Tag Archives: newsletter

It goes without question, among economists of the central planning mindset, that if a central bank can just set the right quantity of dollars[1], then the price level, GDP, unemployment, and everything else will be right at the Goldilocks Optimum. One such approach that has become popular in recent years is nominal GDP targeting. How does a central bank affect the quantity of dollars? In discussing a nominal income...

Ever had to testify in a trial involving your father’s dealings in corrupt activities, and as a result had your tax records leaked for all of the public to see? Sergio Machado, the ex-head of Credit Suisse’s Brazil fixed-income business has, and now everyone knows how much he made in 2015. Sergio’s father, who goes by the same name, is a former Brazilian politician who went on to head the state run oil company...

It was just a thought…. Cartoon by Bob Rich Loose Monetary Policy Remains in Place Last week, we asked where then will silver go. Well, the price moved around this week, dipping on Thursday but then rebounding sharply on Friday. It closed up 13 cents from last week. The price of gold rose $24. This week, the Federal Reserve announced that it will not hike rates. Most economists (and traders) have long been expecting a...

Summary More than $10 trillion of government bonds now trade at negative yields. And another $10 trillion or so worth of U.S. stocks trade well above their long-term average valuations. And there’s more than $200 trillion of debt in the world. All of this sits on the Fed’s financial applecart. Does Janet Yellen dare upset it? Blame “Brexit” BALTIMORE – The U.S. stock market broke its losing streak on Thursday [and...

On the Swiss Franc Recently I enumerated the different drivers for the continuing strength of the franc. Most commentators mentioned Brexit fears, but I insisted on the low rate and yield environment in the United States after the last Non-Farm Payroll report and the FOMC. Today’s jump in sterling after changed Brexit bets confirmed my view. This anticipation of an Anti-Brexit vote was not followed by a franc decline...

Summary Today’s sterling rally is the largest since 2008. The rally began with the murder of UK MP Cox. Risk-reward favors a near-term pullback. Sterling is recording its daily advance since 2008 today.   It is up about 2.3%.  The ostensible driver is the weekend polls suggesting that, as we suspected the murder of the UK MP acting as a catalyst of sorts for public opinion.  The odds makers in the betting houses...

Summary There is much to like in Bullard’s new paradigm. The problem is that it does not reflect the Federal Reserve’s view or approach. Policy emanates from the Fed’s leadership, but be confused by the noise. The dot plot the recent FOMC meeting was curious.  We noted right away that inexplicably there was one official that apparently anticipated one hike this year and then no hikes in 2017 or 2018.  There was...

Summary The pain of negative yields and social chaos will be very long lasting and very good for gold. So, gold must go up, but Brexit is not one of the reasons why it should. This tells me that in the short term there will likely be a correction in the gold price, creating an opportunity to trade Going Up for the Wrong Reason Gold is soaring. It should—and a lot—but in my view not for the reason it is. Indeed gold...

Summary The U.S. is too big, too varied, too much of everything. You can’t fix a single view of it, even in your mind. But now our problems, challenges, and discontents are big. They are national and international.  We cannot see them. We cannot understand them. Instead, we draw their measure from the news media – based on a flag that flutters and sags, depending on which way the wind is blowing. Bold Prediction...

  Summary People have become used to the idea that the State is their sugar daddy. Many apparently believe that it has some undisclosed, infinite stash of resources at its disposal which it can shower them with at will. The reality is unfortunately different. Hollande Threatens to Ban Protests Brexit has diverted attention from another little drama playing out in Europe. As of the time of writing, if you Google...