When everything’s going up, it hides a lot.
This time is different.
Traders Are Betting Fed Will Cut Rates in 2023 After Steep Hikes About 75 basis points of cuts are expected within two years
Steep hikes?
Anyway, sure glad that uber-hawkish phase is almost over! So what’s the terminal rate? 2.5%? 3%? And at what point can we terminate the Fed? No one seems to ask that.
I should note that Danny Moses bet Dan Nathan $5,000 the other day that our hawkish Fed will cut in 2022!
I asked back in April:
How did we as a nation get to the point where a failed-regulator/Berkeley econ professor & a fabulously wealthy private-equity oligarch are the two most powerful people in America?
I don’t think I got any good answers.
ECB/EU bonds: big bazooka needed to stop spreads blowing up Oooh! A bazooka! Remember Hank Paulson’s bazooka? That turned out to be a neutron bomb for most of America.
What the market [what market? - RH] really wants is another “whatever it takes” moment, invoking Mario Draghi’s 2012 commitment to preserve the euro. Underpinning that were outright monetary transactions, a bottomless bond-buying programme that shored up confidence in the euro without ever having to be used.
Who writes this crap? Oh, the FT article is uncredited. I don’t blame them. “Lex” wrote it. Suzanne researched this.
FT is like a Euro-trash Bloomberg, forever speaking praise to power.
Paging Adam Smith:
This disposition to admire, and almost to worship, the rich and the powerful, and to despise, or, at least, to neglect, persons of poor and mean condition, though necessary both to establish and to maintain the distinction of ranks and the order of society, is, at the same time, the great and most universal cause of the corruption of our moral sentiments. That wealth and greatness are often regarded with the respect and admiration which are due only to wisdom and virtue; and that the contempt, of which vice and folly are the only proper objects, is often most unjustly bestowed upon poverty and weakness, has been the complaint of moralists in all ages.
To add insult to injury: FT: Larry Fink and the financial industry’s new emperors Barf.
Why should the ECB be constantly interfering with markets at all? (Heresy I know).
How did all these clowns get so omnipotent, and, if you believe the FT, so omniscient?
Just look at the ECB governing council. What a bunch of wankers (like the Fed. Check out Charles Evans sometime.)
How did we all become colonized by unelected, unaccountable wankers?
I particularly liked this part of the article: “a bottomless bond-buying programme that shored up confidence in the euro without ever having to be used.” Huh? Sure looks like it was used:
“The chart below shows the weekly change in the Fed's balance sheet assets - at one point it was adding $400 billion of fresh money per week! It has since eased off, but it is still adding and not subtracting liquidity to the system. Therefore, I will know that the Fed is serious about combating inflation ONLY when the line on the chart dips well below zero and stays there for the duration.”
In February 2018 I read this:
Having grabbed almost half of the bond market and 75% of ETF investment in Japanese equities, Kurodanomics must get creative. That could mean gorging on mortgage-backed and asset-backed securities to diversify stimulus targets. The BOJ could load up on corporate debt. Perhaps from a list of well-managed companies willing to share profits with workers? Kuroda's team might consider buying local government and municipal IOUs, freeing fiscal space to invest in job-creating industries and free daycare.
What is this? This is not capitalism. It’s much more akin to fascism in my book, a Soviet or Chinese-style command and control economy.
I commented at the time:
No one in the mainstream ever says "These econ clowns have failed, they're dangerous, get them the hell out out of the market-manipulation business". It's always moar moar moar.
And here we are. How the f did we get to this point?
It’s not like the BOJ or ECB or Fed policies are helping most people.
Forget the narrative - look at the results!
I mean, come on…
Can the ECB Avoid a Repeat of Its Debt Crisis?
Childs: Fire's got the temperature up all over the camp. Won't last long though.
MacReady: Neither will we.
Childs: How will we make it?
MacReady: Maybe we shouldn't.
Saudi Crown Prince’s Rare Regional Tour
Is he making Saudi Arabia fun again?
Our corporatists love guys like MBS, Jeff Epstein and Klaus Schwab.
Democracy Dies In Saudi Consulates
…there were a “crazy number” of price cuts over the past week in Southern Nevada — 1,447, up from 319 during the same week last year, according to figures he pulled from Las Vegas’ main listing service. “You can’t overprice it anymore” (Three of the four homes for sale within spitting distance of me have had recent price drops. There’s a fifth home for sale, but it’s literally always for sale.)
In San Diego, the average home price is $850,000 and the average salary in San Diego is around $70,000.
Couldn’t agree more. “The Bank of England plans to scrap rules introduced in the aftermath of the financial crisis designed to test whether borrowers could afford their mortgages in the event of significant interest rate rises.” Brilliant! Next thing you know the U.S. will repeal Glass-Steagall. Oh, wait…
Australians are struggling with a cost of living crisis as grocery bills and fuel prices soar to new heights. Also Australia confronts fixed rate mortgage tsunami. Maybe ask to go back to the camps.
The National Association of Realtors found institutional investors bought 52% of homes in Tarrant County and 43% of homes in Dallas County in 2021 You will own nothing.
Good thread from friend of the show Stephen Punwasi
Low rates hide high prices. (My title quote today was from here.)
Snap back to reality, oh, there goes gravity, oh
From @GrantsPub:
Swedish fintech player Klarna Bank AB is in negotiations for a new financing round for roughly $500 million at a $15 billion valuation, The Wall Street Journal reports today. The only problem: The buy now, pay later outfit was seeking a low $30 billion price tag just last month, and garnered a $45.6 billion valuation one year ago in a $639 million round led by SoftBank Group Corp.’s Vision Fund 2. Prior to the turn in conditions, the company had reportedly set its sights on a $50 billion-plus figure.
Of course, harsh reality has since intervened: Klarna logged a SEK 2.57 billion ($250 million) first quarter loss, quadruple that of a year ago, while announcing layoffs equivalent to 10% of total headcount last month. “We decided that we’re going to change the weight of our investments and focus more on short-term profitability over long-term, new, potential investments,” co-founder and CEO Sebastian Siemiatkowski told the FT on May 25.
Even that rapid fall from grace leaves early backers on firm footing, as 17-year old Klarna raised $460 million at a $5.5 billion valuation in August 2019. That yawning gap between pre- and post-pandemic price tags is far from unusual. L
No, this wasn’t me, but I am encouraged.
The Fed has been absolute hot garbage for close to 30 years now. Everyone after Volcker has ultimately been bad for the country long term and on net has increased overall inequality and further destroyed your purchasing power with each successive cycle.
Greenspan: the bubble master. LTCM bailouts, dotcom bubble, housing bubble lead up to 2008. “Greenspan put.” Anti tariffs on China. Pro H1B. Pro easy money. Original designer of modern day Fed induced economic busts. Went on to make millions of dollars in speaking fees and working for the enemy.
Bernanke: the OG brrrr master. Destroyed a generation’s worth of upward mobility and bailed out huge amounts of shit-heels who should’ve been thrown under a bus with prejudice. Continual rounds of QE until said shit-heels were better off than before. Went on to make millions of dollars in speaking fees and working for the enemy.
Yellen: the deer in headlights uber-dove. Too scared to raise rates by even 25bps out of fear absolutely anything could break. Mostly just a continuation of Bernanke era mismanagement and implicit market pumping by doing nothing surprising whatsoever. Useless academic. Went on to make millions of dollars in speaking fees and working for the enemy (the government in this case).
Powell: the silver haired talk like he’ll do something significant but really only when forced to master. As shown in 2020 they’ll go full Bernanke/Yellen at the drop of a hat if it even remotely means they could be blamed for not doing so. Presently probably waking up every night in a pool of his own sweat at the thought of his $50M net worth taking a hit while inflation forces his hand and gives him no out. About to get hung by his own petard and run over by everything else everyone before him contributed to. Oversaw record amount of Fed govs resigning for corrupt trading practices.
Still waiting for Taleb to re-brand his "Harvard-Kremlin Economic Model" to "Harvard-Kremlin-Berkeley Model" in his next book whenever that is. Janet needs to be acknowledged
I'm old enough to remember when the Fed was called "the lender of last resort" and not "the buyer of every crap instrument issued by its owners and their pals".
Good on ya for using Adam Smith in context. He gets a bum rap from all sides.