The Case for Gold
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As the Trump Rally Fizzles, Attention Turns Back to Reality
The Trump stock rally has finally slowed, right on schedule. As reported here earlier, the Reagan rally following his election in 1980 ended on November 30 and did not resume for more than two years.
Why Trump Can’t Be Reagan
The market wants to imagine that Trump is a new Reagan who will preside over the same sort of economic revival and stock bull market that emerged in 1982. There are NO similarities in these two presidencies. As Hegel famously noted: "We learn from history that we do not learn from history."
This is What a Mania Looks Like
The Trump election has ignited a market mania, to everyone's surprise. Our sense is that it reflects an enormous relief that the Obama years of deadlock and do-nothing have finally ended. It's how you would feel if, after eight years, someone finally stopped hitting you with a hammer; you would probably feel pretty good. But in economic terms, nothing real has changed and the relief probably won't last long.
Thinking Through the Market Response to the Election
Why are stocks and the U.S. dollar up while bonds and gold are down post-election? Trump has pledged to cut taxes and boost spending on infrastructure by as much as $500 billion. His proposals would increase the nation's debt by $5.3 trillion, the non-partisan Committee for a Responsible Federal Budget has estimated. There are two competing views of the impact of this policy.
Respect the Bean: How a Rapid Increase in Soybean Exports Drives Fed Policy. Really.
On Friday, we got the first (advance) estimate of Q3 economic growth for the U.S. The estimate, which is based primarily on data from the first month of the quarter, registered 2.9% on an annualized basis. Not bad, you say? Evidence of a bounce back? You need a coffee.
Another Banking Crisis Begins?
When financial systems begin to fail, the banks are always at the center. When your assets are mostly tied up in long term, relatively illiquid transactions while your funding is mostly of the overnight variety, from depositors, money market funds and other banks, trouble is never far away. Banks are the perfect stress indicator within the system.
Ending With a Bang, Not a Whimper
As we have predicted for some time, central bankers are doubling down on the madness that has failed to achieve economic lift-off. It is no surprise to us that easy money has not stimulated growth. There was never any reason why it should. It reminds us of trying to force hay into the wrong end of an elephant.
Proof Positive that the Fed Has No clue
Here is the Wall Street Journal's unedited transcript of an interview with the St. Louis Fed's James Bullard at Jackson Hole, Wyoming on August 27, 2016. The interview was conducted by WSJ senior reporter John Hilsenrath.
What Does A Bond Crash Look Like?
What Does A Bond Crash Look Like? Swiss government debt maturing in almost 50 years yields around zero. Unilever, the Anglo-Dutch consumer products maker, has securities due in 2020 yielding negative 0.19 per cent. Five years ago, these securities would have seemed impossible.
Keynesian Economics and the End of Central Bank Credibility
It is an axiom of Keynesian economic theory that lower interest rates mean more lending and borrowing, more spending in the near term and a stronger economy. That's the theory that has led central banks to drive down interest rates to record lows, destroy the value of savings and explode bond and stock prices higher.