Fed’s Bullard Issues Paper Reversing Policy Stance, Sees Just 1 Hike Through 2018

What exactly has transpired recently, other than that singular bad jobs number, to deserve this treatise by Fed’s Bullard?Nevertheless, it appears the man from St. Louis has, finally, seen the light.

In the event of BREXIT, the blokes from HSBC are calling for a 10% storm trooping rally in gold. Like me, they believe gold should be placed on the ark, as a safe haven asset.

If, by chance, England votes to remain a slave to Brussels, they’re not really expecting more than a 5% drop. As a matter of fact, they don’t really think there is a scenario that might stop gold from ripping off heads to the upside.

Gold has historically traded as a safe haven asset and, as such, is likely to react to the results of the 23 June UK referendum on EU membership. We look at two possible scenarios, one in which the UK votes to leave and one in which the UK votes to remain in the EU, and their potential impact on gold. Scenario one, a vote to leave, could result in as much as a 10% rally in gold prices, to cUSD1,400/oz, we believe. The drive higher may be more pronounced if there were to be broader concerns about the future direction of the EU after the vote. Gold could also benefit from the reluctance of investors to move into the GBP or even the EUR. Under scenario two, a vote to remain in the EU, we believe gold is likely to fall by no more than 5%, or to USD1,220/oz, as other bullish factors are likely to support prices.

It’s a win-win situation. Can’t fucking lose.

Their bear case is far more detrimental. These maniacs are fear mongering like hell, calling for a 35% drop in equity prices. This is pure clown rapery on a very large scale.

They give BREXIT a 45% of occurring. Naturally, they’re telling folks to vote remain and then brace to lavish themselves in all of the gains to  be had. They’ve even bothered to tell us which sectors will rally most once clearer heads prevail and permit the autocrats in the EU to rule England, indefinitely.

For every carrot, there is a stick. These sectors will be RAMSHACKLED, in the event of a BREXIT. I am talking black flag, full blown mushroom cloud, over London.

In short, vote remain and receive money.

Vote BREXIT and get punched so hard your face will fall off.

I really enjoyed this note. MKM is talking rate equilibrium and making a farce out of our Federal Reserve, who no longer possesses the intellectual upper hand in these debates. Sad but true.

Executive Summary: It’s pretty clear at this point that the Fed will not be hoisting short rates up today and perhaps not even in July. It’s also equally obvious that the Fed desperately wants to raise rates in a sustainable way, despite market doubts that it will be able to do so. Is market incredulity justified, or simply a game of chicken that the Fed keeps losing? The market is skeptical — rightly, in our view — because it knows that the Wicksellian equilibrium rate remains depressed and, thus, the Fed has very little room to move rates up without putting its inflation target (and the business cycle) at risk. Indeed, both the indexed bonded market and survey-based measures show the Fed’s credibility in achieving its 2% PCE objective remains in serious doubt. And when you are near zero on short rates that is a serious problem indeed (and no, raising rates earlier would only have slowed the economy more, which would make the problem worse, not better). Our equilibrium short rate model (based on the prime age EPR and a risk premium) still suggests a near term rate hike would be a mistake. This is, essentially, the same message that our base/NGDP model is sending: the taper and end of QE were a de facto tightening that should be expected to keep NGDP growth, at best, near the low end of the six year range. This is the big picture, not the current myopic focus on a one quarter bounce in GDP that is not likely to be sustained. Indeed, business loan delinquencies are on the upswing, something that preceded a rising unemployment rate going into the early 1990s, early 2000s and 2007-2009 downturns. If this doesn’t make the hawkish hucksterism coming out of various financial organs seem silly, it should. Is the median FOMC member aware of this chart? We sure hope so, but if recent (verbal) performances are indicative of future results, we wouldn’t count on it. Happy Fed Day.

Well done.

I wonder why this is the case? According to Hedge Fund Research Inc., 291 funds were liquidated in the first quarter, with just 206 new funds started. Moreover, clients pulled a staggering $15 billion from these ‘vehicles’ in the first quarter, a trend all too familiar with many stalwart players in the investment business.

Over the past 12 months, 1,053 funds have shut the fuck down, while a mere 910 were started.

While funds like Pershing Square and their big, stupid, bets continue to mesmerize people, the average Clarence in these funds are getting smoked the fuck out–so they’re opting to send their money to their local discount house and subscribe to Exodus instead.

The allure of the hedge fund industry has been damaged, forever, I think. Having been in the business since the late 90’s and keenly aware of the needs of people with money, it’s apparent to me that more and more people want to take control of their finances and try to learn how to do it themselves, especially since their experiences with hedge fund investing have gone grimly these past few years.

Somewhere along the way, hedge funds forgot how to hedge. They’ve morphed into 3x Direxion asshole vehicles, with casino styled PMs at the helm.

It’d be very easy for me to lay waste to Cramer again for talking out of both sides of his ass. I’ll filter out his pathetic hedging, as he’s obviously scared to be labeled as ‘wrong.’ He likes oil, dividend payers and believes BREXIT will not happen. Moreover, this market is setting up for a rally. Names like PXD and BMY appeal to him. But the smaller capped shit, that you like to traverse in and out from, are a bane to him–because they’ve done nothing but crucify people over the past 2 years.

Enough of the religious talk. Here’s Cramer (extra Shining)

Infantile.

As all of Europe’s biggest banks plunge to new, historic, lows, the cost to swap currencies, measured by the FRA/OIS spread, hit the most extreme level since 2012. Many will blame the specter of BREXIT for this dislocation; but the European banks have been taking hits for a while now.

“There is a scarcity, similar to what happened during the Lehman event and European crisis, of dollars,” said Priya Misra, global head of interest-rate strategy at TD Securities (USA) LLC in New York, referring to the collapse of U.S. investment bank Lehman Brothers Holdings Inc. in 2008. “It might be on a smaller scale than Lehman but the essence is very similar, where you have a shortage of one currency.”

Share prices in some of Europe’s largest banks fell to record lows Thursday as the cost to insure against default on their debt rose.
Top officials from the Bank of Japan, European Central Bank and Swiss National Bank said Thursday they could provide liquidity backstops to markets to contain worsening funding stresses in the event that the U.K. votes to leave the European Union.

“These big central banks that matter now have these unlimited swap lines, and that is going to put a bound on how bad things can get,” said Zoltan Pozsar, director of U.S. economics at Credit Suisse Securities (USA) LLC in New York. “You are going to learn about the existence and the importance and the stabilizing impact of these facilities when they are tested.”

How wondrous. Oracle just beat the street. Who needs banks when we have gigantic tech companies and privately held unicorns to invest in?

This sounds like soured graped being flung at the reader class. I swear on a stack of holy Korans, I am in the least bit upset that markets closed higher today.

Having said that, 55% of stocks ended LOWER today. Odds are, if you’re reading this now, you lost money today and have been scratching your balls since noon, wondering where all the gains are being enjoyed.

Also, oil ended down 4%. The market hasn’t really digested the reversal in crude just yet. At $46 per barrel, the entire country of Venezuela is starving. Then again, why should we care?

Moving on.

In summary, the only sector that was noteworthy today were the utilities.

TLT was higher by 0.5% to new highs. The hounds are allocating, heavily, into dividend payers, ahead of a long summer of debauchery.

As you were.

Fuckery is abound. Markets are higher by 100, yet breadth is at a paltry 47%. Beware of the quadruple witching.

All three indices are higher, led by the Dow, +92.

The top performers are as follows.

Food Wholesale
Water Utilities
Healthcare
Meat
Diversified Utilities
Internet Service Providers
Cleaning Products

Oh. Well, that doesn’t sound all that interesting, does it? A Market being led by meat isn’t being led at all, if I might say so myself.

The Bubble Basket in Exodus is down 0.6% for the day, so where is the money going? Clearly, more than meat and utility pole makers are going higher today.

Let’s have a look.

As of right now, just 48 stocks out of 4,000+ are higher by 2% or more. So where the fuck are the gains?

Here they are. Your leaders.

Wonderful.