Commodity Trade Mantra

Posts Tagged ‘Quantitative Easing’

Finally The Fed Admits It Has No Clue on Inflation & Investment Spending

The most interesting comment by Fed Chair Janet Yellen was her admission that she and her prestigious voting members don’t have a clue why inflation and capital investment spending have not returned to loftier levels. Then how do they yet expect a significant 250 basis point credit tightening over the next couple of years in an economy muddling along just above “stall” speed?

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.

Exposing The Link Between Monetary Policy And Social Inequality

Our monetary policy direction has been prolonging the slowdown since 2008. The longer we wait, the worse the hit we will take. We are going from one bubble to another and are just postponing the inevitable. Under our current system, which has stripped the working class from their savings, they are exposed to greater risks than ever before.

Gold and Silver Rally to be Fuelled by More Monetary Easing

July has not been kind to either market, with gold falling 4% lower from the month’s high, while its silver lost 9%. Easing is back on the table in the UK, while the ECB and Japan are also likely to be more dovish. From a technical point of view, both markets seemed to be primed for a sharp rebound, with silver in a descending triangle and gold in a symmetrical triangle.

Helicopter Money Tested And Failed Spectacularly, Surprising Only Economists

Imagine waking one morning to find extra cash in your account, a gift from your country’s central bank. That might sound outlandish. But the concept of so-called helicopter money is being seriously debated by economists. Helicopter money handed directly to consumers, the theory goes, would send us scurrying to the shops to spend our windfalls, boosting confidence in the economy.

Currency Manipulation by the United States Is Alive and Well

Although further currency manipulation is far from ideal, the US is in no place to criticize Japan for it. Historically, the US has been the world’s leading cheerleader for currency manipulation. If the United States government wants to continue dishing out anti-currency manipulation rhetoric, it best explain why it’s had its own hands in the foreign exchange market.

Financial Collapse Could be Farther and Faster Than Pundits Expect

Financial collapse isn’t “out of the blue,” any more than a heart attack is “out of the blue.” Recall that the global “recovery” 2009 – 2015 was entirely based on the expansion of debt taken on by marginal borrowers. Systemic fragility doesn’t respond to central bank jawboning or Keynesian claptrap; unlike those “policy tools,” fragility is real.

The Relevance Of Gold - Sprott's 3 Litmus Tests

Some view gold as an inflation hedge, others as a deflation hedge. During times of financial stress, some view gold as an asset to own, while others might view gold as an asset to short, because of gold’s historically inverse relation with the safe-harbor U.S. dollar. Many view gold as the ultimate “risk off” asset, and just as many view gold as the ultimate “risk on” trade.

Meet Quantitative Tightening; Quantitative Easing's Evil Twin

There is a growing sense across the financial spectrum that the world is about to turn some type of economic page. Now that QE (Quantitative Easing) is ready to move out…QT (Quantitative Tightening) is prepared to take over. No one in the mainstream is too sure what the last chapter was about, and fewer still have any clue as to what the next chapter will bring.

Gold Will Take Off as the Fed Loses Its Credibility

Anticipation of future strength of the dollar is driving gold prices right now. A small rate hike immediately followed by quantitative easing and an rate cut would completely undermine the Fed’s credibility. What about the price of gold? It will rise when the markets wake up to the fact that the Fed’s biggest easy money days are yet to come.

Will the Fed Have to Save Emerging Markets with QE4?

As emerging markets and nations attempting to defend their currency pegs to the USD sell U.S. Treasury bonds (which have been held as foreign exchange reserves), the yields on the Treasuries rise as a matter of supply and demand. As supply increases, sellers must offer higher yields to entice buyers. This dynamic undermines both the emerging markets and the U.S.

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?

Why the Bear of 2015 Is Different from the Bear of 2008

It’s tempting to see similarities in last week’s global stock market mini-crash and the monumental meltdown that almost took down the Global Financial System in 2008-2009. The dizzying drop invites comparison to the last Bear Market that took the S&P 500 from 1,565 in October 2007 to 667 on March 9, 2009. Here are a few of the differences.

China: QE, Printing of Cheap Money, Currency Devaluation and Gold

To the extent that it weakens its own currency, China exports deflation to the U.S. and can help the dollar’s strength. Lower inflation and a stronger dollar reduce the incentive or rationale for any imminent Fed rate hike. So yes, you can almost say this is China’s silent protest against the widely anticipated September hike.

The Key to Understanding China's Devaluation Against the Dollar

By decoupling from the dollar now, China is sending a message that it may be prepared to let it fall later. This means that when the dollar starts to fall in earnest, China may not be there to catch it. This will also mean that the biggest foreign buyer of Treasury bonds will likely be unwilling to provide help when the U.S. needs China’s help the most.

Gold Prices Will Rise Either Way - You Can Profit

Gold has two ways to win. If low rates persist, gold prices become more attractive because costs of carry and opportunity costs of holding an asset without yield decline. Conversely, if rates go up, that means inflation is on the way, and the gold price benefits from that also.

What Is The Federal Reserve System?

Spending time to understand the ins and outs of the Federal Reserve will give you a significant financial edge. Paying attention to and understanding the Federal Reserve System is more critical to your investments now than in the past decade. Well, everything you need to understand the Federal Reserve is right here at your fingertips.

Valuing Gold – USD Fiat Money Quantity Update

The purpose of FMQ, is to quantify the difference between sound money & fiat currency by including the steps by which gold has been progressively absorbed into banking system from private ownership & into government vaults via commercial banks & Fed. FMQ shows gold is substantially under-priced in dollars on a long-term value basis.

ECB Will Cut Rates To Minus 3%: JP Morgan

ECB is now close to running out of ammunition. Contrary to its initial design, the OMT programme could no longer be seen as unlimited. Draghi is already playing down Q€’s potential, noting that QE alone will not be sufficient to reignite eurozone growth. It seems the only option for the ECB would be to plunge further into NIRP-dom.

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