Fed’s Brainard Advocates Easy U.S. Monetary Policy for China, Stocks Roar

Fed’s Brainard has always been a dove. But with all of the hawkish statements out there, the market simply needed to hear what it already knew. There’s no fucking way the Fed is gonna hike rates in September, or ever for that matter. As a result, stocks are soaring.

In what has become common place today, America’s central bank is dictating policy on behalf of China, literally.

“Downside risks are also present in emerging market economies, where growth has slowed rapidly in recent years,” she added.

“Most importantly, China is undergoing a challenging transition from a growth model based on investment, exports, and debt-fueled state-owned enterprises to one driven by consumption, services, and dynamic private businesses. Because of the adjustment costs along this transition path and demographic trends, Chinese growth will likely continue to slow.”

Because of China, Brainard believes the Fed should hold off on rate hikes.

“I believe this approach has served us well in recent months, helping to support continued gains in employment and progress on inflation.”

She concluded, worrying a great deal about overseas:

“Foreign consumption and investment are weak, while foreign demand for savings is high, along with an elevated demand for safe assets.”

Well, you don’t hear stuff like this coming out of Clinton country, aka Wall Street, these days. Funny thing about Wall Street, it’s very similar to the unions, where all of the workers, or many of them are pro republican, but the leaders are mostly democrat shills. On Wall Street, they’re not so much democrat shills, as they are establishment whores.

David Woo, Head of Global Rates and Currencies, said in an interview today a potential Trumo presidency would equate to a massive boom in the dollar and the overall economy as a whole.

“The U.S. economy would take off in a big way” if Trump were elected and Republicans control both legislative houses next year, said Woo, thanks to the fiscal stimulus that Trump would enact. Trump has pledged to spend at least twice as much as the Democratic nominee on infrastructure and also enact a massive tax cut, two measures that would entail a renewed issuance of Treasuries.

Against this backdrop, the greenback would strengthen and U.S. Treasury yields would rise, a view shared by Woo and other fixed income veterans as well.

Without question, lower taxes and a stronger border will help both wages and investment. However, I am far less sanguine abount the immediate after shocks of a Trump win. There is this pervasive belief that Trump is simply talking shit and doesn’t mean to build walls or fuck with China and NAFTA. Well, what if he’s not just talking shit? What if he truly intends to start trade wars, in order to get better deals?

Long term, a Trump win would be fantastic for markets. However, in the short term, I am fairly certain markets will freak the fuck out over the specter of tighter Fed policy and the end to market rigging.

Markets are rallying this morning, completing making fools (once again) of the jackasses who trade futures, who had stocks off by 150 before the bell.

Gains are most abundant in gold and hospital stocks, ironically.

On the downside are banks, especially of the foreign varietal.

Bottom line: you should all relax and enjoy the splendor of the last days of the empire. Watch the fat hogs eat MOAR until their bellies explode with refuse. All of the fashionable folks relish in the depravity. You might as well partake in the excesses, for what else are you to do?

There’s been a lot of fear mongering for the past year or so, much of it has to do with the indelible facts that central banks have been rigging rates and markets, disallowing markets to set prices. The national debt has doubled over the past 8 years and all we’ve got to show for it is the slowest recovery since world war 2.

The fuck.

The Morgan Stanley research team is out with a report today, suggesting that developed economies might’ve topped and could be heading towards recession soon.

“The Morgan Stanley Cycle Indicators across the U.S., eurozone and Japan have stalled, highlighting the increasing risk that we have moved from ‘expansion’ to ‘downturn’ in [developed markets], even as our economics team flags upside risks to its macro outlook,” the team said in a note published on Sundayy.

The team points out that if this is in fact the start of a cycle change, it would represent the shallowest recovery for the U.S. in more than 30 years.

Here’s a look how these cycles have played out in the past, with recessions shaded.

There are a number of factors that are used in this model, and here are some of the main ones that are giving the team cause for concern.

Leading indicators are turning

According to the team, both the U.S. and Japan have seen leading indicators, or data points that typically turn before the broader economy, take a downward turn in recent months.

It’s tougher to get a loan

It has been tough to get a loan throughout the economic recovery, but many banks are reporting that standards are getting even tighter. While this doesn’t always happen at the same time as a downturn, Sheets and his team still find the current levels troubling. “Of course, tighter lending standards have not always coincided with a turn in the cycle but the current elevated reading of the share of U.S. banks reporting tighter credit standards compared to those periods suggests that the shocks are not necessarily transitory,” they write.

Corporate earnings still look bad

The term “earnings recession” has been mentioned a number of times in recent months, and there’s little reason to expect that to change. Such an earnings recession has a strong relationship with economic downturns. “U.S. earnings per share [EPS] year-over-year growth is negative, having peaked in mid-2014,” write Sheets & Co. “Since the 1990s, negative EPS growth has often, although certainly not always, coincided with downturns, although the pattern breaks down if we go further back in time.”

In order to keep a close eye on the potential turn and gauge the likelihood of it actually happening, the team says there are a few indicators they will be keeping an even closer eye on.

Jobless claims, which they say typically trough within 28 months of the cycle peak in the U.S.

The unemployment rate, since this also coincides with cycle peaks nearly 70 percent of the time.

Consumer confidence, as this typically peaks along with the cycle and then sees major reversal during the downturn.
Manufacturing, even though it’s not one of the inputs into Morgan Stanley’s indicator, is worth keeping a close eye on.
U.S. Treasuries, as the yield curve as measured by two- and 10-year notes is usually the flattest around cycle turns.

People Magazine is out with an article this morning, citing Clinton’s pneumonia as being super infectious, saying about a half dozen people on her staff have been stricken with the illness.

One top advisor was so sick, he needed urgent care at a hospital and was taken to the ER by ambulance.

So if all of this is true, then why the fuck was she seen taking a photo with a little girl, following her fainting episode at the 9/11 memorial?

This shows a malicious disregard for the well being of others. In this case, the fact that she put a little girl in harms way is especially distasteful.

These are truly stunning statements, even for Trump. Not only is he saying the markets are rigged, but that Yellen is explicitly doing the bidding for President Obama. Moreover, he says as soon as rates go up, the market is going way down, calling the artificially low rate environment discrimatory against retired savers.

Wow.

I agree with everything he said, especially regarding the $20t in debt we have and nothing to show for it.

Watch the clips below of Trump being interviewed by CNBC. Great stuff.

In a speech given today, the last day to talk shit ahead of the Fed’s September Fed meeting, Fed’s Lockhart made hawkish comments, which in fact were taken as dovish by the pajama clad morons in the futures pits.

Read for yourself.

“If 1.6 percent inflation and 4.9 percent unemployment were all you knew about the economy, would you consider a policy setting one tick above the zero lower bound still appropriate?” Lockhart said in a morning address at the National Association of Business Economists. “I think circumstances call for a lively discussion next week.”

Lockhart has said recent data and contacts with business officials in his southern region leave him confident that job growth will continue and inflation eventually rise towards the Fed’s target.

Though not ruling out some of the more pessimistic arguments of his colleagues who feel the economy may be in a low growth rut, he regards the economy as “chugging along, not stalling out.”

Growth should strengthen in the second half of the year, moving towards a three percent annualized rate, he said. Though weak inflation remains an “awkward” aspect of the Fed’s policy puzzle, he said he remains confident that will rise over time because of still strong consumer spending and continued job growth.

“Conditions warrant that serious discussion,” when the Fed meets next week, Lockhart said.

Losses in SPY futs have halved since this comments were aired, all of which are a mystery to me.

Welcome to September, officially.

The winds are brisk and futures are tumbling. Over in Euroland, stocks are getting their faced kicked in. Collectively, they’re down around 2%, with the Italians ‘enjoying’ the brunt of the sell off.

Leading the charge lower are the banks.

Unicredit -5%
Soc Gen -3.6%
Santader -3.5%
AXA -3.5%
Deutsche Bank -3.5%
Credit Suisse -3.3%
Lloyds -4%
Standard Chartered -4%

It’s worth mentioning, commodity related names are getting poleaxed too, with heavy losses found in E.on,BHP, Rio and Glencore.

Well, this is refreshing. Someone had the balls to call China’s property market a bubble. And guess what, he’s the fucking Chief Economist at the PBOC!

Unlike our Central Bank, who likes to shroud their statements with smoke and mirrors, riddles and stupid statements filled with misdirection, Ma Jun gives zero fucks and is telling you the fucking bubble is dangerous is a risk to the financial system.

“Measures should be taken to put a brake on the excessive bubble expansion in the property sector, and we should curb excessive financing into the real estate sector,” Ma Jun, chief economist of the People’s Bank of China’s research bureau, said in an interview with China Business News. A third of the financial-system leverage added over the past decade has come from the surge of housing prices, Ma said.

In case you’re unfamiliar with China’s bubbling debt situation, you might want to read this, this and of course this.

Like him or not, a D. Trump presidency is the antithesis of the Wall Street Journal led demand for open borders, and upsets the central apple cart that has scorned and beaten middle America into submission.  A Trump presidency upsets the globalist’s vision for the world, where one government presides over an underclass of slaves, producing cheap goods for fellow wards of the state.

Following the most newsworthy events of the Presidential campaign in months, seeing H. Clinton collapse at a 9/11 event,  exposing a young girl to pneumonia, then comical rumors of her body double emerged online, not to mention her calling 50% of Trump’s supporters ‘deplorable’, the market is beginning to price in a potential end to the status quo.

With Trump in office, Yellen and her band of fuckheads are out of there. U.S. trade deals will be canceled and rewritten. Taxes will be levied upon asshole companies shipping factories abroad, who then attempt to import cheaply made goods back into the country. It will be transformative, not to mention THE WALL.

Dow futs are off by 150.

DAX futs are off by 2.1%

WTI is off by 1.6%

Gold is catching a bid, now down by just 0.2%

Bonds are rallying and the Hang Seng is off by 2.75%