonds) and see what happens. Come on, man!

Just for fun, throw in the PBOC.

Another $5.8 trillion, which used to be a lot of money.

As I often point out, Fed QT is much, much, much slower paced than Fed QE.

Podcasts

• Danielle DiMartino Booth and Lacy Hunt Very good interview with my favorite “deflationist,” Lacy Hunt. A few quibbles but that’s ok.

• Take the Long Way Home with Vincent Daniel and Porter Collins (and Danny Moses) A great chat with the guys from The Big Short. By the way, if you haven’t read the book or seen the movie, now would be a good time. Not perfect, but better than 99% of financial media.

• Crypto Critics Corner: Sam Bankman-Fried’s parents were in on it

• Trepp: Extensions & Modifications, Insurance Rundown, REIT Bankruptcy, & Dot Plot Discussion

---

Word Cloud of Powell’s statement the other day

Don’t see middle-class mentioned.

---

The FOMC “Dot Plot” is a Joke.

We’re at a 5.33% Fed Funds rate today. Apparently 13 of 19 FOMC pre-cogs think we’ll cut rates in 2024. So much for “higher for longer.”

Here’s the latest forecast from our resident psychics:

---

Lagarde says ECB rates to stay restrictive as long as needed

---

FEAR ZONE

A different era…

---

---

Loved the opening lines to this review of a new Elon Musk bio:

Who or what is to blame for Elon Musk? Famed biographer of intellectually muscular men Walter Isaacson’s dull, insight-free doorstop of a book casts a wide but porous net in search of an answer.

---