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from FT:
Markets rallied sharply late on Thursday on unconfirmed indications that the Fed may push back more forcefully on investors’ fear of a pre-mature tightening in monetary policy. To sustain the change in market sentiment for more than a few days, the Fed would need to follow up with greater details or, even better, have its beneficial market impact gradually superseded by an accelerated improvement in economic fundamentals. I suspect that, having witnessed [...] 
Central Banks Almost Always Print To Fuel The Boom And Ameliorate The Bust
The Bank For International Settlements – Beware a Crash ….Unlike such ambitious promotions as global warming, economic affairs are more easily influenced, as the current economy is not just man-made but created in an unstable way. The power elite have created a seamless network of something like 150 central banks around the world that pump outfiat money in excess of what economies need. [...] by Phoenix Capital Research
Modern financial theory dictates that sovereign bonds are the most “risk free” assets in the financial system (equity, municipal bond, corporate bonds, and the like are all below sovereign bonds in terms of risk profile). The reason for this is because it is far more likely for a company to go belly up than a country.
Because of this, the entire Western financial system has sovereign bonds (US [...] Wolf Richter www.testosteronepit.com “Japan’s experience is a sobering real-world reminder of why forceful and timely action is appropriate,” Boston Fed president Eric Rosengren said in his desperation to rationalize the Fed’s QE3 decision. It would restart the printing press in a massive way. It would be a flood of money—in contrast to the “muted” response from Japan to its two decades of economic stagnation. And it has already been successful, he said: “I would say [...] Marc Faber, publisher of the Gloom Boom & Doom Report, told Bloomberg Television’s Betty Liu on “In the Loop” today that “the fallacy of monetary policy in the U.S. is to believe this money will go to the man on the street. It won’t. It goes to the Mayfair economy of the well-to-do people and boosts asset prices of Warhols. Faber said that he is “very happy. Very good for the [...] From Pragmatic Capitalism: Here’s an interesting perspective from SocGen on yield-based strategies. I thought I’d pass this along for your own research: Economic slowdown in developed, emerging markets will force another round of monetary easing, pushing yields at long end across all asset classes even lower, Societe Generale strategists including Guillaume Salomon and Georgios Oikonomou write in a note to clients. Best risk-adjusted, yield-based expected returns: * Buy investment grade, high yield bonds; U.S. [...] From FT:
Are the bond markets going mad? It is a question that many investors might ask. For as anxiety has erupted in the eurozone, something striking has occurred with respect to US Treasuries and German Bunds. If you look at the credit derivatives market – the place where investors judge the risk of bond default – government bonds are getting riskier, not just in places such as Greece but in supposed havens such as [...] Bond savers: Get ready to jump ship One of Britain’s leading bond fund managers is urging investors to “get ready” to ditch bonds because they are riskier than equities at this juncture. The warning will sound alarm bells for tens of thousands of risk-averse savers who have piled into bond funds since January amid the economic turmoil. They have poured almost £4bn into corporate bond funds, which have outsold any other type [...] Reuters JPMorgan Chase & Co has sold an estimated $25 billion of profitable securities in an effort to prop up earnings after suffering trading losses tied to the bank’s now-infamous “London Whale,” compounding the cost of those trades. CEO Jamie Dimon earlier this month said the bank sold corporate bonds and other securities, pocketing $1 billion in gains that will help offset more than $2 billion in losses. As a result, the bank will [...] Forget that S&P 500 e-mini futures plunged to four-month lows at 1290; or Treasury yields crashed back to their record lows; or Gold and Silver’s surge today; or WTI’s plummet to almost a $90 handle; or Citi joining Morgan Stanley in the red year-to-date; or credit markets continuing into the red for the year; or IG9 10Y soaring further to 160bps – widest in 6 months; or VIX closing above [...] Now its getting interesting. 30Y yields fell the most in 5 months today back to 5 month lows, 10Y yields crashed to all-time closing lows, and Gold surged by its most in 4 months (and 2nd most in 7 months) as stocks started to accelerate lower. Gold is unch on the week now as 30Y is -21bps and 10Y -14bps to 1 1.69% handle – incredible. Between the Philly Fed’s [...] In the five years that John Silvetz made about $700 million for Deutsche Bank AG (DBK) by trading corporate bonds and credit derivatives, the amount of his annual bonus paid in cash dropped to 20 percent from almost 70 percent. The rest, earned by betting on companies from American International Group Inc. to MBIA Inc., was locked up in deferred stock and euros, according to people familiar with the matter, who declined to [...] If you want to tax the rich, then tax the rich. Taxing corporations is not the way:
The Wealth Distribution In the United States, wealth is highly concentrated in a relatively few hands. As of 2007, the top 1% of households (the upper class) owned 34.6% of all privately held wealth, and the next 19% (the managerial, professional, and small business stratum) had 50.5%, which means that just 20% of the people [...] $100T Value of all bonds worldwide $20T – State Street Bank custodial funds $0.6T QE2 ———— and some further numbers [...] Thetrader.se February 29, 2012, at 11:01 am My Dear Friends, Please do not be bothered by today’s intervention. The following news is what creates the absolute need for QE. It is the thesis of my Formula Of 2006 of no major recovery that gives the foundation to my thesis of QE to Infinity. Treasury Yield Descending Signals Slowdown by ZH As Bloomberg notes: “Foreign investors appear to have little faith in the U.S. economic recovery. They sold $20.7 billion of corporate bonds in December, leaving the one-year mean at minus $3.6 billion. That compares with a 12-month average of $47.3 billion in May 2007. Acquisitions of U.S. stocks were also weak. They totaled minus $11 billion versus a 12-month average of $2.1 billion.” And in a stunning display of reciprocity, US [...] Bernanke’s recognition of his penalizing savers with low rates as an ‘issue for people’ sparked an interesting note from the WSJ on how sensible and stoic savers are being herded (unsafely) into risky investments. Bernanke’s insistence that “our savers collectively have to hold all the assets of the economy and a strong economy produces much better returns in general” must be juxtaposed with comments from a money manager that “I don’t think that’s [...] Zero Hedge Bernanke’s recognition of his penalizing savers with low rates as an ‘issue for people’ sparked an interesting note from the WSJ on how sensible and stoic savers are being herded (unsafely) into risky investments. Bernanke’s insistence that “our savers collectively have to hold all the assets of the economy and a strong economy produces much better returns in general” must be juxtaposed with comments from a money manager that “I [...] Chaos Theory, via Pimco Debating a future of inflation vs. deflation is radically new territory for investors. The chaotic nature of the choice facing societies is whipsawing equity markets and dominating bottom-up factors. By Brett Arends, MarketWatch BOSTON — Get ready for 2012. Because if the markets around the world are to be believed, this is the year when something’s gotta give. Sorry to be gloomy at this festive time, but there it is. Will it be U.S. stocks? Could be. They are already trading at lofty levels. Shares are about 21 times average earnings for the past 10 years, says Yale economics [...] . The bankers’ power is unsettling, says Tim Price, who helps oversee more than $1.5 billion as director of investment at PFP Group LLP, an asset-management firm in London. “It’s a [...] Risk correlations will likely remain high, at similar levels to what we have seen since 2007/2008. Broader macro shocks continue to dominate country-specific factors and most FX cross rates. “JP Morgan beats expectations” are the raving headlines this morning, I should say that this is “disingenuous” but I won’t, rather I will tell the truth and call BULLSHIT because it is a LIE! Mixed into Morgan’s “better than expected” results are a couple sleight of hand laughers. First, Morgan has taken $100 Million of previous writedowns back and claimed them as “earnings”. …And they did this why? Because [...] Via Peter Tchir of TF Market Advisors Today feels just like it did in 2008. We had almost as many manic up days back then as crazy down days. Remember how we were saved when Fannie and Freddie got put into conservatorship? Remember how all was good when AIG was taken over by the government? Then we sold off the day that TARP [...] Telegraph.co.uk Markit’s iTraxx Crossover index – or ‘fear gauge’ – of corporate bonds surged 56 basis points to 857 on Thursday Key indicators of credit stress have reached the danger levels seen before the Lehman Brothers failure three years ago, with Markit’s iTraxx Crossover index – or “fear gauge” – of corporate bonds surging 56 basis points to 857 on Thursday. Societe Generale led [...] From FT: Interest rates on US, German and UK government bonds have fallen to all-time lows. Yields on 10-year US Treasury securities, for example, are below 2 per cent. That is the lowest recorded since the Federal Reserve began publishing market data in 1953. In addition, yields on the inflation-protected 10-year Treasuries are zero. These are almost incomprehensible levels whose implications are profoundly negative. [...] by ZH First it was US money markets; then it was various European industrial concerns (which somehow double down as banks); then it was China; now the bank runs shift to insurance institutions when, as Bloomberg reports, Lloyd’s of London has decided to pull peripheral Euro bank deposits. What next: complete collapse of European interbank market as bank runs become a daily thing at both the retail [...] During a presentation today at the Adam Smith Institute, economist Kevin Dowd, a visiting professor at the Pensions Institute, Cass Business School in London, told his audience: “Fiat money is entering its death spiral… Banks use crooked accounting methods to hide losses and enrich employees with bonuses. It’s another form of looting… At least 46 out of 50 US states are insolvent.” What’s behind Dowd’s thinking? He wrote this last December: “Sooner rather than later, [...] |
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