Wednesday, February 22, 2017

Why Raise Rates?

Everywhere on CNBC are the talking heads lamenting that the Fed is behind the curve.
Bob 'Cool Breeze' Pisani asks, "why not raise in May?"
Santelli is always mad at the Fed. That is his default position.

Yet the dollar stays strong....
And the long bond hangs steady.
And Trump and Congress seem to have no decisions imminent on whether austerity or fiscal stimulus.
They are pushing through tax cuts, unless we consider border taxes, which may raise costs for the little people.
Autos are bought almost entirely with credit...
We have a rental housing crisis.....
Farm labor is getting kicked out of the country....
Social programs are under assault....
N. Korea rattling sabers...
Trump places govt. hiring on hold.
Most appointees not appointed.

I see quite a bit of uncertainty for the Fed to consider.


Tuesday, February 14, 2017

Fed Balance Sheet

Janet Yellen discussing the Federal Reserve Boards bloated balance sheet and the need to reduce holdings at a time that they find it will not hurt growth. (to paraphrase)

I am reminded of the lessons in Reminiscences. When you have a big position you have to wait for the right time to turn around. Given the size of the balance sheet I suspect they will have to wait a while longer. Buyers are disappearing from the bond market and the fiscal side is simmering.

Now is not the time.

Quote, "We will wait for greater clarity."


Monday, February 13, 2017

Worldwide Inflation

"Inflation is always and everywhere a monetary phenomenon."

Milton Freidman

Famous quote. Inflation is the result of devalued currencies.

Stock markets rocketing up all over the world.
Commodities strong. Lumber..... Steel....Silver....

Most people watch their domestic currency and lament strength. Lament the difficulty of putting people to work exporting goods. Populism strong. "Do Something!" they yell.

I think all currencies are going down in value. We must stop seeing them only in relation to each other. The fruits of the currency wars are getting ripe!

The reference points are resetting.

Control risk,