Commodity Trade Mantra

Posts Tagged ‘Fed’

If the Fed does What it Wants to, the Result will be the Opposite of What it Wants

The US economy is slowing perceptively. What should the Fed be doing? They might want to cut interest rates. Problem. Another tool in the arsenal – cheapen the US dollar. Again there is a problem. Whether that works & what is a good idea are separate issues. Certainly a rate hike would take the stock market down 20%. It’s going to be just the opposite of what the Fed wants.

Why Stocks Could Fall 50% if the Fed Makes the Wrong Move

I don’t know what the Fed’s going to do. That’s a guessing game. What’s important is that we’re in an extremely fragile situation. The world has too much debt & the Fed’s margin for error is tiny. If it takes a wrong step & stocks plummet 50%, it could cause a bigger financial crisis than in 2008. Do you trust the US government & the Fed to manage this dangerous situation?

The Fed Is Spooking the Markets, and Not China

The Fed has always known that the fragile economy created through stimulus might prove unable to survive even the most marginal of rate increases. The markets have now panicked that the rate hikes are about to occur in the face of a weakening economy. How much further will markets have to fall before the Fed comes to the rescue by calling off any threatened rate increase?

The Fed Admits Economy Can't Function Without Bubbles

Wild swings in asset prices over the past 20 years and the associated boom-bust cycles have sparked considerable debate about how monetary policy might play a stabilizing role. In other words, thanks to Alan Greenspan, the US economy cannot function under a normalized monetary policy regime, “roughly speaking.”

Here Is Why The Fed Can't Hike Rates By Even 0.25%

The US Treasury and the Federal Reserve (where Zoltan Poszar previously worked) understand and grasp the momentuous implications of even the smallest quantum of interest rate increase. What the Fed doesn’t want, is not one but one thousand LTCMs going off at exactly the same time in what is now the world’s most levered trade.

2% Inflation, Gold and The Fed's Current Mandate

Many modifications of policy mandates occurred between 1913 and 1971, and the Fed continues today in a desperate effort to prevent the total unwinding and collapse of a monetary system built on sand. A storm is brewing and when it hits, it will reveal the fragility of the entire world financial system.

Debt, Default, and Taxes (DDT) Are Poison

National Debt has been increasing faster than both population growth and hourly wages. The only solution is default, either now or later, either by refusing to pay the debt and/or by inflating the dollar so its value decreases to nearly nothing. With so much paper in the system it is easy to see why the Fed publicly denigrates gold.

3 Things Central Banks Will Do to “Save the Economy”

Central bank activism, stimulating credit creation with artificially low interest rates, only works when people see little risk of default or rising rates. But that risk cannot be ignored forever. Rising rates come around sooner or later; often ferociously. When that happens, central banks lose their ability to coax stocks higher with lower rates.

If The Fed Was Truly Data-Dependent, They Would Have Tightened Already

If the Fed were truly ‘data dependent’ they would have tightened already. Yet, it has been difficult to react to this fact, because of the FOMC’s recent history of fluctuating policy objectives and shifting interpretations as to how best to achieve its dual mandate. Simply stated, the goal posts & communication around them keep moving.

How Debt Was Used to Create the Biggest Financial Heist in History

Experts have come up with various reasons behind the financial crisis. Some feel the crisis was because Wall Street was greedy. But then the question to ask is: When was Wall Street not greedy & so why didn’t financial crises happen all the time? Its because never before in history have the entire world’s finances been so distorted by debt.

The Fed “IS” the Problem!

The solvency of the Fed itself will be questioned during the next crisis, which seems to already have begun. Either the Fed gets the markets calmed down or, the markets will begin to question the Fed’s “all-encompassing power.” When will speculators take them on? Announcement of further QE will probably do the trick.

A Strong Dollar? Why has the Dollar Rallied?

To answer the question whether or not King Dollar is back to stay, I don’t believe there is ANY chance at all and the current strength will be very transitory. The U.S. is broke on too many levels to count from financially to morally, ethically and everything in between. So why has the dollar rallied?

We’re in an Era of Central Bank Worship

On the subject of bond markets, “does it not seem incongruous to chase low-yielding fixed-income securities denominated in a currency that the central bank is vowing to inflate?” Why do you think that investors go into bonds despite the Fed’s intention to devalue them over time?

Federal Reserve Policies Cause Booms and Busts

Federal Reserve monetary expansion & artificially low interest rates generated wide imbalances between investment & housing borrowing on the one hand & low levels of real savings in the economy on the other. It was inevitable that reality of scarcity would finally catch up with all these mismatches between market supplies & demands.

Janus Yellen & the Great Transition from Risk-On to Risk-Off

Regardless of how Janus Yellen tries to sell the idea as the miraculous “fix” to the systemic bubble in claims the central banks have inflated, it will fail just as predictably as her plan to defuse the risk-on trade while maintaining the inflated value of the phantom assets the speculative frenzy has created out of nothing.

QE Ending Because It Was Successful? Then Here Are A Few Questions

Certainly, QE-induced perpetually rising asset prices & sinking volatility, likely boosted consumer confidence through the interpretation of lofty prices as ‘all must be well’. However, those aspects dangerously conspire to produce a false perception about the true state of economic fundamentals. Some simple questions need answers.

Jackson Hole: 'Tremendous' Downside Risks If Yellen Doesn't Go Full-Dovish

The 3 ways Yellen can be dovish. Full dovish goes beyond anything she has stated explicitly in her comments. Semi dovish may generate a strong initial market reaction if it looks as if it is introducing new factors into policy equation but is much more ambiguous. Contingent dovish is the argument she has put forward for a long time.

Gold Prices Could Go To Infinity - Ron Paul

Former U.S. Representative Dr Ron Paul told CNBC’s Jackie DeAngelis and the Futures Now Traders that the long-term case for gold remains firmly intact. He has long said America should “end the Fed,” and he made that case once again on Tuesday. He says that he “still believes in gold” and that “gold prices could go to infinity.”

Fed's Bullard Urges Investors To Sell Bonds (But Not Stocks)

Given the market’s rapid surge to dismissing The Fed’s stock-selling recommendations, we are stunned by the silence of “market defenders” as once again the Fed takes to the airwaves to demand investors sell their bonds. The Fed is desperate for investors to sell their bonds as they are in full panic mode over the broken repo markets.

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