"...We have to carefully go back and deconstruct the volatile engagement between capital markets and central banks for the last ten years for an understanding of where we stand today.
The first die was cast by the central bankers in early 2009: having stared into the abyss of a deflationary spiral in 2008 the Fed and the BoE announced a radical new policy of bond purchases named Quantitative Easing.
...Markets primed themselves for inflation yet even with a ripping stock market in 2009/10 they were disappointed. QE rescued the financial system but the liquidity created was distributed to the very rich who have a very low monetary velocity and so the expected inflation fillip never materialised as the liquidity injection came to be stored rather than multiplied by the banking system.
Several years later, in 2013, the Fed suggested a reduction in the pace of its QE program. They wanted to tighten credit conditions gradually. However, capital markets beat them to it and the ensuing “taper tantrum” tightened monetary policy on their behalf. Within four months the market had taken 10 year treasuries from a yield of 1.6% to 2.9%, a move of far greater impact, and much more rapid, than anything the Fed had contemplated doing.
Markets initially thought the US could cope with this higher level of rates, but with a slowing economy, an unfortunately-timed oil price crash, and persistent ghosts in the machine (like the substantial Yuan devaluation fear which never materialised) they were proven wrong...
...people forget but recessions don’t come out of thin air. ...It may prove especially potent right now as the labour market is tight and there are no catalysts to generate a self-correcting US recession with both central bankers and markets now united in their desire for loose policy.
...the Fed has been reluctant to unwind its balance sheet. The largesse of this program fell to those already wealthy (“the global creditor”) and who had a low propensity to spend:
financial markets boomed, less so the real economy...
The top 10% made out very well,
while the bottom 90% are living pay check to pay check
...the bond market’s cautionary recessionary indicator is stuck flashing RED whilst the US economy goes from strength to strength? I fear so.
Clearly of course no one knows."
http://www.zerohedge.com/news/2017-09-14/markets-are-wrong-hugh-hendry-shuts-down-his-hedge-fund-here-his-parting-letter
The first die was cast by the central bankers in early 2009: having stared into the abyss of a deflationary spiral in 2008 the Fed and the BoE announced a radical new policy of bond purchases named Quantitative Easing.
Plus the European and Swiss central banks, among others,
to the tune of about $200 billion per month, making our economy fake
...Markets primed themselves for inflation yet even with a ripping stock market in 2009/10 they were disappointed. QE rescued the financial system but the liquidity created was distributed to the very rich who have a very low monetary velocity and so the expected inflation fillip never materialised as the liquidity injection came to be stored rather than multiplied by the banking system.
Several years later, in 2013, the Fed suggested a reduction in the pace of its QE program. They wanted to tighten credit conditions gradually. However, capital markets beat them to it and the ensuing “taper tantrum” tightened monetary policy on their behalf. Within four months the market had taken 10 year treasuries from a yield of 1.6% to 2.9%, a move of far greater impact, and much more rapid, than anything the Fed had contemplated doing.
A mass realization occurred,
which was stamped out by the rest of the world's central banks,
leaving the masses complaisant and calm
Markets initially thought the US could cope with this higher level of rates, but with a slowing economy, an unfortunately-timed oil price crash, and persistent ghosts in the machine (like the substantial Yuan devaluation fear which never materialised) they were proven wrong...
Which most people have no idea occurred at all,
as they did the 9 to 5 and tried to pay their bills on time
as their Ramen Noodle and potato chip packages became less heavy,
but had the same price and airiness
...people forget but recessions don’t come out of thin air. ...It may prove especially potent right now as the labour market is tight and there are no catalysts to generate a self-correcting US recession with both central bankers and markets now united in their desire for loose policy.
The game is on, in the latter innings,
which will ultimately end up just like the other monetary inflation's of empire's past...
...the Fed has been reluctant to unwind its balance sheet. The largesse of this program fell to those already wealthy (“the global creditor”) and who had a low propensity to spend:
financial markets boomed, less so the real economy...
The top 10% made out very well,
while the bottom 90% are living pay check to pay check
...the bond market’s cautionary recessionary indicator is stuck flashing RED whilst the US economy goes from strength to strength? I fear so.
Clearly of course no one knows."
http://www.zerohedge.com/news/2017-09-14/markets-are-wrong-hugh-hendry-shuts-down-his-hedge-fund-here-his-parting-letter
Maybe a hurricane is like the cat repeating in the matrix, only a glimpse at mortality en mass— Abner Doon (@Aenbrnood) September 14, 2017
A I is spotify, it's embraced, while playing, telling you what you want to hear. It's the news....— Abner Doon (@Aenbrnood) September 14, 2017
My memory is failing, was it Bitcoin or was it JP Morgan that was bailed out by the government? https://t.co/DHqFzr5UJN— Erik Voorhees (@ErikVoorhees) September 12, 2017
"A bank is a place that will lend you money if you can prove that you don't need it."— Trading Proverbs (@tradingproverbs) September 12, 2017
– Bob Hope
Cell phone bills have grown just as fast over that time - again, before the "hedonic quality adjustments" that say there is no inflation. pic.twitter.com/AqtzTVWdFk— Jesse Felder (@jessefelder) September 12, 2017
The BOJ now owns 75% of Japanese ETFs— Jonathan Tepper (@jtepper2) September 12, 2017
The SNB is now a hedge fund owning $85bn of US stocks
The ECB is funding M&A deals at zero yield pic.twitter.com/1wZagTNcTr
Dimon: "You can't...invent a currency out of thin air & think that people who are buying it are really smart.” CB's: Hold my beer... pic.twitter.com/QMwVp5Ayl5— Luke Gromen, CFA (@LukeGromen) September 14, 2017
