Category Archives: Commentary
“For years star investor Jim Rogers, chairman of Rogers Holdings, has been ripping the Federal Reserve and other central banks for their massive easing programs. He sees no reason to feel differently now.
“This is absolute insanity, what’s going on,” he told Reuters TV.
“It’s not just the Fed, it’s central banking. This is the first time in recorded history that all major central banks are printing a lot of money trying to debase their currencies. The world’s floating around on a huge artificial sea of liquidity.”
The European Central Bank cut its benchmark interest rate to a record low Thursday.
And what’s the end game?
Eventually, Rogers asserts, “it’s going to dry up. And when it dries up, we’re all going to pay the price for this madness.”
He doesn’t expect the Fed to taper its quantitative easing anytime soon. The central bank is buying $85 billion of Treasurys and mortgage-backed securities a month.
“Mr. Bernanke’s certainly not going to do it. He wants to get out while he can before it all falls apart,” Rogers said. Fed Chairman Ben Bernanke’s term ends Jan. 31. President Barack Obama has nominated Fed Vice Chair Janet Yellen to replace him.
“Mrs. Yellen undoubtedly will not do anything at first because she knows – I hope she knows – that this is going to cause problems when they stop producing so much money,” Rogers said.
“So I would suspect they will go home for a while—maybe [until] 2015.”
And what’s going to happen when the Fed finally shifts policy? “The markets are going to react and react pretty badly, and then they’ll probably loosen up again,” Rogers said.
“These are not very smart people. They’re government bureaucrats, and they think like government bureaucrats.”
So what should investors focus on next year?
“All you have to do is watch the central banks of the world, because if they’re all going to continue to print money, then a lot of it’s going to wind up in financial markets,” Rogers said. “That’s the most important thing that’s going on in the world right now.”
Rogers has been bullish on China for years and remains that way….”
“Although the real significance of these assets is just the same as the value of the paper they are printed on, still the damage inflicted upon the masses, of which the fiat financial system serves as the control mechanism to the access of all the essentials for one’s survival, is immensely immeasurable.
Greed is never enough to describe the true cause and motivation by which such global torment was perpetrated. The power to extract worship by force is but a shallow understanding of the experience we all refer to as Life.
In the final analysis, those who are doing these senseless acts are not really that smart but suffer beyond idiocy could ever grasp.
Since America’s inception… there has been a lingering notion that European Illuminati bankers seek to bring America to its knees and return it to the fold of the Crown of England, which centuries ago became the key political vassal for the Eight Families who own majority stock in every private central bank in the world- Rothschild, Rockefeller, Kuhn Loeb, Lehman, Goldman Sachs, Warburg, Lazard and Israel Moses Seif.
Many US Presidents warned of the intrigues of the cabal, including George Washington, Thomas Jefferson, John Adams, John Quincy Adams; and later Andrew Jackson, Abraham Lincoln and John F. Kennedy. The latter two were assassinated for trying to nationalize the Federal Reserve via the issuance of Treasury Department-backed (publicly-issued) currency.
As cited in my Big Oil & Their Bankers… book and by others, the Eight Families own 52% of the New York Federal Reserve Bank, far and away the most powerful Fed Bank. Their ownership is disguised under names like JP Morgan Chase, Citigroup, Goldman Sachs and Morgan Stanley.
Do I exaggerate when I claim that there are Eight Families? Well, yes, actually these oligarchs have interbred to the point that they are now, for all practical purposes, one big family, with the Rothschilds being the most powerful. Their net worth alone is estimated at well over $100 trillion. These people, whose latest justification for lording over us is that they are descended from Jesus Christ himself, are, for obvious reasons, counter-revolutionary. In their collective if obtuse minds, there are no good revolutions. Democracy is antithema. Government is something that only gets in the way. It must be discredited and bought. The American Revolution really pissed these inbreds off. In Canada, Australia and New Zealand, the Crown of England still holds sway via the Governor General. Most European countries retained their monarchies. In America, we had a revolution, democracy and government.
A medieval rollback of the American Revolution begins with the concept that “government is the root of all evil”. This strain of thinking is promoted by theSaudi/Israeli-owned Fox News. These nations are not “Islamic” and “Jewish”. They are fronts for the Crown of England and the Rothschilds. The well-paid corporate lackey leadership of the Republican Party pushes this anti-government agenda, while the idiocracy misnomer known as the Tea Party takes this monarchist argument to its fascist extreme.
Deutsche Bank: born of of the Third Reich, now influencing the European Super State plan
Key to this revolutionary rollback is that seminal event- 911- which was used by Windsor family country cousin George Bush Jr. to dismantle our Bill of Rights, bankrupt our nation and destroy our image throughout the world via two oil-grab, narco-stimulant, contractor-friendly wars. In the weeks before 911 the financial weekly Barons reported that Deutsche Bank had purchased huge put options (betting that a stock will go down in price) on American & United Airlines, and WTC reinsurance giants Munich RE, Swiss RE and the French Axa. Deutsche Bank, historically owned by the Nazi-funding Warburg family, bought Bankers Trust in 1999 to become the world’s largest bank with $882 billion in assets. Bankers Trust, as its name indicates, had been the Eight Families’ US wealth repository and is the largest shareholder of the Four Horsemen- Exxon Mobil, Chevron Texaco, BP Amoco and Royal Dutch/Shell- who later reaped the Iraq/Afghanistan oil bonanza. In 2001 Sen. Carl Levin’s (D-MI) Banking Committee fingered Banker’s Trust as a major player in drug money laundering. On August 28th, just two weeks before 911, Deutsche Bank executive Kevin Ingram pled guilty to laundering heroin proceeds and arranging US weapons sales to parties in Pakistan and Afghanistan. A June 15, 2001 New York Post article said Osama bin Laden was the likely buyer. Kevin Ingram is a close friend of Clinton Treasury Secretary and Goldman Sachs insider Robert Rubin, now a board member at Citigroup. Ingram had worked at both Goldman Sachs and Lehman Brothers……”
“No legal issue arises when the United States responds to a challenge to its power, position, and prestige. – Dean Acheson , 1962, speaking to the American Society of International Law.
|Anthony Freda Art|
Paul Craig Roberts
Dean Acheson declared 51 years ago that power, position, and prestige are the ingredients of national security and that national security trumps law. In the United States democracy takes a back seat to “national security,” a prerogative of the executive branch of government.
National security is where the executive branch hides its crimes against law, both domestic and international, its crimes against the Constitution, its crimes against innocent citizens both at home and abroad, and its secret agendas that it knows that the American public would never support.
“National security” is the cloak that the executive branch uses to make certain that the US government is unaccountable.
Without accountable government there is no civil liberty and no democracy except for the sham voting that existed in the Soviet Union and now exists in the US.
There have been periods in US history, such as President Lincoln’s war to prevent secession, World War I, and World War II, when accountable government was impaired. These were short episodes of the Constitution’s violation, and the Constitution was reinstated in the aftermath of the wars. However, since the Clinton regime, the accountability of government has been declining for more than two decades, longer than the three wars combined.
In law there is the concept of adverse possession, popularly known as “squatters’ rights.” A non-owner who succeeds in occupying a piece of property or some one else’s right for a certain time without being evicted enjoys the ownership title conveyed to him. The reasoning is that by not defending his rights, the owner showed his disinterest and in effect gave his rights away.
Americans have not defended their rights conveyed by the US Constitution for the duration of the terms of three presidents. The Clinton regime was not held accountable for its illegal attack on Serbia. The Bush regime was not held accountable for its illegal invasions of Afghanistan and Iraq. The Obama regime was not held accountable for its renewed attack on Afghanistan and its illegal attacks on Libya, Pakistan, and Yemen, and by its proxies on Syria.
We also have other strictly illegal and unconstitutional acts of government for which the government has not been held accountable. The Bush regimes’ acts of torture, indefinite detention, and warrantless spying, and the Obama regime’s acts of indefinite detention, warrantless spying, and murder of US citizens without due process. As the Obama regime lies through its teeth, we have no way of knowing whether torture is still practiced.
If these numerous criminal acts of the US government spread over the terms of three presidents pass into history as unchallenged events, the US government will have acquired squatters’ rights in lawlessness. The US Constitution will be, as President George W. Bush is reported to have declared, “a scrap of paper.”
Lawlessness is the hallmark of tyranny enforced by the police state……”
“Bitcoin, an online-only currency scarcely four years old, is breaking out to new highs this week and now sports a total value of $2.8 billion. Just a few months ago, it looked like this economic experiment as the world’s first decentralized technology-based form of money would crash and burn. Since then, ConvergEx’s Nick Colas points out that the U.S. government has shut down a large drug website which accepted bitcoins and promised further scrutiny of its uses; and omputer science experts have warned that bitcoin is neither especially private – one of its notional values – or especially well constructed. The market doesn’t seem to care, with incremental demand from U.S. citizens (through Second Market) and Chinese nationals leading the path higher. Could bitcoin still fail? Sure. But, as Colas notes, its success to date speaks to how much the world is changing… Technology – properly packaged – can engender enough trust to develop a new asset class.
Bitcoin will eventually have to develop a lot more infrastructure to be a useful global currency, to be sure. But there’s close to $3 billion of real money to help back that transition.
Via ConvergEx’s Nick Colas,
Bitcoin – The Lazarus Currency
Every great religion, or company, or country, or rock band has a dramatic ‘Creation myth’ – the story of its birth. The Judeo-Christian tradition has the story of God creating the world in seven days. Google has the grad-student thesis story. American culture is still informed by the Revolutionary War. And where would the Rolling Stones be if Keith hadn’t chatted up Mick on the train, just because he holding some new R&B albums from the States?
Bitcoin, the online-only stateless currency, has its own creation myth and it is purpose-made to appeal to exactly the kind of people who would find value in it. The highlights are:
The original design for bitcoin comes from a 2008 paper published by a person named Satoshi Nakamoto. Who, by the by, doesn’t actually exist.
Bitcoin’s basic architecture is decentralized – no one is “In control.” People with fast computers and some coding skills compete to solve a puzzle created by the algorithm described in Satoshi’s paper. Simultaneously, they track all the transactions in the bitcoin universe – people and businesses exchanging value for goods and services. Every ten minutes, on average, some lucky coder – or group of coders – solves the puzzle, gets a few new bitcoins, and validates the transaction list. Then the whole thing resets and everyone gets to work on the next puzzle.
In principle, this process leaves everyone exchanging or “mining” (cracking the code gets you 25 bitcoins currently) anonymously in the system. Everything in bitcoin is identified with a nearly-impossible-to-crack coding of letters and numbers. No names, phone numbers, or addresses needed.
Now, who do you think would find this creation story appealing? A few candidates:
Tech savvy people, who by their nature and high-functioning professional skills tend to have a few shekels lying around? Yep – classic early adopters.
Then there might be independence-minded older white males in the U.S., ticked off by the Federal Reserve and government in general. Yes, they like the story as well.
And then there are the criminals – drug dealers and so forth – who might not know a creation myth from crystal meth, but appreciate the potential for secrecy.
Offshore millionaires from essentially anywhere in the world, looking for classic diversification and a liquid investment. All you need to access your bitcoins is that long alphanumeric key and a local bank account which links to a ‘Wallet’ – an online repository to hold the currency. Deposit money in China, write down the key, fly to Monaco and go into an Internet café. Easy-peasy.
The basic appeal of this “Genesis” creation story lit a fire under bitcoin, starting at the beginning of 2012 at around $5 and ending up in a spectacular bubble top at $240 in April 2013. The cause of that peak – overwhelming tulip-bulbish demand for bitcoin – was its undoing. Exchanges where people went to trade dollars or euros for bitcoin couldn’t keep up with the volume. Accounts froze or moved very slowly, and confidence in the currency dropped, along with the price. Just a few days after the $240 high, bitcoin was trading for less than $60…..”
“The extreme experiment of current US monetary policy has evolved (as we noted yesterday), from explicit end-dates, to unlimited end-dates, to threshold-based end-dates. Of course, this ‘threshold’ was no problem for the liquidty whores when unemployment rates were extremely high themselves, but as the world awoke to what we have been pointing out – that it’s all a mirage of collapsing participation rates – the FOMC (and sell-side strategists) realized that the endgame may be ‘too close’. Cue Goldman’s Jan Hatzius, who in today’s note, citing two influential Fed staff economists, shifts the base case and forecasts that the Fed will lower its threshold for rate hikes to 6.0% (and perhaps as low as 5.5%) as early as December (as a dovish forward-guidance balance to an expected Taper announcement).
Via Goldman Sachs,
- The most senior Fed staff economists for monetary policy analysis and domestic macroeconomics, William English and David Wilcox, havepublished separate studies that imply a strong case for a reduction in the 6.5% unemployment threshold for the first funds rate hike. We have proposed such a move for some time, but have been unsure whether it would in fact happen. And while the uncertainty around near-term Fed policy remains very considerable, our baseline view is now that the FOMC will reduce its 6.5% threshold to 6% at the March 2014 FOMC meeting, alongside the first tapering of QE. A move as early as the December 2013 meeting is possible, and if so, this might also increase the probability of an earlier tapering of QE.
It is hard to overstate the importance of two new Fed staff studies that will be presented at the IMF’s annual research conference on November 7-8. The lead author for the first study is William English, who is the director of the Monetary Affairs division and the Secretary and Economist of the FOMC. The lead author for the second study is David Wilcox, who is the director of the Research and Statistics division and the Economist of the FOMC. The fact that the two most senior Board staffers in the areas of monetary policy analysis and domestic macroeconomics have simultaneously published detailed research papers on central issues of the economic and monetary policy outlook is highly unusual and noteworthy in its own right. But the content and implications of these papers are even more striking.
It will take us some time to absorb the sizable amounts of new analysis in the two studies, and we are only able to comment on a few selected aspects at this point. But our initial assessment is that they considerably increase the probability that the FOMC will reduce its 6.5% unemployment threshold for the first hike in the federal funds rate, either coincident with the first tapering of its QE program or before.
The first study, written by William English, David Lopez-Salido, and Robert Tetlow and entitled “The Federal Reserve’s Framework for Monetary Policy–Recent Changes and New Questions,” uses a smaller version of the staff’s large-scale econometric model FRB/US to analyze the optimal path for the federal funds rate. Using “small FRB/US,” a set of assumptions about Fed preferences, and a set of assumptions about the baseline performance of the economy, the authors find that the theoretically optimal policy involves a commitment to hold the federal funds rate near zero until 2017, followed by a series of hikes that push the rate well above neutral by the early 2020s. In this simulation, the unemployment rate falls below the structural rate for a time, and inflation rises modestly above the 2% target. (The optimal policy in the English et al. study is more aggressive than that shown in Vice Chair Yellen’s earlier set of optimal control simulations, which points to the first hike in early 2016; the reasons seem to include a lower assumption for the structural unemployment rate and a later baseline for the first hike in the funds rate.)
However, the authors note that such an optimal policy is possibly infeasible because it is complex and model-dependent….”
“Current Position of the Market
SPX: Very Long-term trend - The very-long-term cycles are in their down phases, and if they make their lows when expected (after this bull market is over), there will be another steep decline into late 2014. However, the severe correction of 2007-2009 may have curtailed the full downward pressure potential of the 40-yr and 120-yr cycles.
Intermediate trend - SPX initial top in place.
Analysis of the short-term trend is done on a daily basis with the help of hourly charts. It is an important adjunct to the analysis of daily and weekly charts which discusses the course of longer market trends.
… For some indices, probably. For the SPX, DOW, and NDX, perhaps not! I mentioned some time ago that I expected a minor top to form which would be followed by the final short-term uptrend. That minor top came at 1775 on SPX — three points beyond the 1772 target I had in place since the 1646 low was confirmed – and the minor correction is under way. Although Friday saw an intra-channel bounce, there are some indications that it was only a rally in a downtrend and that the final minor low is still ahead. After that, we should experience the final up-phase of the bull market which will either re-test the tops, or make new highs in the indices listed above. The DOW has recovered and managed to eke out a fractional new high which was celebrated on CNBC last week. Indexes which tend to lead, such as RUT, experienced the most weakness in last week’s correction.
The mood on Wall Street is very bullish, most individuals believing that as long as the Fed continues its purchases at the same rate, the market will continue to rise. Now that tapering has most likely been put off until next year, the bull market is expected to continue. According to the SentimenTrader:“Active fund managers have added to their exposure to stocks and are now carrying among their heaviest loads in 7 years”.
Cycles, however, may be telling a different story and, if some of the more reliable cycle analysts are correct, the bull is on a very short leash. Also waving a red flag, sentiment indicators are reaching levels that are seen at important tops. If you are an investor, it’s time to become wary!
Even though the DOW is trying to catch up….”
“First it was China hinting that where Silk Road failed in monetizing, pardon the pun, BitCoin, the world’s most populous nation could soon take the lead. Then, none other than private equity titan Fortress said it had great expectations for the digital currency. Now, it is eBay’s turn to announce that it is preparing to expand the range of digital currencies it accepts, adding that “its payment unit PayPal may one day incorporate BitCoin.” But not just yet. FT reports that according to eBay CEO John Donahoe, “digital currency is going to be a very powerful thing.”
The ecommerce group, which has more than 124m active users, is initially focusing on incorporating reward points from retailers’ loyalty schemes into its PayPal wallet.
“We are building the container so any retailer could put their loyalty points into the PayPal wallet,” Mr Donahoe said.
“There is a limit to how many cards you will carry, or remembering what points you have or don’t have,” he said. “But in a digital wallet, you can put 50 different loyalty cards.”
Mr Donahoe said Ebay was not expanding the PayPal wallet to include Bitcoins, “but we are watching it”.
“That same technology could accept other digital currencies,” he said.
While traditional retailers have so far balked at even the vaguest idea of considering allowing BitCoin as a viable payment method, all that would take to start a seismic shift in perception would be one angel idea “investor” to show that it can be done. ….”
The Printer That Can Print A 2,500 Square Foot House In 20 Hours
“I wasn’t the only person coming out with a book this week (much more on that at the end of the letter). Alan Greenspan hit the street with The Map and the Territory. Greenspan left Bernanke and Yellen a map, all right, but in many ways the Fed (along with central banks worldwide) proceeded to throw the map away and march off into totally unexplored territory. Under pressure since the Great Recession hit in 2007, they abandoned traditional monetary policy principles in favor of a new direction: print, buy, and hope that growth will follow. If aggressive asset purchases fail to promote growth, Chairman Bernanke and his disciples (soon to be Janet Yellen and the boys) respond by upping the pace. That was appropriate in 2008 and 2009 and maybe even in 2010, but not today.
Consider the Taylor Rule, for example – a key metric used to project the appropriate federal funds rate based on changes in growth, inflation, other economic activity, and expectations around those variables. At the worst point of the 2007-2009 financial crisis, with the target federal funds rate already set at the 0.00% – 0.25% range, the Taylor Rule suggested that the appropriate target rate was about -6%. To achieve a negative rate was the whole point of QE; and while a central bank cannot achieve a negative interest-rate target through traditional open-market operations, it can print and buy large amounts of assets on the open market – and the Fed proceeded to do so. By contrast, the Taylor Rule is now projecting an appropriate target interest rate around 2%, but the Fed is goes on pursuing a QE-adjusted rate of around -5%.
Also, growth in NYSE margin debt is showing the kind of rapid acceleration that often signals a drawdown in the S&P 500. Are we there yet? Maybe not, as the level of investor complacency is just so (insert your favorite expletive) high.
The potential for bubbles building atop the monetary largesse being poured into our collective glasses is growing. As an example, the “high-yield” bond market is now huge. A study by Russell, a consultancy, estimated its total size at $1.7 trillion. These are supposed to be bonds, the sort of thing that produces safe income for retirees, yet almost half of all the corporate bonds rated by Standard & Poor’s are once again classed as speculative, a polite term for junk.
Central Bankers Gone Wild
But there is a resounding call for even more rounds of monetary spirits coming from emerging-market central banks and from local participants, as well. And the new bartender promises to be even more liberal with her libations. This week my friend David Zervos sent out a love letter to Janet Yellen, professing an undying love for the prospect of a Yellen-led Fed and quoting a song from the “Rocky Horror Picture Show,” whose refrain was “Dammit, Janet, I love you.” In his unrequited passion I find an unsettling analysis, if he is even close to the mark. Let’s drop in on his enthusiastic note:
I am truly looking forward to 4 years of “salty” Janet Yellen at the helm of the Fed. And it’s not just the prolonged stream of Jello shots that’s on tap. The most exciting part about having Janet in the seat is her inherent mistrust of market prices and her belief in irrational behaviour processes. There is nothing more valuable to the investment community than a central banker who discounts the value of market expectations. In many ways the extra-dovish surprise in September was a prelude of so much more of what’s to come.
I can imagine a day in 2016 when the unemployment rate is still well above Janet’s NAIRU estimate and the headline inflation rate is above 4 percent. Of course the Fed “models” will still show a big output gap and lots of slack, so Janet will be talking down inflation risks. Markets will be getting nervous about Fed credibility, but her two-year-ahead projection of inflation will have a 2 handle, or who knows, maybe even a 1 handle. Hence, even with house prices up another 10 percent and spoos well above 2100, the “model” will call for continued accommodation!! Bond markets may crack, but Janet will stay the course. BEAUTIFUL!!
Janet will not be bogged down by pesky worries about bubbles or misplaced expectations about inflation. She has a job to do – FILL THE OUTPUT GAP! And if a few asset price jumps or some temporary increases in inflation expectations arise, so be it. For her, these are natural occurrences in “irrational” markets, and they are simply not relevant for “rational” monetary policy makers equipped with the latest saltwater optimal control models.
The antidote to such a boundless love of stimulus is of course Joan McCullough, with her own salty prose:
And the more I see of the destruction of our growth potential … the more convinced I am that it’s gonna’ backfire in spades. Do I still think that we remain good-to-go into year end? At the moment, sporadic envelope testing notwithstanding, the answer is yes. But…..”
“Note from dshort: The NYSE has released new data for margin debt, now available through September. I’ve updated the charts in this commentary to include the new numbers.
The New York Stock Exchange publishes end-of-month data for margin debt on the NYXdata website, where we can also find historical data back to 1959. Let’s examine the numbers and study the relationship between margin debt and the market, using the S&P 500 as the surrogate for the latter.
The first chart shows the two series in real terms — adjusted for inflation to today’s dollar using the Consumer Price Index as the deflator. I picked 1995 as an arbitrary start date. We were well into the Boomer Bull Market that began in 1982 and approaching the start of the Tech Bubble that shaped investor sentiment during the second half of the decade. The astonishing surge in leverage in late 1999 peaked in March 2000, the same month that the S&P 500 hit its all-time daily high, although the highest monthly close for that year was five months later in August. A similar surge began in 2006, peaking in July, 2007, three months before the market peak.
The next chart shows the percentage growth of the two data series from the same 1995 starting date, again based on real (inflation-adjusted) data. I’ve added markers to show the precise monthly values and added callouts to show the month. Margin debt grew at a rate comparable to the market from 1995 to late summer of 2000 before soaring into the stratosphere. The two synchronized in their rate of contraction in early 2001. But with recovery after the Tech Crash, margin debt gradually returned to a growth rate closer to its former self in the second half of the 1990s rather than the more restrained real growth of the S&P 500. But by September of 2006, margin again went ballistic. It finally peaked in the summer of 2007, about three months before the market.
After the market low of 2009, margin debt again went on a tear until the contraction….”
“The Federal Reserve shocked market participants in September with its decision to refrain from tapering quantitative easing, as many felt that the central bank had signaled the move at its June meeting.
Fed chairman Ben Bernanke sparked a sharp rise in long-term interest rates at the June press conference by suggesting that tapering could happen later in the year.
The September decision raised questions among observers over whether talking about tapering ended up eventually precluding tapering, because the rise in long-term interest rates sparked by the signal weighed on the economy such that the Fed then felt it couldn’t ease up on the bond buying it does under its QE program.
Richard Koo calls it the “QE trap,” a concept he explained in a note following the September FOMC decision.
Koo has been meeting with clients and officials in the U.S., and he says he hasn’t been able to find anyone to refute the theory that the U.S. economy is currently ensnared in the “QE trap.”
“At the Fed I hoped to hear a refutation of the QE ‘trap’ argument presented in my last report and which I presented using Figure 1,” writes Koo in a note to clients. “However, the official I met with was unable to say anything to ease my concerns.”
The QE “trap” happens when the central bank has purchased long-term government bonds as part of quantitative easing. Initially, long-term interest rates fall much more than they would in a country without such a policy, which means the subsequent economic recovery comes sooner (t1). But as the economy picks up, long-term rates rise sharply as local bond market participants fear the central bank will have to mop up all the excess reserves by unloading its holdings of long-term bonds.
Demand then falls in interest rate sensitive sectors such as automobiles and housing, causing the economy to slow and forcing the central bank to relax its policy stance. The economy heads towards recovery again, but as market participants refocus on the possibility of the central bank absorbing excess reserves, long-term rates surge in a repetitive cycle I have dubbed the QE “trap.”
In countries that do not engage in quantitative easing….”
“The Standard & Poor’s 500 Index hit yet another record high Monday, and some experts say conditions are ripe for the stock market to keep climbing.
The economy and earnings are growing, albeit at a modest pace; inflation is low; and in the wake of Washington’s budget/debt ceiling mess, the Federal Reserve isn’t about to tighten policy, the bulls tell The Wall Street Journal.
“This is the best environment for stocks right now. You don’t have rising interest rates becoming a problem. You don’t have inflationary pressures. You do have earnings growth,” Tim Hayes, chief global investment strategist at Ned Davis Research, tells the paper.
Even the 7.3 percent unemployment rate is a good thing, he says, because the rate is dropping.
When the unemployment rate is above 6 percent and decreasing, the S&P 500 averages annual gains of 16.5 percent, going back to the 1940s, Hayes explains.
Ned Davis Research says stocks also do better when earnings growth is under 5 percent….”
Corporate welfare come in many forms, but this is one you might not have expected….
“The fast-food industry is one of the nation’s largest employers of low and minimum wage workers. According to one group, often the industry workers’ pay is not enough and many turn to government programs for assistance. In fact the group calculated the largest of these companies, McDonald’s, cost U.S. taxpayers close to $3.8 billion each year.
According to the National Employment Law Project’s (NELP) newest report, because the fast-food industry pays its workers less than a living wage, U.S. taxpayers must foot the bill in the form of the public assistance programs these workers must use to get by. McDonald’s alone, according to the group, cost taxpayers $1.2 billion last year. Based on NELP’s estimates, 24/7 Wall St. reviewed the annual costs of providing public assistance to low wage employees working at the seven largest publicly traded fast-food companies.
“What this report shows,” explained NELP policy analyst Jack Temple, “is that whether or not you work in the fast-food industry or eat fast-food, the industry is costing you….”