Tag Archives: Pretense Of Knowledge

Seemingly terrific April jobs report poses strange puzzle

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“Let’s review. The U.S. added 288,000 jobs in April, the biggest spike since January 2012. The increase in employment is measured by the so-called establishment survey that quizzes private firms, government worksites and nonprofit institutions.  Yet the size of the labor force sank by 806,000. That’s the biggest drop since a 848,000 plunge in October and you have to go all the way back to 1981 to find another 800,000-plus decline. Labor-force changes are measured by the ‘household’ survey that interviews Americans directly.  ‘You have drastically different messages offered by the establishment and household surveys,’ said Stephen Stanley, chief economist of Pierpont Securities.”

http://blogs.marketwatch.com/capitolreport/2014/05/02/seemingly-terrific-april-jobs-report-poses-strange-puzzle/

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Fed Tapers Another $10 Billion, Expecting Rebound From Grim Q1

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“The U.S. economy stalled out in Q1, as GDP rose at a 0.1% annual rate, the Commerce Department said Wednesday. But with other data showing rebounding growth in the spring, the Federal Reserve voted to taper its bond-buys by another $10 billion.  The Fed’s decision, widely expected, cited ongoing improvement in the economy. But as previously signaled, the central bank left interest rates untouched and pledged to keep policy easy as long as the economy remained shaky.  Residential investment fell hard for a second straight quarter, and business fixed investment declined at a 5.5% rate. Both sectors were expected to help lead the economy in 2014.”

http://news.investors.com/economy/043014-699061-fed-tapers-expecting-better-growth-after-q1-gdp.htm?p=full

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Five+ Years of Fed Futility Laid Bare for All to See

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“It has been five-and-a-half years since Lehman Brothers, AIG, Fannie Mae, Freddie Mac, and other casualties of the credit crisis imploded! We’ve been subjected to more than a half-decade of the Fed’s supposedly useful and appropriate medicine … Unlimited money printing.  Zero percent interest rates.  Gargantuan bank bailouts.  Deliberate attempts to inflate stock and house prices.  And for what?  More than $3 TRILLION in extra padding on the Fed balance sheet doesn’t look like it’s done much for the broad economy.  GDP grew just 0.1 percent in the first quarter.   Even that dismal reading was propped up by a massive surge of $43.3 billion in health care spending tied to the Obamacare rollout.”

http://www.moneyandmarkets.com/five-years-of-fed-futility-laid-bare-for-all-to-see-60708

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Why the housing sector won’t save the broader economy

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“[The Princeton professors] point out that house-price growth during the last two years was actually a bit better than between 2004 and 2006. But cash-out refinancing volume is way down, as is the building of new units.  ‘Dreadful new home sales data yesterday heightened concerns that house-price growth will stall, but we are making a different point: the sensitivity of economic activity to rising house prices is much lower today than it was prior to the Great Recession,’ they say. ‘This is due to a number of factors, such as the rise in investor purchases and the fact that the households who would be most likely to spend out of housing wealth are no longer homeowners.'”

http://blogs.marketwatch.com/capitolreport/2014/04/24/house-of-debt-bloggers-say-housing-sector-wont-save-the-broader-economy/

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“Everything we are told about deflation is a lie”

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“Messrs Yellen, Draghi et al should be careful what they wish for. Inflation targeting is hardly a precise science. Achieving an entirely arbitrary 2% inflation level is bad enough for savers on fixed incomes when deposit rates are close enough to zero as to make no difference, but markets have a tendency to overshoot. Most government bond markets are clearly overbought – but in a QE world given fresh impetus by the looming arrival of the ECB, overbought markets can become even more overbought. When we don’t claim to understand the underlying dynamics (political) or the final destination (though we have our own fears), it’s much better simply not to play.”

http://www.cobdencentre.org/2014/04/everything-we-are-told-about-deflation-is-a-lie/

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Bill Bonner: The Fed’s Childishly Naïve Theory of Credit

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Bill-Bonner2

“The $33 trillion spent by Americans over the last four decades or so did not come from savings. Instead, it came out of thin air – from the banking system, which contrary to the common belief that it requires some pre-existing money (in the form of cash deposits or reserves) to make loans, simply creates them out of nothing.  In other words, this credit creation did not represent resources that had been set aside – like seed corn – to prime future growth.  No one ever deprived himself of a single meal, or as much as a single beer, to save the money. No one troubled himself to work even a single hour to earn it. No one toiled or spun.”

http://www.bonnerandpartners.com/the-feds-childishly-naive-theory-of-credit/

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Bank of Japan To Double ETF Purchases in Next Round of Easing

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“Japan’s central bank will probably double purchases of exchange-traded funds in a second round of monetary easing under Governor Haruhiko Kuroda anticipated in coming months, a Bloomberg News survey of economists shows.  The Bank of Japan, which tomorrow is forecast to leave unchanged a 60 to 70 trillion yen target for yearly expansion of the monetary base, will increase annual ETF buys to 2 trillion yen, according to a survey of 36 analysts. Evidence of budding inflation expectations among Japan’s companies may restrain more ambitious plans, such as open-ended ETF purchases, even as the economy slows because of this month’s sales-tax increase.”

http://www.businessweek.com/news/2014-04-06/boj-seen-doubling-etf-purchases-in-next-round-of-japan-easing

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European central banks mull bolder moves to prevent low inflation

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“Asked what tools the ECB has remaining, Mr. Liikanen, who has headed Finland’s central bank since 2004 and is on the ECB’s 24-member governing council, cited a negative deposit rate as well as additional loans to banks and asset purchases.  Bundesbank President Jens Weidmann didn’t rule out large-scale asset purchases, known as quantitative easing. Mr. Liikanen also said it was an option for the ECB and wouldn’t run afoul of rules prohibiting the central bank from financing governments. The Federal Reserve and Bank of Japan have aggressively used the policy to keep inflation from falling too low.”

http://www.marketwatch.com/story/ecb-mulls-bolder-moves-to-prevent-low-inflation-2014-03-26

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Cheap Printing vs. Expensive Drilling

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“Yellen explained that the Fed helps people secure employment ‘by influencing interest rates.’ She followed, ‘Although we work through financial markets, our goal is to help Main Street, not Wall Street.’  Her predecessor used the same rhetoric in 2012. ‘This is a Main Street policy. Many people own stocks directly or indirectly. The issue here is whether or not improving asset prices generally will make people more willing to spend.’  Oil, unlike the Fed’s fiat dollars, can’t be created out of nothing. And, job or no job, people are driving.  Mrs. Yellen tells crowds, Don’t worry be happy, your job will be printed anytime now.  Let’s just say, for those with a job to go to, getting there will not be getting easier.”

http://www.caseyresearch.com/cdd/cheap-printing-vs.-expensive-drilling

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Fund Manager Jeremy Grantham Blasts the Fed

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“The Fed can manipulate stock prices. That’s perhaps the only thing they can do. But why would you want to get an advantage from the wealth effect when you know you are going to have to give it all back when the Fed reverses course. At the same time, the Fed encourages steady increasing leverage and more asset bubbles. It’s clear to most investing professionals that they can benefit from an asymmetric bet here. The Fed gives them very cheap leverage on the upside, and then bails them out on the downside. And you should have more confidence of that now. The only ones who have really benefited from QE are hedge fund managers.”

http://www.thedailybell.com/news-analysis/35154/Fund-Manager-Blasts-the-Fed/

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