Global Equity Index Hanging On Lower Precipice
Submitted by Tyler D.
09/09/2015 08:30 -0400
Via Dana Lyons' Tumblr,
On June 17, our Chart Of The Day indicated that the Global Dow Index was “sitting on the precipice”. The Global Dow is an equally-weighted index of the world’s 150 largest stocks. Therefore, it is a pretty fair barometer of the state of the global equity market. The precipice at the time was the UP trendline connecting the 2012, 2014 and 2015 lows. In that post, we intimated that the trendline stood a good chance of being broken sooner than later. As we stated:
one reason why a breakdown may come sooner than later is the frequency of the trendline touches recently. As the duration between touches of a trendline or support/resistance line decreases, the odds of a break increase. Therefore, it would not surprise us to see a breakdown sometime soon.
Indeed, after bouncing off the trendline the very next day, the index would revisit the line just 7 days later. It did not fare as well that time as it broke down through the trendline and immediately dropped some 4%. That immediate drop validated the trendline as a significant level, as did the failed attempt to retake the trendline just a few weeks later. The failure of that level precipitated (<– see what we did there?) a further drop of some 13% over the following month as global equity markets around the globe saw steep declines.
That decline brought the Global Dow down to one of the support areas we indicated in that June post around 2280. And while that level was based on key Fibonacci analysis, another major source of support happened to be intersecting that same level: the post-2009 UP trendline. The Global Dow has been able to hold that level, thus far, though it has not yet been able to mount much of a bounce.
image
As precipices go, this one would be even more painful in the event of a breakdown considering it would be a chink in the armor of the entire cyclical bull market. That is not to say that a breakdown below the post-2009 UP trendline would signal the end of the cyclical bull market, but it would necessarily mark a not insignificant loss of momentum.
Speaking of breaks, what levels would a break of the trendline open up on the downside? Updating another chart we posted in the June piece provides some possible levels.
image
As the chart indicates, the post-2009 UP trendline currently resides in the same area as a very important confluence of Fibonacci Retracement levels:
* The 23.6% Fibonacci Retracement of the 2009-2014 Rally ~2291
* The 38.2% Fibonacci Retracement of the 2011-2014 Rally ~2284
* The 61.8% Fibonacci Retracement of the June 2013-2014 Rally ~2275
Add in the 1000-day simple moving average and it’s not hard to see why the index found support where it did. Should the Global Dow fail to hang on the precipice here, the next major level of logical support would come in at the next sequence of Fibonacci Retracement levels in the 2050-2070 area, or another 10% lower.
Now, to some, the word “precipice” may connote the sense that a breakdown is inevitable. That is not our intention. It is possible to rise up from the precipice and, in fact, that would not be surprising to see considering the importance of the current levels. An immediate failure here would suggest some sort of global crash is truly at hand. That would not be our “highest odds” scenario. Thus, one’s focus at this time may center on the magnitude and sustainability of a bounce from here. A “dead cat” bounce should take the index to perhaps 2420 (+6%) at the worst, and maybe 2500 (+10%) at best. From there, another test of the precipice here at 2280 would not be surprising.
Of course, this entire scenario is speculation and conjecture. The point is that this key barometer of global equities dropped to a level that it could ill-afford to lose. And while a bounce should transpire from here, the fact that the index has been traversing this level for the past 8 days reminds us that significant potential risk awaits should it fall off the precipice.
* * *
More from Dana Lyons, JLFMI and My401kPro.
Miercoles 09/09/15 Solicitudes de hipotecas
Re: Miercoles 09/09/15 Solicitudes de hipotecas
por Fenix » Mié Sep 09, 2015 2:32 pm
- Fenix
- Mensajes: 16334
- Registrado: Vie Abr 23, 2010 2:36 am
Re: Miercoles 09/09/15 Solicitudes de hipotecas
por Fenix » Mié Sep 09, 2015 2:36 pm
Buiter: Only "Helicopter Money" Can Save The World From The Next Recession
Submitted by Tyler D.
09/09/2015 08:08 -0400
It is to be expected that economists – even economists working for the same team – have different views about the likelihood of different future outcomes. Economics isn’t rocket science, and even rockets frequently land in the wrong place or explode in mid-air.
That rather hilarious characterization of the pseudoscience that is economics comes from the desk of Citi’s Chief Economist Willem Buiter and it’s apparently evidence that even if you don’t think too much of his views on “pet rocks” (gold is a 6,000 year-old bubble) or on the efficacy and/or utility of physical banknotes (ban cash), you’d be hard pressed to disagree with him when it comes to critiquing his profession. Of course we don’t want to give Buiter too much credit here because the quote shown above could simply be an attempt to stamp a caveat emptor on his latest prediction in case, like his predictions on when Greece would ultimately leave the euro, it turns out to be wrong.
As tipped by comments made at the Council of Foreign Relations in New York late last month, Buiter is out with a damning look at the global economy which he says will be drug kicking and screaming into a recession by the turmoil in China and the unfolding chaos in EM. Here’s the call:
In the Global Economics team, however, we believe that a moderate global recession scenario has become the most likely global macroeconomic scenario for the next two years or so. To clarify further, the most likely scenario, in our view, for the next few years is that global real GDP growth at market exchange rates will decline steadily from here on and reach or fall below 2%.
More specifically, Buiter says the odds of some kind of recession (either mild or terrifying) are 55%. Not 54%, or 56% mind you, but exactly 55%, because as indicated by the introductory excerpt above, economic outcomes are very amenable to precise forecasting:
In our view, the probability of some kind of recession, moderate or severe, is therefore 55%. A global recession of some kind is our modal forecast. A moderate recession is our modal forecast if we decompose recession outcomes into moderate and severe ones and assign separate probabilities to them.
The culprit, as mentioned above, is China (where Citi says real GDP growth is actually somewhere in the neighborhood of 4%) and EMs more broadly which are suffering mightily in the face of sluggish Chinese demand, slumping commodity prices, and, most recently, the devaluation of the yuan:
Should China enter a recession – and with Russia and Brazil already in recession – we believe that many other EMs, already weakened, will follow, driven in part by the effects of China’s downturn on the demand for their exports and, for the commodity exporters, on commodity prices.
The main driver of global underperformance during the past two years has been EM weakness. No EM of any significant size is outperforming our forecasts since the beginning of the year or earlier; most are underperforming. Even the success stories, like India, central and eastern Europe, and to a certain extent Mexico, are not outperforming our forecasts. Brazil and Russia are in recession, and GDP growth there has turned negative. South Africa is in a recession, with output below potential and output growth below potential output growth. The most significant underperformer is China. For reasons explained earlier, we don’t think there is much point in forecasting official GDP growth. We therefore focus on our best guess as to the ‘true’ growth rate of real GDP, which, as noted earlier, is probably somewhere around 4% now.
Evidence of weakness, Buiter continues, is everywhere:
The evidence for a global slowdown is everywhere. Global growth is weakening since 2010 as is evident from Figure 6, which shows global real GDP growth since 1980 at both market and PPP exchange rates, as well as EM and DM real GDP growth at PPP exchange rates. A modest pickup in GDP growth in the DMs since 2012 is swamped by a sharp decline in EM growth. There are other informative indicators of global weakness, notably the very weak – indeed negative - world trade growth in the first half of 2015, the continued weakening of (real) commodity prices, the weakness of the global inflation rate (measured by the GDP deflator), the recent decline in global stock prices, measured by the MSCI ACWI, plus indications that corporate earnings growth is slowing down in most countries, and the unprecedented decline in nominal interest rates, shown in Figure 7 – Figure 11.
And China - the epicenter of it all - is ill-equipped to cope because, as we’ve discussed at length, the country’s many spinning plates have elicited an eye-watering array of conflicting directives and policies which are now tripping over each other at nearly every turn:
The policy response to the weakening of domestic (and external) demand in China is likely to be too little and too late. China is not a command economy or a centrally planned economy – indeed, unlike the former Soviet Union, it never was. Like most real-world economies today, it is a messy market economy of the state-capitalist/crony-capitalist variety, where policy ambitions are not matched with effective policy instruments and where macroeconomic management and financial crisis prevention and mitigation competence are in short supply.
The mishandling of the housing boom, bubble and bust, and of the latest stock market boom, bubble and bust together with the recent RMB kerfuffle don’t inspire confidence in the ability of the authorities to prevent a cyclical hard landing for China.
Finally, DM central planners are in no shape to combat the China/EM contagion because - and this will come as no surprise - they are simply out of ammunition having thrown everything in the Keynesian toolbox at their respective economies in the post-crisis years with limited (and swiftly diminishing) returns:
Most advanced economies are, as regards countercyclical policy ammunition, in the position that either they don’t have very much of it or are unwilling and/or unable (because of domestic or external political constraints) to use what ammunition they have.
Expansionary monetary policy in the US, the UK, the Eurozone, Japan and most smaller advanced economies is operating in the zone of severely diminishing returns.
As you might have guessed, Buiter thinks there’s only one way out of this: helicopter money.
And not just in the US, but in Europe (against the protestations of what Buiter calls the “Teutonic fringe”) and indeed across all DMs and also in China.
Helicopter money drops would be the best instrument to tackle a downturn in all DMs.
In the Eurozone, a significant Teutonic fringe believe that a fiscal stimulus is contractionary and that monetization of public debt and deficits is a sure road to hyperinflation. It is a widely held view that Article 123 of the Treaty on the Functioning of the European Union forbids monetization of public debt and thus makes a helicopter money drop in the Eurozone impossible. Debt-financed (non-monetised) fiscal expansions run into the twin obstacles of an already excessive public debt in most Eurozone member states and the pro-cyclical nature of the constraints imposed by the Stability and Growth Pact and its myriad offspring, operated out of Brussels.
In the US, the fiscal stance is, from a cyclical perspective, not unlike a clock that is halted and points at the right time only twice a day. Fortunately, today is one of these times. Should the country need a fiscal stimulus (or indeed a fiscal contraction), it is in our view highly unlikely that the Congressional gridlock could be overcome sufficiently to do what is necessary when it is necessary. So as regards countercyclical policy, the US, like the Eurozone, has to rely on progressively less effective monetary stimulus alone.
The fiscal position of the Japanese sovereign is by far the worst of any large advanced country, despite its large stock of foreign exchange reserves and the positive net foreign investment position of Japan as a whole. Only a permanently monetised fiscal stimulus would be feasible if the markets were to wake from their decades-long slumber and wonder whether, and how, the Japanese sovereign can reach the shores of solvency without inflating its debt away.
Fiscal policy can undoubtedly come to the rescue and prevent a recession in China. But what is needed is not another dose of the familiar post-2008 fiscal medicine: heavy-lifting capital expenditure on infrastructure with dubious financial and social returns, and capital expenditure by SOEs that are already struggling with excess capacity, all funded, as if these were commercially viable ventures, through the banking or shadow banking sectors. As regards funding the fiscal stimulus, only the central government has the deep pockets to do this on any significant scale. The first-best would be for the central government to issue bonds to fund this fiscal stimulus and for the PBOC to buy them and either hold them forever or cancel them, with the PBOC monetizing these Treasury bond purchases. Such a ‘helicopter money drop’ is fiscally, financially and macro-economically prudent in current circumstances, with inflation well below target and likely to fall further.
So basically, these central banks which Buiter just admitted are already “operating in the zone of severely diminishing returns,” should not only do more of the same, but a lot more of the same and in fact, they should all dive head first into the Keynesian abyss by simultaneously cranking the knob on their respective printing presses to the max:
We expect to see QE #N, where N could become a large integer, as part of the monetary policy response in the US and the UK, and QEE2 in Japan. The ECB will likely have to continue its asset purchases beyond September 2016 and it may cut its policy rates further. All this will not be enough to prevent most advanced economies from performing worse in 2016 and 2017 than in 2015, and worse than our current forecasts for the next two years.
There you have it. "QE#N where N could become a large integer", and paradoxically, by not normalizing policy when it had the chance, the Fed has now made this inevitable because as we've shown, tightening into an EM FX reserve drawdown will only exacerbate said drawdown making an embarrassing about-face by the FOMC a foregone conclusion. In other words, this is game over. We've entered the monetary Twilight Zone where the only way to keep the increasingly wobbly house of cards standing is to continue to monetize everything that's monetizable and when we hit the limit we must then move to issue more debt for the sole purpose of monetizing it and immediately canceling it.
But as Buiter noted at the outset, these are all just the musings of a pseudo-scientist, who, by the very nature of his profession, is prone to making predictions that, much like the Fed's "liftoff", are just as likely to "explode in mid-air" as not.
Submitted by Tyler D.
09/09/2015 08:08 -0400
It is to be expected that economists – even economists working for the same team – have different views about the likelihood of different future outcomes. Economics isn’t rocket science, and even rockets frequently land in the wrong place or explode in mid-air.
That rather hilarious characterization of the pseudoscience that is economics comes from the desk of Citi’s Chief Economist Willem Buiter and it’s apparently evidence that even if you don’t think too much of his views on “pet rocks” (gold is a 6,000 year-old bubble) or on the efficacy and/or utility of physical banknotes (ban cash), you’d be hard pressed to disagree with him when it comes to critiquing his profession. Of course we don’t want to give Buiter too much credit here because the quote shown above could simply be an attempt to stamp a caveat emptor on his latest prediction in case, like his predictions on when Greece would ultimately leave the euro, it turns out to be wrong.
As tipped by comments made at the Council of Foreign Relations in New York late last month, Buiter is out with a damning look at the global economy which he says will be drug kicking and screaming into a recession by the turmoil in China and the unfolding chaos in EM. Here’s the call:
In the Global Economics team, however, we believe that a moderate global recession scenario has become the most likely global macroeconomic scenario for the next two years or so. To clarify further, the most likely scenario, in our view, for the next few years is that global real GDP growth at market exchange rates will decline steadily from here on and reach or fall below 2%.
More specifically, Buiter says the odds of some kind of recession (either mild or terrifying) are 55%. Not 54%, or 56% mind you, but exactly 55%, because as indicated by the introductory excerpt above, economic outcomes are very amenable to precise forecasting:
In our view, the probability of some kind of recession, moderate or severe, is therefore 55%. A global recession of some kind is our modal forecast. A moderate recession is our modal forecast if we decompose recession outcomes into moderate and severe ones and assign separate probabilities to them.
The culprit, as mentioned above, is China (where Citi says real GDP growth is actually somewhere in the neighborhood of 4%) and EMs more broadly which are suffering mightily in the face of sluggish Chinese demand, slumping commodity prices, and, most recently, the devaluation of the yuan:
Should China enter a recession – and with Russia and Brazil already in recession – we believe that many other EMs, already weakened, will follow, driven in part by the effects of China’s downturn on the demand for their exports and, for the commodity exporters, on commodity prices.
The main driver of global underperformance during the past two years has been EM weakness. No EM of any significant size is outperforming our forecasts since the beginning of the year or earlier; most are underperforming. Even the success stories, like India, central and eastern Europe, and to a certain extent Mexico, are not outperforming our forecasts. Brazil and Russia are in recession, and GDP growth there has turned negative. South Africa is in a recession, with output below potential and output growth below potential output growth. The most significant underperformer is China. For reasons explained earlier, we don’t think there is much point in forecasting official GDP growth. We therefore focus on our best guess as to the ‘true’ growth rate of real GDP, which, as noted earlier, is probably somewhere around 4% now.
Evidence of weakness, Buiter continues, is everywhere:
The evidence for a global slowdown is everywhere. Global growth is weakening since 2010 as is evident from Figure 6, which shows global real GDP growth since 1980 at both market and PPP exchange rates, as well as EM and DM real GDP growth at PPP exchange rates. A modest pickup in GDP growth in the DMs since 2012 is swamped by a sharp decline in EM growth. There are other informative indicators of global weakness, notably the very weak – indeed negative - world trade growth in the first half of 2015, the continued weakening of (real) commodity prices, the weakness of the global inflation rate (measured by the GDP deflator), the recent decline in global stock prices, measured by the MSCI ACWI, plus indications that corporate earnings growth is slowing down in most countries, and the unprecedented decline in nominal interest rates, shown in Figure 7 – Figure 11.
And China - the epicenter of it all - is ill-equipped to cope because, as we’ve discussed at length, the country’s many spinning plates have elicited an eye-watering array of conflicting directives and policies which are now tripping over each other at nearly every turn:
The policy response to the weakening of domestic (and external) demand in China is likely to be too little and too late. China is not a command economy or a centrally planned economy – indeed, unlike the former Soviet Union, it never was. Like most real-world economies today, it is a messy market economy of the state-capitalist/crony-capitalist variety, where policy ambitions are not matched with effective policy instruments and where macroeconomic management and financial crisis prevention and mitigation competence are in short supply.
The mishandling of the housing boom, bubble and bust, and of the latest stock market boom, bubble and bust together with the recent RMB kerfuffle don’t inspire confidence in the ability of the authorities to prevent a cyclical hard landing for China.
Finally, DM central planners are in no shape to combat the China/EM contagion because - and this will come as no surprise - they are simply out of ammunition having thrown everything in the Keynesian toolbox at their respective economies in the post-crisis years with limited (and swiftly diminishing) returns:
Most advanced economies are, as regards countercyclical policy ammunition, in the position that either they don’t have very much of it or are unwilling and/or unable (because of domestic or external political constraints) to use what ammunition they have.
Expansionary monetary policy in the US, the UK, the Eurozone, Japan and most smaller advanced economies is operating in the zone of severely diminishing returns.
As you might have guessed, Buiter thinks there’s only one way out of this: helicopter money.
And not just in the US, but in Europe (against the protestations of what Buiter calls the “Teutonic fringe”) and indeed across all DMs and also in China.
Helicopter money drops would be the best instrument to tackle a downturn in all DMs.
In the Eurozone, a significant Teutonic fringe believe that a fiscal stimulus is contractionary and that monetization of public debt and deficits is a sure road to hyperinflation. It is a widely held view that Article 123 of the Treaty on the Functioning of the European Union forbids monetization of public debt and thus makes a helicopter money drop in the Eurozone impossible. Debt-financed (non-monetised) fiscal expansions run into the twin obstacles of an already excessive public debt in most Eurozone member states and the pro-cyclical nature of the constraints imposed by the Stability and Growth Pact and its myriad offspring, operated out of Brussels.
In the US, the fiscal stance is, from a cyclical perspective, not unlike a clock that is halted and points at the right time only twice a day. Fortunately, today is one of these times. Should the country need a fiscal stimulus (or indeed a fiscal contraction), it is in our view highly unlikely that the Congressional gridlock could be overcome sufficiently to do what is necessary when it is necessary. So as regards countercyclical policy, the US, like the Eurozone, has to rely on progressively less effective monetary stimulus alone.
The fiscal position of the Japanese sovereign is by far the worst of any large advanced country, despite its large stock of foreign exchange reserves and the positive net foreign investment position of Japan as a whole. Only a permanently monetised fiscal stimulus would be feasible if the markets were to wake from their decades-long slumber and wonder whether, and how, the Japanese sovereign can reach the shores of solvency without inflating its debt away.
Fiscal policy can undoubtedly come to the rescue and prevent a recession in China. But what is needed is not another dose of the familiar post-2008 fiscal medicine: heavy-lifting capital expenditure on infrastructure with dubious financial and social returns, and capital expenditure by SOEs that are already struggling with excess capacity, all funded, as if these were commercially viable ventures, through the banking or shadow banking sectors. As regards funding the fiscal stimulus, only the central government has the deep pockets to do this on any significant scale. The first-best would be for the central government to issue bonds to fund this fiscal stimulus and for the PBOC to buy them and either hold them forever or cancel them, with the PBOC monetizing these Treasury bond purchases. Such a ‘helicopter money drop’ is fiscally, financially and macro-economically prudent in current circumstances, with inflation well below target and likely to fall further.
So basically, these central banks which Buiter just admitted are already “operating in the zone of severely diminishing returns,” should not only do more of the same, but a lot more of the same and in fact, they should all dive head first into the Keynesian abyss by simultaneously cranking the knob on their respective printing presses to the max:
We expect to see QE #N, where N could become a large integer, as part of the monetary policy response in the US and the UK, and QEE2 in Japan. The ECB will likely have to continue its asset purchases beyond September 2016 and it may cut its policy rates further. All this will not be enough to prevent most advanced economies from performing worse in 2016 and 2017 than in 2015, and worse than our current forecasts for the next two years.
There you have it. "QE#N where N could become a large integer", and paradoxically, by not normalizing policy when it had the chance, the Fed has now made this inevitable because as we've shown, tightening into an EM FX reserve drawdown will only exacerbate said drawdown making an embarrassing about-face by the FOMC a foregone conclusion. In other words, this is game over. We've entered the monetary Twilight Zone where the only way to keep the increasingly wobbly house of cards standing is to continue to monetize everything that's monetizable and when we hit the limit we must then move to issue more debt for the sole purpose of monetizing it and immediately canceling it.
But as Buiter noted at the outset, these are all just the musings of a pseudo-scientist, who, by the very nature of his profession, is prone to making predictions that, much like the Fed's "liftoff", are just as likely to "explode in mid-air" as not.
- Fenix
- Mensajes: 16334
- Registrado: Vie Abr 23, 2010 2:36 am
Re: Miercoles 09/09/15 Solicitudes de hipotecas
por Fenix » Mié Sep 09, 2015 2:40 pm
The Endless Emergency - Why It's Always ZIRP Time In The Casino
09/09/2015 09:26 -0400
Submitted by David Stockman
Based on the headline from the latest Jobs Friday report you wouldn’t know that we are still mired in an economic emergency - one apparently so extreme that it might entail moving to the 81st straight month of zero interest rates at next week’s FOMC meeting. After all, the unemployment rate came in smack-dab on the Fed’s full-employment target at 5.1%.
But that’s not the half of it. The August unemployment rate was also in the lowest quintile of modern history.
That’s right. There have been 535 monthly jobs reports since 1970, yet in only 98 months or 18% of the time did the unemployment rate post at 5.1% or lower.
Monthly Unemployment Rate Below And Above 5.1% Since 1970
Monthly Unemployment Rate Below And Above 5.1% Since 1970
In a word, the official unemployment rate is now in what has been the macroeconomic end zone for the past 45 years. Might this suggest that the emergency is over and done?
Not at all. The talking heads have been out in force insisting on yet another deferral of “lift-off” on the grounds that the economy is allegedly still fragile and that the establishment survey number at 173,000 jobs came in on the light side. Even the so-called centrists on the Fed—–Stanley Fischer and John Williams—–have gone to full-bore, open-mouth, two-armed economist mode, jabbering incoherently while they await more “in-coming” economic data.
Self-evidently, the only “incoming” information that can matter between now and next Wednesday is the stock market averages. To wit, if last October’s Bullard Rip low on the S&P 500 holds at 1867, the FOMC will declare “one and done”, at least for the year; and if the market succumbs to another spot of vertigo, the Fed will concoct yet another lame excuse for delay.
Indeed, the Fed’s true Humphrey-Hawkins target is transparent. Namely, avoidance of a “risk-off” hissy fit at all hazards.
So let’s just call the whole thing a cosmic farce and dispense with the macroeconomic hair-splitting. Ordinary people everywhere on the planet are in grave danger because governments and their central banking branches have put the gamblers in charge of the economic show.
That’s self-evident in Europe where the Brussels/Frankfurt apparatchiks are deathly afraid of a stampede toward the exits by the front-running gamblers who “rented” (on repo) the sovereign bond market on Draghi’s “whatever it takes” ukase. So they have now turned Greece into an outright debtors’ prison, extinguishing the last remnants of democratic self-rule and imposing debt obligations that will approach $500 billion when Greece’s new bailout and existing massive ECB debits are reckoned.
Greece’s battered and still shrinking $200 billion economy, therefore, will either become an economic Atlantis lost under the Aegean or an exploding debt bomb. That is, when Greece finally defaults, it will trigger the demise of the Euro, the European Project and the continent’s rickety banking system——-stuffed to the gills, as it is, with the unpayable debts of aging, sclerotic socialist economies.
Likewise, the lunatic twosome of Abe and Kuroda in Japan have succeeded in putting the Japanese economy back into recession—-even as they run the greatest sovereign buyback Ponzi in history. To wit, the BOJ is buying up Japan’s stupendous one quadrillion yen of public debt faster than new debt is being created, thereby pegging the 10-year JGB at a ridiculous 36 basis point yield and flushing Japan’s domestic investors into a rampaging stock bubble that is an accident waiting to happen.
In the nearby land of red capitalism the statist fix gets more preposterous by the day. Having sent out Brink’s trucks loaded with $300 billion to buy unwanted stocks and a fleet of paddy wagons to arrest anyone even a tad too eager to sell, China’s chief money printer told the G-20 on Saturday that China’s $5 trillion stock market meltdown was over.
But when the Shanghai market opened nearly 2% down last night, the “national team” went berserk hitting the “offers” in a desperate effort to prove him right. On a dime, the red casino suddenly ripped to 3% higher by the market’s close.
So the suzerains of red capitalism now depend on a blunderbuss PPT (Plunge Protection Team) to keep the grim reaper at bay. With more retail stock account holders (90 million) than communist party members (80 million) and more separate trading accounts (287 million) than the combined population of Japan, South Korea, Taiwan and Thailand (267 million), a supreme irony has come to pass. Namely, that Beijing’s heirs of Mao’s anti-capitalist revolution have no choice except to prop-up the stock market in order to obfuscate the deflationary whirlwind battering Mr. Deng’s hothouse economy.
Even then, the giant Red Elephant in the room is hard to hide. That’s why capital is in full flight, as underscored by last night’s disclosure that China’s vaunted FX reserves dropped by $94 billion in August alone—-notwithstanding a huge current account surplus.
That’s also why China’s imports plunged by 14% and exports by nearly 6% last month, and why car sales have dropped sharply again in August. Indeed, flat-lining industrial production, power consumption and freight shipments all show an economy floundering at stall speed or worse.
At least the rulers in Beijing make no bones about the fact that they are rigging the stock index. After all, “command and control” is what the communist party does.
Not so for the hypocritical posse of cowards, dissemblers and Keynesian dogmatists who run the Fed. These folks presumably have a passing regard for the rudiments of capitalism and free markets.
Yet they insist that the most important market in all of capitalism—–the money market where traders and speculators fund trillions of positions and inventories—-is no market at all; and that, instead, it’s an administrative department of the central bank to be governed by the writ of 12 FOMC members based on their subjective assessment of the “incoming” macroeconomic noise.
Stated differently, the Fed has extinguished any and all market prices for money, and indeed any price at all; and in the process has caused the falsification of debt and equity prices throughout the capital markets. So Wall Street and its equivalents around the world have become little more than casinos where the gamblers trade against the croupiers domiciled in the major central banks.
But heavens forfend that our monetary central planners should admit to the unseemly bended knee estate to which they have been reduced. So in what amounts to mindless ritual incantation they persist in gumming about what is self-evidently seasonally maladjusted, constantly revised, inherently incomplete noise. At the end of the day that’s the frail reed on which the whole contemporary central banking enterprise is based.
The truth is, central banks emit credits conjured from thin air into a borderless planetary financial system that is now populated by the demons and furies of bubble finance. These free money enabled gamblers and speculators never stop confecting new forms of carry trades, collateralized finance and momentum chasing algorithms that rip the casino loose from the real economy.
Moreover, all the central bank interest rate pegging at zero is beside the point insofar as the real economy is concerned. That’s because over the last two decades the central banks have fueled a debt binge of staggering proportions. Overall credit market debt has grown from $40 trillion in 1995 to $200 trillion last year. That $160 trillion credit expansion was nearly 4X the modest global GDP growth of $45 trillion during the same period.
Accordingly, the world has simultaneously reached a condition of “peak debt” in the DM world, where 90% of households are tapped out or on welfare; and “peak capacity” in the EM world, where a digging, building and investment spree has left economies drowning in excess industrial capacity and white elephant public infrastructure.
In that context, the only thing that zero interest rates can do is fuel a few more spasms of “risk-on” rips in the casino; and supply a drip of cheap capital to DM companies wishing to buy back their own stock, and a temporary lifeline to EM and commodity sector zombies hemorrhaging cash.
But what it can’t do is anything to deliver the so-called Humphrey-Hawkins target of maximum employment; or the goal of price stability as per the Fed’s perverse definition of it as 2% on the PCE deflator—— less food and energy or whatever else the monetary politburo chooses to delete from the figure.
The measured inflation rate, of course, is now being powerfully suppressed by the very global deflation flowing from peak DM debt and peak EM capacity that the central bank money printers have generated over the last two decades. Beyond that, there is not a shred of valid evidence from economic history or logic that says you get more sustainable growth in living standards from 2% consumer inflation than from 0%.
But at the end of the day all of the Fed’s jawing in support of ZIRP is rooted in an utterly obsolete model of bathtub economics in one nation. That is, the notion that central bank credit is injected into a closed domestic economy, not a wide-open global casino, and that these injections will eventually cause an invisible economic ether called “aggregate demand” to rise to the brim of full employment.
Since the year 2000 the Fed has emitted $4 trillion of central bank credit. But as the Friday Jobs report actually showed, 5.1% on the official unemployment rate has had nothing to do with filling the US economic bathtub to its purported full employment potential.
As shown below, notwithstanding hitting the 5% unemployment target three times since the late 1990s, the real measures of labor inputs employed by the US economy have gone steadily south. The civilian employment-population ratio is down by five full percentage points or 12.5 million workers, and total nonfarm labor hours deployed by the business economy have not broken the flat-line in 15 years.
Even more to the point, the number of breadwinner jobs paying a fulltime living wage was still nearly two million below its turn of the century level in Friday’s report.
Breadwinner Economy Jobs
Breadwinner Economy Jobs
Needless to say, Friday’s report perfectly underscores why basing Fed policy on “incoming data” like the BLS employment report is so copasetic to the casino.
If the Fed take no action after the September release, it’s hard to imagine a report that wouldn’t support ZIRP or near-ZIRP in the minds of the money printers and the Wall Street gamblers they pleasure.
09/09/2015 09:26 -0400
Submitted by David Stockman
Based on the headline from the latest Jobs Friday report you wouldn’t know that we are still mired in an economic emergency - one apparently so extreme that it might entail moving to the 81st straight month of zero interest rates at next week’s FOMC meeting. After all, the unemployment rate came in smack-dab on the Fed’s full-employment target at 5.1%.
But that’s not the half of it. The August unemployment rate was also in the lowest quintile of modern history.
That’s right. There have been 535 monthly jobs reports since 1970, yet in only 98 months or 18% of the time did the unemployment rate post at 5.1% or lower.
Monthly Unemployment Rate Below And Above 5.1% Since 1970
Monthly Unemployment Rate Below And Above 5.1% Since 1970
In a word, the official unemployment rate is now in what has been the macroeconomic end zone for the past 45 years. Might this suggest that the emergency is over and done?
Not at all. The talking heads have been out in force insisting on yet another deferral of “lift-off” on the grounds that the economy is allegedly still fragile and that the establishment survey number at 173,000 jobs came in on the light side. Even the so-called centrists on the Fed—–Stanley Fischer and John Williams—–have gone to full-bore, open-mouth, two-armed economist mode, jabbering incoherently while they await more “in-coming” economic data.
Self-evidently, the only “incoming” information that can matter between now and next Wednesday is the stock market averages. To wit, if last October’s Bullard Rip low on the S&P 500 holds at 1867, the FOMC will declare “one and done”, at least for the year; and if the market succumbs to another spot of vertigo, the Fed will concoct yet another lame excuse for delay.
Indeed, the Fed’s true Humphrey-Hawkins target is transparent. Namely, avoidance of a “risk-off” hissy fit at all hazards.
So let’s just call the whole thing a cosmic farce and dispense with the macroeconomic hair-splitting. Ordinary people everywhere on the planet are in grave danger because governments and their central banking branches have put the gamblers in charge of the economic show.
That’s self-evident in Europe where the Brussels/Frankfurt apparatchiks are deathly afraid of a stampede toward the exits by the front-running gamblers who “rented” (on repo) the sovereign bond market on Draghi’s “whatever it takes” ukase. So they have now turned Greece into an outright debtors’ prison, extinguishing the last remnants of democratic self-rule and imposing debt obligations that will approach $500 billion when Greece’s new bailout and existing massive ECB debits are reckoned.
Greece’s battered and still shrinking $200 billion economy, therefore, will either become an economic Atlantis lost under the Aegean or an exploding debt bomb. That is, when Greece finally defaults, it will trigger the demise of the Euro, the European Project and the continent’s rickety banking system——-stuffed to the gills, as it is, with the unpayable debts of aging, sclerotic socialist economies.
Likewise, the lunatic twosome of Abe and Kuroda in Japan have succeeded in putting the Japanese economy back into recession—-even as they run the greatest sovereign buyback Ponzi in history. To wit, the BOJ is buying up Japan’s stupendous one quadrillion yen of public debt faster than new debt is being created, thereby pegging the 10-year JGB at a ridiculous 36 basis point yield and flushing Japan’s domestic investors into a rampaging stock bubble that is an accident waiting to happen.
In the nearby land of red capitalism the statist fix gets more preposterous by the day. Having sent out Brink’s trucks loaded with $300 billion to buy unwanted stocks and a fleet of paddy wagons to arrest anyone even a tad too eager to sell, China’s chief money printer told the G-20 on Saturday that China’s $5 trillion stock market meltdown was over.
But when the Shanghai market opened nearly 2% down last night, the “national team” went berserk hitting the “offers” in a desperate effort to prove him right. On a dime, the red casino suddenly ripped to 3% higher by the market’s close.
So the suzerains of red capitalism now depend on a blunderbuss PPT (Plunge Protection Team) to keep the grim reaper at bay. With more retail stock account holders (90 million) than communist party members (80 million) and more separate trading accounts (287 million) than the combined population of Japan, South Korea, Taiwan and Thailand (267 million), a supreme irony has come to pass. Namely, that Beijing’s heirs of Mao’s anti-capitalist revolution have no choice except to prop-up the stock market in order to obfuscate the deflationary whirlwind battering Mr. Deng’s hothouse economy.
Even then, the giant Red Elephant in the room is hard to hide. That’s why capital is in full flight, as underscored by last night’s disclosure that China’s vaunted FX reserves dropped by $94 billion in August alone—-notwithstanding a huge current account surplus.
That’s also why China’s imports plunged by 14% and exports by nearly 6% last month, and why car sales have dropped sharply again in August. Indeed, flat-lining industrial production, power consumption and freight shipments all show an economy floundering at stall speed or worse.
At least the rulers in Beijing make no bones about the fact that they are rigging the stock index. After all, “command and control” is what the communist party does.
Not so for the hypocritical posse of cowards, dissemblers and Keynesian dogmatists who run the Fed. These folks presumably have a passing regard for the rudiments of capitalism and free markets.
Yet they insist that the most important market in all of capitalism—–the money market where traders and speculators fund trillions of positions and inventories—-is no market at all; and that, instead, it’s an administrative department of the central bank to be governed by the writ of 12 FOMC members based on their subjective assessment of the “incoming” macroeconomic noise.
Stated differently, the Fed has extinguished any and all market prices for money, and indeed any price at all; and in the process has caused the falsification of debt and equity prices throughout the capital markets. So Wall Street and its equivalents around the world have become little more than casinos where the gamblers trade against the croupiers domiciled in the major central banks.
But heavens forfend that our monetary central planners should admit to the unseemly bended knee estate to which they have been reduced. So in what amounts to mindless ritual incantation they persist in gumming about what is self-evidently seasonally maladjusted, constantly revised, inherently incomplete noise. At the end of the day that’s the frail reed on which the whole contemporary central banking enterprise is based.
The truth is, central banks emit credits conjured from thin air into a borderless planetary financial system that is now populated by the demons and furies of bubble finance. These free money enabled gamblers and speculators never stop confecting new forms of carry trades, collateralized finance and momentum chasing algorithms that rip the casino loose from the real economy.
Moreover, all the central bank interest rate pegging at zero is beside the point insofar as the real economy is concerned. That’s because over the last two decades the central banks have fueled a debt binge of staggering proportions. Overall credit market debt has grown from $40 trillion in 1995 to $200 trillion last year. That $160 trillion credit expansion was nearly 4X the modest global GDP growth of $45 trillion during the same period.
Accordingly, the world has simultaneously reached a condition of “peak debt” in the DM world, where 90% of households are tapped out or on welfare; and “peak capacity” in the EM world, where a digging, building and investment spree has left economies drowning in excess industrial capacity and white elephant public infrastructure.
In that context, the only thing that zero interest rates can do is fuel a few more spasms of “risk-on” rips in the casino; and supply a drip of cheap capital to DM companies wishing to buy back their own stock, and a temporary lifeline to EM and commodity sector zombies hemorrhaging cash.
But what it can’t do is anything to deliver the so-called Humphrey-Hawkins target of maximum employment; or the goal of price stability as per the Fed’s perverse definition of it as 2% on the PCE deflator—— less food and energy or whatever else the monetary politburo chooses to delete from the figure.
The measured inflation rate, of course, is now being powerfully suppressed by the very global deflation flowing from peak DM debt and peak EM capacity that the central bank money printers have generated over the last two decades. Beyond that, there is not a shred of valid evidence from economic history or logic that says you get more sustainable growth in living standards from 2% consumer inflation than from 0%.
But at the end of the day all of the Fed’s jawing in support of ZIRP is rooted in an utterly obsolete model of bathtub economics in one nation. That is, the notion that central bank credit is injected into a closed domestic economy, not a wide-open global casino, and that these injections will eventually cause an invisible economic ether called “aggregate demand” to rise to the brim of full employment.
Since the year 2000 the Fed has emitted $4 trillion of central bank credit. But as the Friday Jobs report actually showed, 5.1% on the official unemployment rate has had nothing to do with filling the US economic bathtub to its purported full employment potential.
As shown below, notwithstanding hitting the 5% unemployment target three times since the late 1990s, the real measures of labor inputs employed by the US economy have gone steadily south. The civilian employment-population ratio is down by five full percentage points or 12.5 million workers, and total nonfarm labor hours deployed by the business economy have not broken the flat-line in 15 years.
Even more to the point, the number of breadwinner jobs paying a fulltime living wage was still nearly two million below its turn of the century level in Friday’s report.
Breadwinner Economy Jobs
Breadwinner Economy Jobs
Needless to say, Friday’s report perfectly underscores why basing Fed policy on “incoming data” like the BLS employment report is so copasetic to the casino.
If the Fed take no action after the September release, it’s hard to imagine a report that wouldn’t support ZIRP or near-ZIRP in the minds of the money printers and the Wall Street gamblers they pleasure.
- Fenix
- Mensajes: 16334
- Registrado: Vie Abr 23, 2010 2:36 am
Re: Miercoles 09/09/15 Solicitudes de hipotecas
por Fenix » Mié Sep 09, 2015 2:42 pm
Puerto Rico To Run Out Of Cash By Year End, Faces $13 Billion Shortfall
Submitted by Tyler D.
09/09/2015 - 09:50
Remember when two months ago Schauble, jokingly, offered Jack Lew to "trade" Greece for Puerto Rico? Something tells us in the interim period the German finmin changed his mind because while the Greek can has been kicked again, if only for the time being until bailout #4, the full severity of the Puerto Rican insolvency was laid out for all to see moments ago when top officials and outside advisors to the commonwealth released a highly-anticipated report showing that island's whopping funding gap of $28 billion will at best be reduced to "only" $13 billion over the next several years. Worse: according to the report of the so-called Working Group, the Treasury’s single cash account and Government Development Bank would exhaust available liquidity before the end of the year
Chanos Vs Icahn: Famous Short-Seller Goes After Icahn's LNG Exporting Activist Play
Submitted by Tyler D.
09/09/2015 - 09:41
Since Icahn announced he was going activist on Cheniere Energy one month ago, he has not exactly hit a home run, with the stock tumbling 20% from Icahn's initial price, and closing at $56.75 yesterday: hardly good news for the outspoken billionaire. Today Icahn got some more bad news when famous short-seller Jim Chanos announced on CNBC that his latest heretofore undisclosed short is precisely Cheniere, which he described as a "looming disaster" alleging that demand for liquid natural gas isn’t growing.
Submitted by Tyler D.
09/09/2015 - 09:50
Remember when two months ago Schauble, jokingly, offered Jack Lew to "trade" Greece for Puerto Rico? Something tells us in the interim period the German finmin changed his mind because while the Greek can has been kicked again, if only for the time being until bailout #4, the full severity of the Puerto Rican insolvency was laid out for all to see moments ago when top officials and outside advisors to the commonwealth released a highly-anticipated report showing that island's whopping funding gap of $28 billion will at best be reduced to "only" $13 billion over the next several years. Worse: according to the report of the so-called Working Group, the Treasury’s single cash account and Government Development Bank would exhaust available liquidity before the end of the year
Chanos Vs Icahn: Famous Short-Seller Goes After Icahn's LNG Exporting Activist Play
Submitted by Tyler D.
09/09/2015 - 09:41
Since Icahn announced he was going activist on Cheniere Energy one month ago, he has not exactly hit a home run, with the stock tumbling 20% from Icahn's initial price, and closing at $56.75 yesterday: hardly good news for the outspoken billionaire. Today Icahn got some more bad news when famous short-seller Jim Chanos announced on CNBC that his latest heretofore undisclosed short is precisely Cheniere, which he described as a "looming disaster" alleging that demand for liquid natural gas isn’t growing.
- Fenix
- Mensajes: 16334
- Registrado: Vie Abr 23, 2010 2:36 am
Re: Miercoles 09/09/15 Solicitudes de hipotecas
por Fenix » Mié Sep 09, 2015 2:45 pm
Janet Yellen's "Favorite" Jobs Indicator Just Shrieked A Rate Hike Is Imminent
Submitted by Tyler D.
09/09/2015 10:32 -0400
Following the surge in overnight screams against a rate hike, which in just the past 24 hours has added those of the World Bank's chief economist, Paul Krugman, and Larry Summers (for the second time), all eyes were focused on Janet Yellen's favoriote Jobs indicator - the JOLTS report, and especially the total nonfarm Job Openings. And here a big problem appeared because while the Fed is now facing tremendous pressure from the outside not to hike in September, the JOLTS report not only gave a green light, but literally shrieked a rate hike in September is inevitable.
The reason: the Job Openings number soared from 5.323MM to a new record high of 5.753MM, smashing expectations of a drop to 5.3MM. In fact, the monthly increase in openings of 430,000 was the highest stretching all the way back to April 2010, and was the fourth highest monthly jump in the history of the series!
To be sure, a more than cursory scan at the components of the jump reveals that not all is well: for example the job openings were all quantity, and zero quality: the biggest increase among "job wanted" poasters was for low-paying jobs (just in case anyone is still confused why there are no wage hikes), including retail trade and leisure and hospitality.
Furthermore, the level of hiring is clearly tapering off, and 4.983MM was the lowest since last August, confirming the lagging nature of jobs data, which is now rolloing over and leading to continued decling in wages for non-supervisory workers.
And then there was the "quits" indicator - the best metric of how much job confidence employees really have, as a jump in quitting (as opposed to terminations) suggests workers have substantial faith in their skillset and that they can quickly find more lucrative jobs elsewhere. This too slumped in July, and at 2.685MM was the lowest print since November of 2014.
But to the Fed all that is largely irrelevant.
What does matter to Yellen is that the ratio of number of unemployed people per job opening is now back to pre-crisis levels. To wit: "when the most recent recession began (December 2007), the number of unemployed persons per job opening was 1.8. The ratio peaked at 6.8 unemployed persons per job opening in July 2009 and has trended downward since. The ratio was 1.4 in July 2015."
For Yellen, this will be evidence that virtually all the slack in the labor market has been removed and if wage growth just refuses to materialize, then so be it.
Which means the Fed's boxed-in problem just got even bigger: will Yellen defer the rate hike because of outside influence (and the market tantrum of course) and be widely perceived as a mere puppet of others, or will the Fed not lose any more credibility, and rely on the data - as it has promised repeatedly it does -and which as shown above, is now shrieking a rate hike is long overdue. Find out next week.
Submitted by Tyler D.
09/09/2015 10:32 -0400
Following the surge in overnight screams against a rate hike, which in just the past 24 hours has added those of the World Bank's chief economist, Paul Krugman, and Larry Summers (for the second time), all eyes were focused on Janet Yellen's favoriote Jobs indicator - the JOLTS report, and especially the total nonfarm Job Openings. And here a big problem appeared because while the Fed is now facing tremendous pressure from the outside not to hike in September, the JOLTS report not only gave a green light, but literally shrieked a rate hike in September is inevitable.
The reason: the Job Openings number soared from 5.323MM to a new record high of 5.753MM, smashing expectations of a drop to 5.3MM. In fact, the monthly increase in openings of 430,000 was the highest stretching all the way back to April 2010, and was the fourth highest monthly jump in the history of the series!
To be sure, a more than cursory scan at the components of the jump reveals that not all is well: for example the job openings were all quantity, and zero quality: the biggest increase among "job wanted" poasters was for low-paying jobs (just in case anyone is still confused why there are no wage hikes), including retail trade and leisure and hospitality.
Furthermore, the level of hiring is clearly tapering off, and 4.983MM was the lowest since last August, confirming the lagging nature of jobs data, which is now rolloing over and leading to continued decling in wages for non-supervisory workers.
And then there was the "quits" indicator - the best metric of how much job confidence employees really have, as a jump in quitting (as opposed to terminations) suggests workers have substantial faith in their skillset and that they can quickly find more lucrative jobs elsewhere. This too slumped in July, and at 2.685MM was the lowest print since November of 2014.
But to the Fed all that is largely irrelevant.
What does matter to Yellen is that the ratio of number of unemployed people per job opening is now back to pre-crisis levels. To wit: "when the most recent recession began (December 2007), the number of unemployed persons per job opening was 1.8. The ratio peaked at 6.8 unemployed persons per job opening in July 2009 and has trended downward since. The ratio was 1.4 in July 2015."
For Yellen, this will be evidence that virtually all the slack in the labor market has been removed and if wage growth just refuses to materialize, then so be it.
Which means the Fed's boxed-in problem just got even bigger: will Yellen defer the rate hike because of outside influence (and the market tantrum of course) and be widely perceived as a mere puppet of others, or will the Fed not lose any more credibility, and rely on the data - as it has promised repeatedly it does -and which as shown above, is now shrieking a rate hike is long overdue. Find out next week.
- Fenix
- Mensajes: 16334
- Registrado: Vie Abr 23, 2010 2:36 am
Re: Miercoles 09/09/15 Solicitudes de hipotecas
por Fenix » Mié Sep 09, 2015 2:48 pm
Europe's Banks – Insolvent Zombies
Submitted by Tyler D.
09/09/2015 - 11:57
Bank profitability will remain under pressure for some time to come in light of the new capital regulations currently in the works. This will make it more difficult for banks to generate new capital internally, so they will have to tap the capital markets and dilute their shareholders further. It is no wonder that bank stocks remain way below the valuations they once commanded (we actually wouldn’t touch these stocks with a ten-foot pole). From a wider economic perspective, the new capital regulations are rendering banks moderately safer for depositors (as long as the markets don’t lose faith in government debt that is), but they also contribute to their ongoing “zombification”. Bank lending is going to remain subdued. This wouldn’t represent a big problem, if not for the fact that it is likely to provoke even more government activism.
The End Of The Fed's "Interest Rate Magic Show" Looms
09/09/2015 11:10 -0400
Submitted by Aswath Damodoran
The Fed, Interest Rates and Stock Prices: Fighting the Fear Factor
If it feels like you are reading last year’s business stories in today's paper, there is a simple reason. The Federal Reserve's Open Markets Committee (FOMC) meeting date is approaching, and in a replay of what we have seen ahead of previous meetings, we are being told that this is the one where the Fed will lower the boom on stock markets, by raising interest rates. While this navel gazing may keep market oracles, Fed watchers and CNBC pundits occupied, I think that the Fed’s role in setting interest rates is vastly overstated, and that this fiction is maintained because it is convenient both for the Fed and for the rest of us. I think that there are multiple myths about the Fed’s powers that have taken hold of our collective consciousness, and led us into an investing netherworld. So at the risk of provoking the wrath of Fed watchers everywhere, and repeating what I have said in earlier posts, here are my top four myths about central banks.
1. The Fed sets interest rates
Myth: The Federal Reserve (or the Central Bank of whichever country you are in) sets interest rates, short term as well as long term. In my last post on this topic, I mentioned my tour of the Federal Reserve Building, with my wife and children, and how sorely tempted I was to ask the tour guide whether I could see the interest rate room, the one where Janet Yellen sits, with levers that she can move up or down to change our mortgage rates, the rate at which companies borrow from banks and the market and the rates on US treasuries.
Reality: There is only one rate that the Federal Reserve sets, and it is the Fed Funds rate. It is the rate at which banks trade funds, that they hold at the Federal Reserve, with each other. Needless to say, not only is this an overnight rate, but it is of little relevance to most of us who don't have access to the Fed windows. While there is a tenuous link of Fed Funds rate to short term market interest rates, that link becomes much weaker when we look at long term rates and their derivatives.
Why preserve the myth: Giving the Fed the power to set interest rates gives us all a false sense of control over our economic destinies. Thus, if rates are high, we assume that the Fed can lower them by edict and if rates are too low, it can raise it by dictate. If only..
2. Low interest rates are the Fed’s doing
Myth: Interest rates are at historic lows not just in the United States but in much of the developed world, and it is central banking policy that has kept them there, through a policy of quantitative easing The myth acquires additional sheen when accompanied by acronyms such as QE1 and QE2, which bring ocean liners to my mind and a nagging fear that the next Fed move will be titled the Titanic!
Reality: The Fed has had a bond-buying program that is unprecedented and large, but only relative to the Fed's own history. Relative to the size of the US treasury bond market (about $500 billion a day in 2014), the Fed bond-buying (about $60-$85 billion a month) is modest and unlikely to have the influence on interest rates that is attributed to it. So, what has kept rates low? At the risk of rehashing a graph that I have used multiple times, it is far simpler and more fundamental, and it lies in the Fisher equation, which decomposes the nominal interest rate into its expected inflation and real interest rate components:
Nominal Interest Rate = Expected Inflation + Expected Real Interest Rate
If you make the assumption that in the long term, the real interest rate in an economy converges on real growth rate, you have an equation for what I call an intrinsic risk free rate. In the graph below, I graph out the actual US 10-year treasury bond rate against this intrinsic risk free rate and you can make your own judgment on why rates have been low for the last five years.'
To me, the answer seems self evident. Interest rates in the US (and Europe) have been low because inflation has been non-existent and real growth has been anemic, and it is my guess that rates would have been low, with or without the Fed’s exertions. In fact, the cumulative effect of the Fed's exertions can be measured as the difference between the intrinsic risk free rate and the US treasury bond rate, and during the entire quantitative easing period of 2008-2014, it amounted to about 0.13%. It is true that the jump in US GDP in the most recent quarter has widened the difference between the treasury bond rate and the intrinsic interest rate, but it remains to be seen whether this increase is a precursor to more healthy growth in the future, or just an one-quarter aberration.
Why preserve the myth: I think it is much more comforting for developed market investors to think of low interest rates as an unmitigated good, pushing up stock and bond prices, rather than as a depressing signal of future growth and low inflation (perhaps even deflation) in much of the developed world. That problem will not be fixed by Fed meetings and is symptomatic of shifts in global economic power and a re-apportioning of the world economic pie.
3. The reason stock prices are so high is because rates are low
Myth: Stock prices are high today because interest rates are at historic lows. If interest rates revert back to normal levels, stock prices will collapse.
Reality: Low interest rates have been a mixed blessing for stocks. The low rates, by themselves, make stocks more attractive relative to the alternative of investing in bonds. But if the low rates are symptomatic of low inflation and low real growth, they do have effects on the cash flows that can partially or completely offset the effect of low rates. One way to decompose the effects is to compute forward-looking expected returns on stocks, given stock prices today and expected cash flows from dividends and buybacks in the future to see how much of the stock price effect is fueled by interest rates and how much by cash flow changes. If this bull market has been entirely or mostly driven by the drop in interest rates, the expected return on stocks should have declined in line with the drop in interest rates. In my most recent update on this number at close of trading on August 31, 2015, I estimated an expected return of 8.50%, almost unchanged from the level in 2009 and higher than the expected return in 2007.
At least based on my estimates, the primary driver of stock prices has been the extraordinary fountain of cash that companies have been able to return in the last few years, combined with a capacity to grow earnings over the same period. By the same token, if you are concerned about cash flows, it should be with the sustainability of these cash flows, for two reasons. The first is that earnings will be under pressure, given the strength of the dollar and the weakness in China, and this is starting to show up already, with 2015 earnings about 5-10% below 2014 levels. The second is that companies will not be able to keep returning as much as they are in cash flows; in 2015, the cash returned to stockholders stood at 91% of earnings, a number well above historic norms. In the table below, I check to see how much the index, which was at 1951.13 at the close of trading on September 3, would be affected by an increase in interest rates (increasing the US 10-year T.Bond rate from the 2.27% on September 3, to 5%) as contrasted with a drop in cash flows (with a maximum drop of 25%, coming from a combination of earnings decline and reduced cash payout): If you hold cash flows constant, an increase in interest rates has a relatively small effect on stock prices, with stock prices dropping 8.76%, even if the US T.Bond rate rises to 5%. In contrast, if cash flows drop, the index drops proportionately, even if interest rates remain unchanged. You are welcome to make your own "bad news" assumptions and check out the effect on value in this spreadsheet.
Why preserve the myth: For perpetual bears, wrong time and again in the last five years about stocks, the Fed (and low interest rates) have become a convenient bogeyman for why their market bets have gone wrong. If only the Fed had behaved sensibly and if only interest rates were at normal levels (though normal is theirs to define), they bemoan, their market timing forecasts would have been vindicated.
4. The biggest danger to the Fed is that the market will react violently to a change in its interest rate policy
Myth: The biggest danger to the Fed is that, if it reverses its policy of zero interest rates and stops its bond buying, stock and bond markets will drop dramatically.
Reality: While no central bank wants to be blamed for a market meltdown, the bigger danger, in my view, is that the Fed does what it has been promising to for so long, and nothing happens. That is a good thing, you might say, and while I agree with you in the short term, the long-term consequences for Fed credibility are damaging and here is why. The best analogy that I can offer for the Fed and its role on interest rates is the story of Chanticleer, a rooster that is the strutting master of the barnyard that he lives in, revered by the other farm animals because he is the one who causes the sun to rise every morning with his crowing (or so they think). In the story, Chanticleer’s hubris leads him to abandon his post one morning, and when the sun comes up anyway, the rooster loses his exalted standing. Given the build up we have had over the last few years to the momentous decision to change interest rate policy, think of how much our perceptions of Fed power will change, if stock and bond markets respond with yawns to an interest rate policy shift.
Why we hold on to the myth: If you buy into the first three myths, this one follows. After all, if you believe that the Fed sets interest rates, that it has deliberately kept interest rates low for the last five years and that stock prices are high because interest rates are low, you should fear a change in that policy. Coupled with China, you have the excuses for your underperformance this year, thus absolving yourself of all responsibility for your choices. How convenient?
What next?
Over the last five years, we have developed an unhealthy obsession with the Federal Reserve, in particular, and central banks, in general, and I think that there is plenty of blame to go around. Investors have abdicated their responsibilities for assessing growth, cash flows and value, and taken to watching the Fed and wondering what it is going to do next, as if that were the primary driver of stock prices. The Fed has happily accepted the role of market puppet master, with Federal Bank governors seeking celebrity status, and piping up about inflation, the level of stock prices and interest rate policy. Market watchers, journalists and economists have found stories about the Fed to be great fillers that they can use to fill financial TV shows, newspaper and opinion columns.
I don't know what will happen at the FOMC meeting, but I hope that it announces an end to it's "interest rate magic show". I think that there is enough pent up fear in markets that the initial reaction will be negative, but I am hoping that investors move on to healthier, and more real, concerns about economic growth and earnings sustainability. If the Fed does make its move, the best news will be that we will not have to go through more rounds of obsessive Fed watching, second-guessing and punditry.
Submitted by Tyler D.
09/09/2015 - 11:57
Bank profitability will remain under pressure for some time to come in light of the new capital regulations currently in the works. This will make it more difficult for banks to generate new capital internally, so they will have to tap the capital markets and dilute their shareholders further. It is no wonder that bank stocks remain way below the valuations they once commanded (we actually wouldn’t touch these stocks with a ten-foot pole). From a wider economic perspective, the new capital regulations are rendering banks moderately safer for depositors (as long as the markets don’t lose faith in government debt that is), but they also contribute to their ongoing “zombification”. Bank lending is going to remain subdued. This wouldn’t represent a big problem, if not for the fact that it is likely to provoke even more government activism.
The End Of The Fed's "Interest Rate Magic Show" Looms
09/09/2015 11:10 -0400
Submitted by Aswath Damodoran
The Fed, Interest Rates and Stock Prices: Fighting the Fear Factor
If it feels like you are reading last year’s business stories in today's paper, there is a simple reason. The Federal Reserve's Open Markets Committee (FOMC) meeting date is approaching, and in a replay of what we have seen ahead of previous meetings, we are being told that this is the one where the Fed will lower the boom on stock markets, by raising interest rates. While this navel gazing may keep market oracles, Fed watchers and CNBC pundits occupied, I think that the Fed’s role in setting interest rates is vastly overstated, and that this fiction is maintained because it is convenient both for the Fed and for the rest of us. I think that there are multiple myths about the Fed’s powers that have taken hold of our collective consciousness, and led us into an investing netherworld. So at the risk of provoking the wrath of Fed watchers everywhere, and repeating what I have said in earlier posts, here are my top four myths about central banks.
1. The Fed sets interest rates
Myth: The Federal Reserve (or the Central Bank of whichever country you are in) sets interest rates, short term as well as long term. In my last post on this topic, I mentioned my tour of the Federal Reserve Building, with my wife and children, and how sorely tempted I was to ask the tour guide whether I could see the interest rate room, the one where Janet Yellen sits, with levers that she can move up or down to change our mortgage rates, the rate at which companies borrow from banks and the market and the rates on US treasuries.
Reality: There is only one rate that the Federal Reserve sets, and it is the Fed Funds rate. It is the rate at which banks trade funds, that they hold at the Federal Reserve, with each other. Needless to say, not only is this an overnight rate, but it is of little relevance to most of us who don't have access to the Fed windows. While there is a tenuous link of Fed Funds rate to short term market interest rates, that link becomes much weaker when we look at long term rates and their derivatives.
Why preserve the myth: Giving the Fed the power to set interest rates gives us all a false sense of control over our economic destinies. Thus, if rates are high, we assume that the Fed can lower them by edict and if rates are too low, it can raise it by dictate. If only..
2. Low interest rates are the Fed’s doing
Myth: Interest rates are at historic lows not just in the United States but in much of the developed world, and it is central banking policy that has kept them there, through a policy of quantitative easing The myth acquires additional sheen when accompanied by acronyms such as QE1 and QE2, which bring ocean liners to my mind and a nagging fear that the next Fed move will be titled the Titanic!
Reality: The Fed has had a bond-buying program that is unprecedented and large, but only relative to the Fed's own history. Relative to the size of the US treasury bond market (about $500 billion a day in 2014), the Fed bond-buying (about $60-$85 billion a month) is modest and unlikely to have the influence on interest rates that is attributed to it. So, what has kept rates low? At the risk of rehashing a graph that I have used multiple times, it is far simpler and more fundamental, and it lies in the Fisher equation, which decomposes the nominal interest rate into its expected inflation and real interest rate components:
Nominal Interest Rate = Expected Inflation + Expected Real Interest Rate
If you make the assumption that in the long term, the real interest rate in an economy converges on real growth rate, you have an equation for what I call an intrinsic risk free rate. In the graph below, I graph out the actual US 10-year treasury bond rate against this intrinsic risk free rate and you can make your own judgment on why rates have been low for the last five years.'
To me, the answer seems self evident. Interest rates in the US (and Europe) have been low because inflation has been non-existent and real growth has been anemic, and it is my guess that rates would have been low, with or without the Fed’s exertions. In fact, the cumulative effect of the Fed's exertions can be measured as the difference between the intrinsic risk free rate and the US treasury bond rate, and during the entire quantitative easing period of 2008-2014, it amounted to about 0.13%. It is true that the jump in US GDP in the most recent quarter has widened the difference between the treasury bond rate and the intrinsic interest rate, but it remains to be seen whether this increase is a precursor to more healthy growth in the future, or just an one-quarter aberration.
Why preserve the myth: I think it is much more comforting for developed market investors to think of low interest rates as an unmitigated good, pushing up stock and bond prices, rather than as a depressing signal of future growth and low inflation (perhaps even deflation) in much of the developed world. That problem will not be fixed by Fed meetings and is symptomatic of shifts in global economic power and a re-apportioning of the world economic pie.
3. The reason stock prices are so high is because rates are low
Myth: Stock prices are high today because interest rates are at historic lows. If interest rates revert back to normal levels, stock prices will collapse.
Reality: Low interest rates have been a mixed blessing for stocks. The low rates, by themselves, make stocks more attractive relative to the alternative of investing in bonds. But if the low rates are symptomatic of low inflation and low real growth, they do have effects on the cash flows that can partially or completely offset the effect of low rates. One way to decompose the effects is to compute forward-looking expected returns on stocks, given stock prices today and expected cash flows from dividends and buybacks in the future to see how much of the stock price effect is fueled by interest rates and how much by cash flow changes. If this bull market has been entirely or mostly driven by the drop in interest rates, the expected return on stocks should have declined in line with the drop in interest rates. In my most recent update on this number at close of trading on August 31, 2015, I estimated an expected return of 8.50%, almost unchanged from the level in 2009 and higher than the expected return in 2007.
At least based on my estimates, the primary driver of stock prices has been the extraordinary fountain of cash that companies have been able to return in the last few years, combined with a capacity to grow earnings over the same period. By the same token, if you are concerned about cash flows, it should be with the sustainability of these cash flows, for two reasons. The first is that earnings will be under pressure, given the strength of the dollar and the weakness in China, and this is starting to show up already, with 2015 earnings about 5-10% below 2014 levels. The second is that companies will not be able to keep returning as much as they are in cash flows; in 2015, the cash returned to stockholders stood at 91% of earnings, a number well above historic norms. In the table below, I check to see how much the index, which was at 1951.13 at the close of trading on September 3, would be affected by an increase in interest rates (increasing the US 10-year T.Bond rate from the 2.27% on September 3, to 5%) as contrasted with a drop in cash flows (with a maximum drop of 25%, coming from a combination of earnings decline and reduced cash payout): If you hold cash flows constant, an increase in interest rates has a relatively small effect on stock prices, with stock prices dropping 8.76%, even if the US T.Bond rate rises to 5%. In contrast, if cash flows drop, the index drops proportionately, even if interest rates remain unchanged. You are welcome to make your own "bad news" assumptions and check out the effect on value in this spreadsheet.
Why preserve the myth: For perpetual bears, wrong time and again in the last five years about stocks, the Fed (and low interest rates) have become a convenient bogeyman for why their market bets have gone wrong. If only the Fed had behaved sensibly and if only interest rates were at normal levels (though normal is theirs to define), they bemoan, their market timing forecasts would have been vindicated.
4. The biggest danger to the Fed is that the market will react violently to a change in its interest rate policy
Myth: The biggest danger to the Fed is that, if it reverses its policy of zero interest rates and stops its bond buying, stock and bond markets will drop dramatically.
Reality: While no central bank wants to be blamed for a market meltdown, the bigger danger, in my view, is that the Fed does what it has been promising to for so long, and nothing happens. That is a good thing, you might say, and while I agree with you in the short term, the long-term consequences for Fed credibility are damaging and here is why. The best analogy that I can offer for the Fed and its role on interest rates is the story of Chanticleer, a rooster that is the strutting master of the barnyard that he lives in, revered by the other farm animals because he is the one who causes the sun to rise every morning with his crowing (or so they think). In the story, Chanticleer’s hubris leads him to abandon his post one morning, and when the sun comes up anyway, the rooster loses his exalted standing. Given the build up we have had over the last few years to the momentous decision to change interest rate policy, think of how much our perceptions of Fed power will change, if stock and bond markets respond with yawns to an interest rate policy shift.
Why we hold on to the myth: If you buy into the first three myths, this one follows. After all, if you believe that the Fed sets interest rates, that it has deliberately kept interest rates low for the last five years and that stock prices are high because interest rates are low, you should fear a change in that policy. Coupled with China, you have the excuses for your underperformance this year, thus absolving yourself of all responsibility for your choices. How convenient?
What next?
Over the last five years, we have developed an unhealthy obsession with the Federal Reserve, in particular, and central banks, in general, and I think that there is plenty of blame to go around. Investors have abdicated their responsibilities for assessing growth, cash flows and value, and taken to watching the Fed and wondering what it is going to do next, as if that were the primary driver of stock prices. The Fed has happily accepted the role of market puppet master, with Federal Bank governors seeking celebrity status, and piping up about inflation, the level of stock prices and interest rate policy. Market watchers, journalists and economists have found stories about the Fed to be great fillers that they can use to fill financial TV shows, newspaper and opinion columns.
I don't know what will happen at the FOMC meeting, but I hope that it announces an end to it's "interest rate magic show". I think that there is enough pent up fear in markets that the initial reaction will be negative, but I am hoping that investors move on to healthier, and more real, concerns about economic growth and earnings sustainability. If the Fed does make its move, the best news will be that we will not have to go through more rounds of obsessive Fed watching, second-guessing and punditry.
- Fenix
- Mensajes: 16334
- Registrado: Vie Abr 23, 2010 2:36 am
Re: Miercoles 09/09/15 Solicitudes de hipotecas
por Fenix » Mié Sep 09, 2015 2:50 pm
Demand Surges Into 10 Year Treasury Auction As Shorts Squeezed Again
Submitted by Tyler D.
09/09/2015 - 13:12
The short squeeze into 10Y auctions never fails.
Apple Slides After Unveiling iPad ProSurfaceNote, $99 iPencil, (Wi)iTV, iPhone 6S(ame), & $1100 Watch - Post Mortem
Submitted by Tyler D.
09/09/2015 12:55 -0400
* Apple
* Twitter
* Twitter
*
inShare5
AAPL stock did not seem too excited intraday early on but activity picked up into today's product announcements...
And longer-term, investors, for once, did not buy on the Apple rumors, so traders are hoping that maybe they won’t sell on the news.
As Bespoke shows above, this is the first pre-product announcement drop in AAPL's history. Apple shares are down about 6.7% over the past month and 13% over the past three months through Tuesday’s close.
* * *
And as we show below it appears we have reached peak Apple...
1302: APPLE CEO TIM COOK DISCUSSES APPLE WATCH
* 1305: APPLE SVP WILLIAMS SAYS TRANSIT DIRECTIONS COMING TO WATCH MAPS
* 1306: APPLE WATCH HAS 10,000 APPS IN APP STORE, WILLIAMS SAYS
* 1307: GOPRO, FACEBOOK MESSENGER APPS TO BE AVAILABLE ON APPLE WATCH
* 1310: APPLE ADDS TWO COLORS FOR WATCH - ROSE GOLD AND ALUMINUM
* 1312: APPLE WATCH SOFTWARE UPDATE AVAILABLE SEPT. 16, WILLIAMS SAYS
* APPLE & HERMÈS UNVEIL APPLE WATCH HERMÈS COLLECTION
* APPLE WATCH HERMÈS STARTS AT $1,100
1316: APPLE CEO TIM COOK DISCUSSES IPAD
* 1318: APPLE CEO TIM COOK UNVEILS LARGER IPAD PRO
* 1319: IPAD PRO IS 'MOST POWERFUL IPAD,' COOK SAYS
* 1321: APPLE IPAD PRO HAS 12.9-INCH SCREEN
* 1323:APPLE: IPAD PRO 'IS MOST ADVANCED DISPLAY WE HAVE EVER MADE'
* 1324: APPLE: IPAD PRO HAS NEW A9X CHIP, DESKTOP PC-LIKE PERFORMANCE
* 1325: APPLE IPAD PRO IS FASTER THAN 80% OF PORTABLE PCS: SCHILLER
* 1326: APPLE IPAD PRO HAS 10 HOURS OF BATTERY LIFE, SVP SCHILLER SAYS (market drops)
* 1327: APPLE IPAD PRO IS 6.9MM THICK, WEIGHS 1.57LBS
* 1328: APPLE INTRODUCES 'SMART KEYBOARD' FOR IPAD PRO (like the Microsoft Surface?)
* 1328: APPLE SAYS KEYBOARD DOUBLES AS CASE FOR IPAD PRO
* 1332: APPLE INTRODUCES STYLUS FOR IPAD PRO, CALLED 'APPLE PENCIL' (like Microsft Surface and Galaxy Note)
2007: pic.twitter.com/XrnnZsrNOq
— Tim Bradshaw (@tim) September 9, 2015
* 1336: MICROSOFT EXEC: 'MORE THAN EVER' SUPPORTING MSFT OFFICE ON IPAD
* 1347: APPLE SAYS IPAD PRO HAS THREE COLORS -- SILVER, GRAY, GOLD
* 1348: APPLE: IPAD PRO COSTS $799, $949, $1079, DEPENDING ON MEMORY (market drops)
* 1348: APPLE SAYS IPAD PRO TO BE AVIALABLE IN NOVEMBER
* 1349: APPLE PENCIL TO COST $99, KEYBOARD $169
* 1351: APPLE LOWERS IPAD MINI 2 PRICE TO $269
1353: APPLE CEO TIM COOK DISCUSSES APPLE TV (market rallies)
* 1354: APPLE'S COOK SAYS 'THE FUTURE OF TV IS APPS'
* 1355: APPLE'S COOK SAYS 'WE NEED A NEW FOUNDATION FOR TV'
* 1357: APPLE TV INCLUDES SIRI FOR SEARCHING FOR PROGRAMS, ACTORS (like Xfinity)
* 1359: APPLE TV REMOTE HAS BUTTON FOR SIRI, TOUCH-SENSOR FOR SCROLLING
* 1400: APPLE TV SEARCHES ACROSS DIFFERENT CONTENT APPS,NOT JUST ITUNES
* 1401: APPLE TV HAS GRID SOFTWARE LAYOUT, SIMILAR TO OLDER MODELS
* 1409: APPLE: ACTIVISION TO RELEASE GUITAR HERO FOR APPLE TV (market rallies)
* 1415: APPLE SHOWS blacklisted_site, SHOPPING AND VIDEO APPLICATIONS FOR APPLE TV
* 1420:*APPLE TV COSTS $149/$199, DEPENDING ON MEMORY
* *APPLE TV AVAIABLE LATE OCT. IN 80 COUNTRIES
1424: *APPLE CEO TIM COOK DISCUSSES IPHONE
* 1425: APPLE'S COOK SAYS IPHONE SALES CONTINUE TO GROW IN CHINA
* 1426: APPLE INTRODUCES IPHONE 6S, IPHONE 6S PLUS
* 1428: APPLE INTRODUCES '3D TOUCH' AS NEW WAY TO INTERACT WITH DEVICE
* 1429: APPLE SAYS NEW GLASS IS STRONGER WITH IPHONE 6S MODELS
* 1430: APPLE:3D TOUCH ADDS FOR WHEN PERSON HOLDS DOWN ON SCREEN LONGER
* 1431: APPLE SAYS 3D TOUCH GIVES SHORTCUTS FOR APPLICATIONS
* 1440: APPLE IPHONE 6S MODELS HAVE A9 CHIP, 70 PERCENT FASTER
* 1445: APPLE IPHONE 6S HAS 12-MEGAPIXEL CAMERA (less than Note5 and Galaxy 6S)
* 1450: APPLE SAYS IPHONE 6S HAS CAMERA FOR SHOOTING 4K VIDEOS
* 1452: APPLE ADDS FLASH ON FRONT-FACING IPHONE 6S CAMERA FOR SELFIES
* 1456: APPLE SAYS LTE AND WI-FI SPEEDS DOUBLE IN IPHONE 6S
* 1459: APPLE IPHONE 6S STARTS AT $199, 6S PLUS $299 (with 2 year contract)
* 1500: APPLE UPGRADE PLAN COMES WITH NEW IPHONE EVERY YEAR FOR $32/MO.
* 1501: APPLE IPHONE PRE-ORDERS START SEPT. 12, ONSALE SEPT. 25
* 1501: APPLE IOS 9 TO BE AVAILABLE SEPT. 16
How did the market like it?
We're gonna need a new email Mr.Cook!!
Submitted by Tyler D.
09/09/2015 - 13:12
The short squeeze into 10Y auctions never fails.
Apple Slides After Unveiling iPad ProSurfaceNote, $99 iPencil, (Wi)iTV, iPhone 6S(ame), & $1100 Watch - Post Mortem
Submitted by Tyler D.
09/09/2015 12:55 -0400
* Apple
*
inShare5
AAPL stock did not seem too excited intraday early on but activity picked up into today's product announcements...
And longer-term, investors, for once, did not buy on the Apple rumors, so traders are hoping that maybe they won’t sell on the news.
As Bespoke shows above, this is the first pre-product announcement drop in AAPL's history. Apple shares are down about 6.7% over the past month and 13% over the past three months through Tuesday’s close.
* * *
And as we show below it appears we have reached peak Apple...
1302: APPLE CEO TIM COOK DISCUSSES APPLE WATCH
* 1305: APPLE SVP WILLIAMS SAYS TRANSIT DIRECTIONS COMING TO WATCH MAPS
* 1306: APPLE WATCH HAS 10,000 APPS IN APP STORE, WILLIAMS SAYS
* 1307: GOPRO, FACEBOOK MESSENGER APPS TO BE AVAILABLE ON APPLE WATCH
* 1310: APPLE ADDS TWO COLORS FOR WATCH - ROSE GOLD AND ALUMINUM
* 1312: APPLE WATCH SOFTWARE UPDATE AVAILABLE SEPT. 16, WILLIAMS SAYS
* APPLE & HERMÈS UNVEIL APPLE WATCH HERMÈS COLLECTION
* APPLE WATCH HERMÈS STARTS AT $1,100
1316: APPLE CEO TIM COOK DISCUSSES IPAD
* 1318: APPLE CEO TIM COOK UNVEILS LARGER IPAD PRO
* 1319: IPAD PRO IS 'MOST POWERFUL IPAD,' COOK SAYS
* 1321: APPLE IPAD PRO HAS 12.9-INCH SCREEN
* 1323:APPLE: IPAD PRO 'IS MOST ADVANCED DISPLAY WE HAVE EVER MADE'
* 1324: APPLE: IPAD PRO HAS NEW A9X CHIP, DESKTOP PC-LIKE PERFORMANCE
* 1325: APPLE IPAD PRO IS FASTER THAN 80% OF PORTABLE PCS: SCHILLER
* 1326: APPLE IPAD PRO HAS 10 HOURS OF BATTERY LIFE, SVP SCHILLER SAYS (market drops)
* 1327: APPLE IPAD PRO IS 6.9MM THICK, WEIGHS 1.57LBS
* 1328: APPLE INTRODUCES 'SMART KEYBOARD' FOR IPAD PRO (like the Microsoft Surface?)
* 1328: APPLE SAYS KEYBOARD DOUBLES AS CASE FOR IPAD PRO
* 1332: APPLE INTRODUCES STYLUS FOR IPAD PRO, CALLED 'APPLE PENCIL' (like Microsft Surface and Galaxy Note)
2007: pic.twitter.com/XrnnZsrNOq
— Tim Bradshaw (@tim) September 9, 2015
* 1336: MICROSOFT EXEC: 'MORE THAN EVER' SUPPORTING MSFT OFFICE ON IPAD
* 1347: APPLE SAYS IPAD PRO HAS THREE COLORS -- SILVER, GRAY, GOLD
* 1348: APPLE: IPAD PRO COSTS $799, $949, $1079, DEPENDING ON MEMORY (market drops)
* 1348: APPLE SAYS IPAD PRO TO BE AVIALABLE IN NOVEMBER
* 1349: APPLE PENCIL TO COST $99, KEYBOARD $169
* 1351: APPLE LOWERS IPAD MINI 2 PRICE TO $269
1353: APPLE CEO TIM COOK DISCUSSES APPLE TV (market rallies)
* 1354: APPLE'S COOK SAYS 'THE FUTURE OF TV IS APPS'
* 1355: APPLE'S COOK SAYS 'WE NEED A NEW FOUNDATION FOR TV'
* 1357: APPLE TV INCLUDES SIRI FOR SEARCHING FOR PROGRAMS, ACTORS (like Xfinity)
* 1359: APPLE TV REMOTE HAS BUTTON FOR SIRI, TOUCH-SENSOR FOR SCROLLING
* 1400: APPLE TV SEARCHES ACROSS DIFFERENT CONTENT APPS,NOT JUST ITUNES
* 1401: APPLE TV HAS GRID SOFTWARE LAYOUT, SIMILAR TO OLDER MODELS
* 1409: APPLE: ACTIVISION TO RELEASE GUITAR HERO FOR APPLE TV (market rallies)
* 1415: APPLE SHOWS blacklisted_site, SHOPPING AND VIDEO APPLICATIONS FOR APPLE TV
* 1420:*APPLE TV COSTS $149/$199, DEPENDING ON MEMORY
* *APPLE TV AVAIABLE LATE OCT. IN 80 COUNTRIES
1424: *APPLE CEO TIM COOK DISCUSSES IPHONE
* 1425: APPLE'S COOK SAYS IPHONE SALES CONTINUE TO GROW IN CHINA
* 1426: APPLE INTRODUCES IPHONE 6S, IPHONE 6S PLUS
* 1428: APPLE INTRODUCES '3D TOUCH' AS NEW WAY TO INTERACT WITH DEVICE
* 1429: APPLE SAYS NEW GLASS IS STRONGER WITH IPHONE 6S MODELS
* 1430: APPLE:3D TOUCH ADDS FOR WHEN PERSON HOLDS DOWN ON SCREEN LONGER
* 1431: APPLE SAYS 3D TOUCH GIVES SHORTCUTS FOR APPLICATIONS
* 1440: APPLE IPHONE 6S MODELS HAVE A9 CHIP, 70 PERCENT FASTER
* 1445: APPLE IPHONE 6S HAS 12-MEGAPIXEL CAMERA (less than Note5 and Galaxy 6S)
* 1450: APPLE SAYS IPHONE 6S HAS CAMERA FOR SHOOTING 4K VIDEOS
* 1452: APPLE ADDS FLASH ON FRONT-FACING IPHONE 6S CAMERA FOR SELFIES
* 1456: APPLE SAYS LTE AND WI-FI SPEEDS DOUBLE IN IPHONE 6S
* 1459: APPLE IPHONE 6S STARTS AT $199, 6S PLUS $299 (with 2 year contract)
* 1500: APPLE UPGRADE PLAN COMES WITH NEW IPHONE EVERY YEAR FOR $32/MO.
* 1501: APPLE IPHONE PRE-ORDERS START SEPT. 12, ONSALE SEPT. 25
* 1501: APPLE IOS 9 TO BE AVAILABLE SEPT. 16
How did the market like it?
We're gonna need a new email Mr.Cook!!
- Fenix
- Mensajes: 16334
- Registrado: Vie Abr 23, 2010 2:36 am
Re: Miercoles 09/09/15 Solicitudes de hipotecas
por Fenix » Mié Sep 09, 2015 2:53 pm
"It Doesn't Matter Till It Matters"
Submitted by Tyler D.
09/09/2015 12:40 -0400
For the last 35 years, The Dow Industrials has found one technical level to be crucially important in knowing "when to bail on stocks." Currently that level is 15,334 - a closing break below spells significant downside... Of course, none of this matter, until it matters!
The 200-week moving-average has been an incredible source of support... and indicator of trouble...
And last week's plunge perfectly stopped at the 200-week average support...
So all eyes on 15.334 if The Fed hikes or not.
Why The Greeks Should Repudiate Their Government's Debt
Submitted by Tyler D.
09/09/2015 - 13:47
It would be a welcome gesture for an incoming government to declare the actions of previous governments to be against the interests of the taxpayers and repudiate the national debt. This would not only relieve the taxpayers of a present burden but would also mean that any future government would find it hard to borrow from international creditors forcing them to bear the negative effects of their fiscal and monetary policies much earlier and with greater severity. Unfortunately Greece’s “anti-bailout” government’s decision to ignore a plebiscite opposing a new bailout deal and the German parliament’s recent approval of said deal (going against the will of the majority of Germans) proves that any concept of democratic legitimacy is not only logically flawed but will always be discredited in practice.
Submitted by Tyler D.
09/09/2015 12:40 -0400
For the last 35 years, The Dow Industrials has found one technical level to be crucially important in knowing "when to bail on stocks." Currently that level is 15,334 - a closing break below spells significant downside... Of course, none of this matter, until it matters!
The 200-week moving-average has been an incredible source of support... and indicator of trouble...
And last week's plunge perfectly stopped at the 200-week average support...
So all eyes on 15.334 if The Fed hikes or not.
Why The Greeks Should Repudiate Their Government's Debt
Submitted by Tyler D.
09/09/2015 - 13:47
It would be a welcome gesture for an incoming government to declare the actions of previous governments to be against the interests of the taxpayers and repudiate the national debt. This would not only relieve the taxpayers of a present burden but would also mean that any future government would find it hard to borrow from international creditors forcing them to bear the negative effects of their fiscal and monetary policies much earlier and with greater severity. Unfortunately Greece’s “anti-bailout” government’s decision to ignore a plebiscite opposing a new bailout deal and the German parliament’s recent approval of said deal (going against the will of the majority of Germans) proves that any concept of democratic legitimacy is not only logically flawed but will always be discredited in practice.
- Fenix
- Mensajes: 16334
- Registrado: Vie Abr 23, 2010 2:36 am
Re: Miercoles 09/09/15 Solicitudes de hipotecas
por Fenix » Mié Sep 09, 2015 2:54 pm
Fed Economist Unveils Cunning Plan To Boost US Economy: Issue Even More Debt
Submitted by Tyler D.
09/09/2015 13:21 -0400
Every so often, the Minneapolis Fed's Narayana Kocherlakota likes to remind Congress that to the extent America has a problem with subpar economic growth, that problem can be solved with more debt. Of course all problems can be solved with more debt. That, as we put it a few months back, is an immutable truth, as critical to the pseudoscience of economics as Newton’s first law is to physics and we know it to be true because it’s propagated by one of the greatest economic minds in the history of the world: Paul Krugman.
But if the only place this finds expression is on Krugman’s New York Times blog then it won’t be much use when it comes to saving the world. Fortunately, there are central planners like Kocherlakota who are willing to turn Krugman-isms into policy.
Back in July, in remarks ironically prepared for delivery at a conference hosted by the Bundesbank, Kocherlakota noted that in order to lift the neutral rate, US lawmakers might want to consider issuing more debt. Translated from ‘economist’ to layman, that just means this: “we may need to ease again and we’re bumping up against the lower bound on the rate cut side and we’ve run out of monetizable assets on the QE side.”
Kocherlakota was quick to note that he wasn’t attempting to tell Congress what to do, he was only dropping subtle hints about what might happen to still-depressed aggregate demand if the Fed doesn’t have enough rope to do more of the things which have so far failed miserably when it comes to boosting said demand:
“I am not saying that it is appropriate for fiscal policymakers to increase the long-run level of public debt. I am simply pointing to one benefit associated with such an increase: It allows the central bank to be more effective in mitigating the impact of adverse shocks to aggregate demand."
That was in Frankfurt where we can only assume that if Wolfgang Schaeuble was in attendance he may have had a conniption fit and now, exactly two months later, Kocherlakota is at it again, this time in remarks prepared for a speech at Northwestern. Here’s Reuters:
A top U.S. Federal Reserve official on Tuesday floated a potentially controversial proposal to help keep America's economy more stable: The federal government could issue more debt.
Narayana Kocherlakota, president of the Minneapolis Fed, said bond market data suggests that the ideal inflation-adjusted rates of interest in the U.S. economy have fallen in recent decades.
This is important because it means the Fed's own target for interest rate policy will tend to be lower, raising the risk that the Fed finds itself in a situation where it would like to slash rates but can only cut them modestly before hitting the "zero lower bound."
Near-zero rates also raise the risk of encouraging people to over borrow, setting up instability in the form of financial booms and busts.
"Younger workers (and those who are yet to be born) have to pay the taxes to fund this extra debt issuance," he said, adding that "balancing these gains versus losses is clearly a job for the fiscal authority, not for monetary policymakers like me."
"I am simply pointing to two key benefits associated with such an increase," Kocherlakota said, referring to more effective monetary policy and less risk of financial instability.
Got that? We'd me remiss if we didn't spell out precisely why Kocherlakota's argument is so absurd.
It is of course the Fed's misguided attempts to use monetary policy to micromanage economic outcomes (i.e. "smooth out the business cycle") that are leading to the more frequent occurences of spectacular booms and busts. In other words, they aren't smoothing out the business cycle, they're making it immeasurably more unpredictable. The FOMC's latest and greatest foray into central planning the economy has now created what will likely be viewed in hindsight as some of the greatest speculative bubbles ever witnessed, and part and parcel of this monumental folly is ZIRP. Now, Kocherlakota is trying to argue that because the Fed's own policies (which, again, are designed to eliminate instability by smoothing out the business cycle) have put it at the zero lower bound, the US government should print more debt in an effort to boost the neutral rate to give the FOMC more room to do more of the very same things they just did, things which, by Kocherlakota's own admission, have "raised the risk of encouraging people to over borrow, setting up instability in the form of financial booms and busts" and which by virtually any measure one cares to look at, have done a poor job of boosting inflation expectations and aggregate demand.
This is the Einstenian insanity employed by those who control the fate of the financial universe. Be afraid. Be very afraid.
Submitted by Tyler D.
09/09/2015 13:21 -0400
Every so often, the Minneapolis Fed's Narayana Kocherlakota likes to remind Congress that to the extent America has a problem with subpar economic growth, that problem can be solved with more debt. Of course all problems can be solved with more debt. That, as we put it a few months back, is an immutable truth, as critical to the pseudoscience of economics as Newton’s first law is to physics and we know it to be true because it’s propagated by one of the greatest economic minds in the history of the world: Paul Krugman.
But if the only place this finds expression is on Krugman’s New York Times blog then it won’t be much use when it comes to saving the world. Fortunately, there are central planners like Kocherlakota who are willing to turn Krugman-isms into policy.
Back in July, in remarks ironically prepared for delivery at a conference hosted by the Bundesbank, Kocherlakota noted that in order to lift the neutral rate, US lawmakers might want to consider issuing more debt. Translated from ‘economist’ to layman, that just means this: “we may need to ease again and we’re bumping up against the lower bound on the rate cut side and we’ve run out of monetizable assets on the QE side.”
Kocherlakota was quick to note that he wasn’t attempting to tell Congress what to do, he was only dropping subtle hints about what might happen to still-depressed aggregate demand if the Fed doesn’t have enough rope to do more of the things which have so far failed miserably when it comes to boosting said demand:
“I am not saying that it is appropriate for fiscal policymakers to increase the long-run level of public debt. I am simply pointing to one benefit associated with such an increase: It allows the central bank to be more effective in mitigating the impact of adverse shocks to aggregate demand."
That was in Frankfurt where we can only assume that if Wolfgang Schaeuble was in attendance he may have had a conniption fit and now, exactly two months later, Kocherlakota is at it again, this time in remarks prepared for a speech at Northwestern. Here’s Reuters:
A top U.S. Federal Reserve official on Tuesday floated a potentially controversial proposal to help keep America's economy more stable: The federal government could issue more debt.
Narayana Kocherlakota, president of the Minneapolis Fed, said bond market data suggests that the ideal inflation-adjusted rates of interest in the U.S. economy have fallen in recent decades.
This is important because it means the Fed's own target for interest rate policy will tend to be lower, raising the risk that the Fed finds itself in a situation where it would like to slash rates but can only cut them modestly before hitting the "zero lower bound."
Near-zero rates also raise the risk of encouraging people to over borrow, setting up instability in the form of financial booms and busts.
"Younger workers (and those who are yet to be born) have to pay the taxes to fund this extra debt issuance," he said, adding that "balancing these gains versus losses is clearly a job for the fiscal authority, not for monetary policymakers like me."
"I am simply pointing to two key benefits associated with such an increase," Kocherlakota said, referring to more effective monetary policy and less risk of financial instability.
Got that? We'd me remiss if we didn't spell out precisely why Kocherlakota's argument is so absurd.
It is of course the Fed's misguided attempts to use monetary policy to micromanage economic outcomes (i.e. "smooth out the business cycle") that are leading to the more frequent occurences of spectacular booms and busts. In other words, they aren't smoothing out the business cycle, they're making it immeasurably more unpredictable. The FOMC's latest and greatest foray into central planning the economy has now created what will likely be viewed in hindsight as some of the greatest speculative bubbles ever witnessed, and part and parcel of this monumental folly is ZIRP. Now, Kocherlakota is trying to argue that because the Fed's own policies (which, again, are designed to eliminate instability by smoothing out the business cycle) have put it at the zero lower bound, the US government should print more debt in an effort to boost the neutral rate to give the FOMC more room to do more of the very same things they just did, things which, by Kocherlakota's own admission, have "raised the risk of encouraging people to over borrow, setting up instability in the form of financial booms and busts" and which by virtually any measure one cares to look at, have done a poor job of boosting inflation expectations and aggregate demand.
This is the Einstenian insanity employed by those who control the fate of the financial universe. Be afraid. Be very afraid.
- Fenix
- Mensajes: 16334
- Registrado: Vie Abr 23, 2010 2:36 am
Re: Miercoles 09/09/15 Solicitudes de hipotecas
por Fenix » Mié Sep 09, 2015 2:57 pm
Russia Expands Military Presence In Syria Despite German, French Threats
Submitted by Tyler D.
09/09/2015 - 14:05
Now that Europe's migrant crisis is making international headlines on a nightly basis, France and Britain are set to use the influx of aslylum seekers as a pretext for airstrikes in Syria. The timing could not be more convenient as new "intelligence" suggests that Russia is expanding its presence in the Assad stronghold around Latakia. For its part, Germany is out warning the Kremlin against "military engagement."
Comprar, comprar.. como si fuera tan fácil
Miércoles, 9 de Setiembre del 2015 -15:53:00
Durante el mes de agosto el ECB compró deuda por 51.6 bn. por debajo de los 60 bn. fijados. Pero, por otro lado, durante mayo/julio las compras excedieron en promedio mensual los 60 bn.
En el caso de deuda pública, en la última semana el ECB compró 11.91 bn. por encima de los 9.77 bn. de la semana previa.
Acumula ya más de 301.4 bn. en compras de papel público.
Pero en la última semana apenas ha comprado 1.1 bn. en titulizaciones y 382 M. en ABS.
Durante la semana pasada compró 1.9 bn. en covered bond y vendió 106 M. de titulizaciones de crédito.
En agosto el ECB ha comprado 7.459 bn. lo que ha supuesto un mínimo de compras de covered.
Sobre ABS, poco que añadir tras los comentarios ayer de un consejero del ECB sobre la decepción que le ha producido el escaso impacto del programa de compra de este papel sobre le desarrollo de este mercado.
Al final, la eterna pregunta: ¿y quién vende?. No es una pregunta fácil de responder.
En este punto, con dudas y bajo elevada tensión, lo cierto es que la demanda de papel sigue siendo superior a la oferta. En el caso concreto de la banca, titulizar crédito significa dejar hueco para nuevo crédito. Pero, otra cuestión sin resolver: ¿y si la demanda de crédito es débil o poco solvente? Consideremos, además, que en este mismo momento el propio ECB valora con las principales entidades financieras los nuevos requisitos de capital. Y serán probablemente más estrictos que los anteriores.
Bajo este escenario: ¿ampliar el QE?. Consideremos, por último, que el Programa de compra de activos tenía como limitación que no podría influir en los precios del mercado. Era una de las razones por las que se fijaban límites estrictos en términos de emisión y referencia, este último revisado en ocho puntos al alza hasta 33 % en la reunión anterior.
Al final, no es fácil un QE bajo todas estas limitaciones. Y ampliarlo, si fuera necesario (hay una probabilidad significativa de que finalmente lo sea), sería mucho más complicado. Veremos.
José Luis Martínez Campuzano
Estratega de Citi en España
Submitted by Tyler D.
09/09/2015 - 14:05
Now that Europe's migrant crisis is making international headlines on a nightly basis, France and Britain are set to use the influx of aslylum seekers as a pretext for airstrikes in Syria. The timing could not be more convenient as new "intelligence" suggests that Russia is expanding its presence in the Assad stronghold around Latakia. For its part, Germany is out warning the Kremlin against "military engagement."
Comprar, comprar.. como si fuera tan fácil
Miércoles, 9 de Setiembre del 2015 -15:53:00
Durante el mes de agosto el ECB compró deuda por 51.6 bn. por debajo de los 60 bn. fijados. Pero, por otro lado, durante mayo/julio las compras excedieron en promedio mensual los 60 bn.
En el caso de deuda pública, en la última semana el ECB compró 11.91 bn. por encima de los 9.77 bn. de la semana previa.
Acumula ya más de 301.4 bn. en compras de papel público.
Pero en la última semana apenas ha comprado 1.1 bn. en titulizaciones y 382 M. en ABS.
Durante la semana pasada compró 1.9 bn. en covered bond y vendió 106 M. de titulizaciones de crédito.
En agosto el ECB ha comprado 7.459 bn. lo que ha supuesto un mínimo de compras de covered.
Sobre ABS, poco que añadir tras los comentarios ayer de un consejero del ECB sobre la decepción que le ha producido el escaso impacto del programa de compra de este papel sobre le desarrollo de este mercado.
Al final, la eterna pregunta: ¿y quién vende?. No es una pregunta fácil de responder.
En este punto, con dudas y bajo elevada tensión, lo cierto es que la demanda de papel sigue siendo superior a la oferta. En el caso concreto de la banca, titulizar crédito significa dejar hueco para nuevo crédito. Pero, otra cuestión sin resolver: ¿y si la demanda de crédito es débil o poco solvente? Consideremos, además, que en este mismo momento el propio ECB valora con las principales entidades financieras los nuevos requisitos de capital. Y serán probablemente más estrictos que los anteriores.
Bajo este escenario: ¿ampliar el QE?. Consideremos, por último, que el Programa de compra de activos tenía como limitación que no podría influir en los precios del mercado. Era una de las razones por las que se fijaban límites estrictos en términos de emisión y referencia, este último revisado en ocho puntos al alza hasta 33 % en la reunión anterior.
Al final, no es fácil un QE bajo todas estas limitaciones. Y ampliarlo, si fuera necesario (hay una probabilidad significativa de que finalmente lo sea), sería mucho más complicado. Veremos.
José Luis Martínez Campuzano
Estratega de Citi en España
- Fenix
- Mensajes: 16334
- Registrado: Vie Abr 23, 2010 2:36 am
Re: Miercoles 09/09/15 Solicitudes de hipotecas
por Fenix » Mié Sep 09, 2015 2:59 pm
Why Did China Invite Blackrock's Larry Fink For Advice How To Manipulate Its Stock Market?
Submitted by Tyler D.
09/09/2015 - 14:49
While it is already common knowledge that China has thrown virtually everything at the market in order to halt the ongoing market crash, including arresting "malicious sellers", journalists, and suspicious hedge fund managers, blaming HFTs for daring to sell in addition to buy, and even making trading index futures practically impossible, perhaps the most interesting revelation showcasing China's desperation came from CNBC today which reported that the government recently invited none other than Mr. ETF himself, BlackRock CEO Larry Fink to "discuss the market situation there", or said otherwise: how to manipulate the market better.
Have We Reached Peak Apple?
09/09/2015 14:20 -0400
Submitted by Omid Malekan via OmidMalekan.com,
Technological change often comes faster than what the people in it’s thrall can predict. It wasn’t that long ago when you and everyone else you knew were probably using AOL Instant Messenger, around the same time that dude, you were getting a Dell. Then one day you weren’t. Blackberrys used to be so popular that “to bbm” someone made it into the dictionary, but then the devices all but disappeared. These inflection points are seldom based on the companies failing their customers, but rather because consumers simply moved on.
Apple’s success in the past year with the iPhone 6 has been so spectacular that it’s hard not to assume it will go on. Unfortunately that’s usually when the turn starts, without anyone noticing. To question whether the iPhone’s cultural and economic dominance is peaking is not to say that one of its competitors will overtake it, as It wasn’t MSN Messenger or Hewlett Packard that took down the major players of their day, but rather their customers’ apathy. Apple now stands at the same precipice.
The first threat to the iPhone’s ongoing success is the iPhone’s ongoing success. Apple realized long before any of its competitors that portable technology is as much a fashion item as it is a gadget, and marketed its products accordingly. But now that so many different kinds of people own an iPhone, it’s no longer cutting edge fashion. Being popular in the tech world might feed on itself, but being too popular in fashion is dangerous.
The second threat to the iPhone, and smartphones in general, is the success Apple and its competitors have had in cramming every imaginable feature into the latest devices. Today’s iterations are more like “a computer in your pocket” than a communication device, and that’s a liability. Once smartphones become little computers then the only improvements left to be made are incremental. The next model will be a bit faster and have a better camera, but what it probably won’t have is a revolutionary feature that will dramatically shift user experience. There was a time in the PC business where the release of every new Windows version or Intel processor was a milestone and a boost to sales, but the changes eventually became incremental, and it was PC makers who paid the price.
Not all aspects of the iPhone’s dominance have followed historical precedence however. Thanks to the unique position of wireless carriers in the smartphone market, Apple (and to a lesser extent its rivals) have enjoyed heightened US adoption thanks to the carrier subsidy model. When smartphones first came out it wasn’t a given that everyone would jump to an expensive data plan. To drive adoption major carriers like Verizon and AT&T decided to subsidize smartphone purchases in exchange for locking customers into a 2 year contract. This model was beneficial for iPhone sales in several ways.
The overall cost of owning an expensive phone and upgrading regularly was now lower. Since the monthly data bill did not change whether you were under contract or not, all consumers were encouraged to always upgrade to the latest model as soon as possible. iPhone owners enjoyed a third perk, as iPhones on average cost more than their competitors. Since the carriers decided to make the initial contract fee $200 regardless of whether you were signing up for a $700 iPhone or $500 Android device, iPhone users were effectively being subsidized by non-iPhone users.
All of these benefits are about to end. As smartphones have gone mainstream, carriers no longer need to subsidize the phones to get users to pay for data plans. To them it doesn’t matter if you have the latest iPhone or your old phone from 2 years ago. This is why they have been moving towards a monthly installment model and Verizon, the nation’s biggest, recently announced an end to all phone subsidies and contracts. Instead subscribers can now either bring in their own phone, pay full price for a new one or go on an installment plan where they pay the full cost of the phone in monthly increments.
This move from Verizon is bad for all smartphone makers because for the first time consumers are forced to choose how much they spend on a new phone. Back when all new phones still cost $200 the incentive was to choose the most expensive option (which was almost always an iPhone) and to upgrade regularly. But now by using an old phone or choosing a cheaper one consumers can save money. Those savings occur either all up front or on a monthly basis, so the likelihood of impulse purchases of the latest and thus most expensive models will go down. If a user doesn’t upgrade at all their monthly bill will drop substantially once their existing phone is paid off, making the cost of a new phone that much more apparent.
As the dominant market leader and the company with the biggest margins Apple has the most to lose to these changing industry dynamics. Premium brands always benefit the most from an industry subsidy, but when that subsidy ends, they suffer the most. It would be one thing if Apple could counter the de facto price increase on all iPhones going forward with significant improvements, but alas the commoditization of smartphones in general means those days are behind us. Consumers are about to be asked to pay more for a phone that stands out less.
In the past few weeks Apple’s stock has seen significant turmoil, along with the rest of the market. Although some of Apple’s decline has been rightly attributed to the economic turmoil in China, the changing industry dynamics in the US should not be ignored. Current reports indicate that Apple has ordered a record number of units from its suppliers for the release of the upcoming iPhone 6s. Record uncertainty is about to meet record supply.
Although Apple offers many other products none of them come close to to the iPhone in terms of sales volume or profits. That is why in the coming years the company will live or die by its flagship product. To borrow their long time marketing slogan, if it’s not an iPhone, then its not an iPhone.
Looking back to the Dell example, it now seems fairly obvious that the stock and company were bound to fall down to earth as its products became increasingly commoditized while lower cost competitors moved in, and sexier gadgets like smartphones took center stage. Someday future analysts might feel the same about Apple and its historic iPhone success.
Submitted by Tyler D.
09/09/2015 - 14:49
While it is already common knowledge that China has thrown virtually everything at the market in order to halt the ongoing market crash, including arresting "malicious sellers", journalists, and suspicious hedge fund managers, blaming HFTs for daring to sell in addition to buy, and even making trading index futures practically impossible, perhaps the most interesting revelation showcasing China's desperation came from CNBC today which reported that the government recently invited none other than Mr. ETF himself, BlackRock CEO Larry Fink to "discuss the market situation there", or said otherwise: how to manipulate the market better.
Have We Reached Peak Apple?
09/09/2015 14:20 -0400
Submitted by Omid Malekan via OmidMalekan.com,
Technological change often comes faster than what the people in it’s thrall can predict. It wasn’t that long ago when you and everyone else you knew were probably using AOL Instant Messenger, around the same time that dude, you were getting a Dell. Then one day you weren’t. Blackberrys used to be so popular that “to bbm” someone made it into the dictionary, but then the devices all but disappeared. These inflection points are seldom based on the companies failing their customers, but rather because consumers simply moved on.
Apple’s success in the past year with the iPhone 6 has been so spectacular that it’s hard not to assume it will go on. Unfortunately that’s usually when the turn starts, without anyone noticing. To question whether the iPhone’s cultural and economic dominance is peaking is not to say that one of its competitors will overtake it, as It wasn’t MSN Messenger or Hewlett Packard that took down the major players of their day, but rather their customers’ apathy. Apple now stands at the same precipice.
The first threat to the iPhone’s ongoing success is the iPhone’s ongoing success. Apple realized long before any of its competitors that portable technology is as much a fashion item as it is a gadget, and marketed its products accordingly. But now that so many different kinds of people own an iPhone, it’s no longer cutting edge fashion. Being popular in the tech world might feed on itself, but being too popular in fashion is dangerous.
The second threat to the iPhone, and smartphones in general, is the success Apple and its competitors have had in cramming every imaginable feature into the latest devices. Today’s iterations are more like “a computer in your pocket” than a communication device, and that’s a liability. Once smartphones become little computers then the only improvements left to be made are incremental. The next model will be a bit faster and have a better camera, but what it probably won’t have is a revolutionary feature that will dramatically shift user experience. There was a time in the PC business where the release of every new Windows version or Intel processor was a milestone and a boost to sales, but the changes eventually became incremental, and it was PC makers who paid the price.
Not all aspects of the iPhone’s dominance have followed historical precedence however. Thanks to the unique position of wireless carriers in the smartphone market, Apple (and to a lesser extent its rivals) have enjoyed heightened US adoption thanks to the carrier subsidy model. When smartphones first came out it wasn’t a given that everyone would jump to an expensive data plan. To drive adoption major carriers like Verizon and AT&T decided to subsidize smartphone purchases in exchange for locking customers into a 2 year contract. This model was beneficial for iPhone sales in several ways.
The overall cost of owning an expensive phone and upgrading regularly was now lower. Since the monthly data bill did not change whether you were under contract or not, all consumers were encouraged to always upgrade to the latest model as soon as possible. iPhone owners enjoyed a third perk, as iPhones on average cost more than their competitors. Since the carriers decided to make the initial contract fee $200 regardless of whether you were signing up for a $700 iPhone or $500 Android device, iPhone users were effectively being subsidized by non-iPhone users.
All of these benefits are about to end. As smartphones have gone mainstream, carriers no longer need to subsidize the phones to get users to pay for data plans. To them it doesn’t matter if you have the latest iPhone or your old phone from 2 years ago. This is why they have been moving towards a monthly installment model and Verizon, the nation’s biggest, recently announced an end to all phone subsidies and contracts. Instead subscribers can now either bring in their own phone, pay full price for a new one or go on an installment plan where they pay the full cost of the phone in monthly increments.
This move from Verizon is bad for all smartphone makers because for the first time consumers are forced to choose how much they spend on a new phone. Back when all new phones still cost $200 the incentive was to choose the most expensive option (which was almost always an iPhone) and to upgrade regularly. But now by using an old phone or choosing a cheaper one consumers can save money. Those savings occur either all up front or on a monthly basis, so the likelihood of impulse purchases of the latest and thus most expensive models will go down. If a user doesn’t upgrade at all their monthly bill will drop substantially once their existing phone is paid off, making the cost of a new phone that much more apparent.
As the dominant market leader and the company with the biggest margins Apple has the most to lose to these changing industry dynamics. Premium brands always benefit the most from an industry subsidy, but when that subsidy ends, they suffer the most. It would be one thing if Apple could counter the de facto price increase on all iPhones going forward with significant improvements, but alas the commoditization of smartphones in general means those days are behind us. Consumers are about to be asked to pay more for a phone that stands out less.
In the past few weeks Apple’s stock has seen significant turmoil, along with the rest of the market. Although some of Apple’s decline has been rightly attributed to the economic turmoil in China, the changing industry dynamics in the US should not be ignored. Current reports indicate that Apple has ordered a record number of units from its suppliers for the release of the upcoming iPhone 6s. Record uncertainty is about to meet record supply.
Although Apple offers many other products none of them come close to to the iPhone in terms of sales volume or profits. That is why in the coming years the company will live or die by its flagship product. To borrow their long time marketing slogan, if it’s not an iPhone, then its not an iPhone.
Looking back to the Dell example, it now seems fairly obvious that the stock and company were bound to fall down to earth as its products became increasingly commoditized while lower cost competitors moved in, and sexier gadgets like smartphones took center stage. Someday future analysts might feel the same about Apple and its historic iPhone success.
- Fenix
- Mensajes: 16334
- Registrado: Vie Abr 23, 2010 2:36 am
Re: Miercoles 09/09/15 Solicitudes de hipotecas
por Fenix » Mié Sep 09, 2015 3:02 pm
Britain’s £173 Billion “Debt Timebomb”
Posted by: GoldCore
Post date: 09/09/2015 - 07:59
Silver premiums continue to move higher, while premiums on gold have remained steady. UK households are sitting on a £173 billion debt time bomb after once again being lured into a spending...
Krugman Joins Goldman, Summers, World Bank, IMF, & China: Demands No Fed Rate Hike
Submitted by Tyler D.
09/09/2015 15:12 -0400
The growing roar of 'the establishment' crying for help from The Fed should make investors nervous. While your friendly local asset-getherer and TV-talking-head will proclaim how a rate-hike is so positive for the economy and stocks, we wonder why it is that The IMF, The World Bank, Larry Summers (twice), Goldman Sachs, China (twice), and now no lessor nobel-winner than Paul Krugman has demanded that The Fed not hike rates for fear of - generally speaking - "panic and turmoil," however, as Krugman notes, “I think it would be a terrible mistake to move. But I’m not confident that they won’t make a mistake."
The IMF panics...
The Federal Reserve should hold off from raising interest rates until the first half of 2016, the International Monetary Fund said as it cut its U.S. growth forecast for the second time in three months.
The lender also said that the dollar was “moderately overvalued” and a further marked appreciation would be “harmful,” in a statement released in Washington on Thursday on its annual checkup of the U.S. economy.
“The FOMC should remain data dependent and defer its first increase in policy rates until there are greater signs of wage or price inflation than are currently evident,” the IMF said. Based on the fund’s economic forecast, and “barring upside surprises to growth and inflation, this would put lift-off into the first half of 2016.”
...
“There is a risk that a further marked appreciation of the dollar -- particularly one that takes place in an environment where policies to address growth deficiencies languish both in the U.S. and abroad -- would be harmful.”
The report also discussed financial stability, with the IMF pointing to higher risks in shadow banking, a potential lack of liquidity in fixed-income markets, and greater market risk-taking in the insurance industry
The World Bank raises the fear-mongery...
“I don’t think the Fed lift-off itself is going to create a major crisis but it will cause some immediate turbulence,” Mr Basu said. “It is the compounding effect of the last two weeks of bad news with that [China devaluation] . . . In the middle of this it is going to cause some panic and turmoil.
China (twice) demanded The Fed hold...
* U.S. FEDERAL RESERVE SHOULD DELAY RATE HIKE, COULD PUSH SOME EMERGING MARKETS INTO CRISIS - CHINA OFFICIAL
"China's exchange rate reform had nothing to do with the global stock market volatility, it was mainly due to the upcoming U.S. Federal Reserve monetary policy move," Yao said. "We were wronged."
Goldman Sachs offers up 7 reasons why Yellen should stay on hold... Shouldn't Be Close
1. We do not expect a rate hike at the September 16-17 FOMC meeting. This call was originally based on our interpretationof the June “dot plot” and Chair Yellen's July 10 speech, which suggested to us that her own expectation was liftoff in December, not September. If this interpretation was correct at the time, and if we are right in assuming that Yellen’s views are ultimately decisive, the key question is how the economy and the financial markets have performed relative to her expectations of 2-3 months ago. If developments have beaten her expectations, it is possible that she might now support a hike. In contrast, if developments have been in line with or weaker than her expectations, she will presumably resist a hike.
2. Even if we focus only on the economic data, it is difficult to argue that developments have beaten expectations. Although growth has been decent and the labor market has improved further, both wage and price inflation have fallen short of consensus expectations. Our wage tracker stands at just 2.1% as the Q2 employment cost index surprised on the downside, and core PCE inflation just made a four-year low of 1.24%. Moreover, the notion that the weakness in core inflation is principally due to the temporary effects of a stronger dollar and lower commodity prices does not look right; core PCE goods inflation, where such effects should be concentrated, is only 0.4pp below its 20-year average, a gap that is worth just 0.1pp for the overall core PCE index. This suggests that most of the inflation shortfall relative to the Fed’s 2% target is due to more persistent factors, including continued labor market slack.
3. Once we broaden the perspective to include financial markets, developments have been substantially worse than almost anyone expected in June or early July, leading many forecasters (ourselves included) to shave their expectations of future growth. Our GS Financial Conditions Index (GSFCI) is at the tightest level since 2010, as the dollar has appreciated further, credit spreads have widened, and stock prices have fallen substantially. At this point, our “GSFCI Taylor rule” suggests that actual financial conditions are much tighter than the level suggested by the current levels of employment and inflation relative to the Fed’s targets. In a similar vein, market inflation expectations have fallen back to the lows of early 2015; the five-year five-year forward TIPS breakeven stood at 1.88% on Friday, which we think is consistent with a market expectation for PCE inflation of just 1½%, half a point below the Fed’s target.
4. So how do we explain Vice Chairman Fischer’s relatively hawkish CNBC interview and speechat the Jackson Hole symposium? While Fischer did not comment directly on the timing of liftoff, he did provide a fairly upbeat interpretation of the labor market and inflation picture, which many have interpreted as a signal that he will support a hike on September 17. However, an alternative interpretation is a desire to avoid pre-empting the actual FOMC meeting, at a point in time when the market-implied probability of a September hike stood below 25%. In support of this interpretation, we would note that Fischer also gave a speech widely interpreted as hawkish just three weeks before the March 17-18 FOMC meeting, which featured sizable downward revisions to the committee’s inflation and funds rate paths.
5. There are also some logistical difficulties with a hike on September 17. Right now, the market-implied probability of a hike is 30%-35%. We believe that the FOMC will want to be reasonably sure that the first rate hike in nearly a decade is well anticipated by the market on the day it occurs. This implies that a strong signal between now and the meeting may be necessary to put the committee in a position where it feels it actually can hike without potentially causing a significant amount of market disruption. But again, the desire to avoid pre-empting the discussion at the meeting itself presumably argues against sending such a signal. The path of least resistance is therefore to wait, which might mean that the market-implied probability of a hike on the day of the meeting itself will be close to current levels. If so, we think that market pricing in itself would become a strong argument around the FOMC table against pulling the trigger on September 16-17 [ZH: which means that as many have suggested, it is the market's tantrums and not the Fed, which calls the shots].
6. If we are right about the will-they-or-won’t-they issue, the next question is what message the committee will send about future policy on September 17. On this, it is harder to be confident. The tightening of financial conditions has greatly strengthened the case of commentators such as former Treasury Secretary Summers that the committee should not be signaling a 2015 liftoff; taken literally, our GSFCI rule implies that the committee should be looking for ways to ease, not tighten, policy. And the simplest way to do that would be to signal a later liftoff than the market is currently discounting. Against this, many meeting participants will argue that the tightening of financial conditions could reverse quickly and a 2016 liftoff is too late given the further improvement in the labor market and the sharper-than-expected decline in the headline unemployment rate in recent months. In the end, our baseline expectation is that the message from the meeting, including the “leadership dots”, will remain broadly consistent with liftoff in December but Chair Yellen will make it clear in the press conference that financial conditions need to improve for the committee to actually hike this year.
7. Other aspects of the meeting are also likely to be mostly dovish. Although the unemployment rate path will once again have to come down, we expect this to be largely offset by a reduction in the committee’s estimate of the structural unemployment rate. The forecasts for real GDP growth, inflation, and the longer-term funds rate are also likely to decline modestly. That said, the Fed’s funds rate expectations are likely to remain well above the distant forward rate, which now suggests a market view of the equilibrium funds rate of just 2%. We agree with the Fed’s view that this is likely too low, although the question will not be definitively settled for several years.
Larry Summers...
a Federal Reserve decision to raise rates in September would be a serious mistake.
Now is the time for the Fed to do what is often hardest for policymakers. Stand still.
And now Paul Krugman joins the fray...
“I don’t think they are moving next week,” economist Paul Krugman says at conference in Tokyo on Wednesday when asked about timing of possible interest rate increase by U.S. Federal Reserve.
“I still think it would be a terrible mistake to move. But I’m not confident that they won’t make a mistake"
Fed keeps sounding like it’s eager to raise rates.
It’s almost as if there exists an urge at the Fed to repeat the mistakes of the BOJ and ECB.
* * *
Now Yellen is really cornered.. and just exactly how are the talking heads going to spin any of this as positive?
However, Saxo Bank offers four reasons why The Fed should hike rates in September... The probability of a rate hike in September is stronger than is generally believed. There is no perfect timing for the tightening monetary policy but several arguments confirm that the Fed is able to begin this month if it so desires. Here are the four we can see:
1. The Fed is on its way to achieving its dual mandate
With a 5.1% unemployment rate, the US economy is very near "full employment" and is preparing to enter its seventh year of expansion. Notably, the current period of growth is already 16 months longer than the average seen since 1945.
As for inflation, the Fed has nearly achieved its goal as inflation (excluding oil and energy) lies at 1.8%, very close to the 2% target.
Taking oil into account, of course, inflation is down significantly. But this near-deflation situation is an external factor on which the central bank has little influence and it cannot be the only driver of US monetary policy strategy.
2. The Fed is aware of the 'speculative bubbles' risk
Even if preventing speculative bubbles is not officially part of the Fed's dual mandate, this legitimate preoccupation is strengthened by the financialisation of the economy.
Economic literature dating from the beginning of the previous century underlines the necessity of central bankers' including the price of financial assets and real estate to get a more comprehensive view on actual inflation.
Recent speculative bubbles on stocks or real estate in several industrialised countries confirm this necessity.
In the United States, the excesses that led to the 2007 crisis appear to be drawing near again. Many stock prices are disconnected from companies’ balance sheets and first-time buyers can once again take out a loan worth 97% of the price of the property they intend to purchase.
Coming back to a more orthodox monetary policy implies obvious dangers, but the first benefit would be to return “real” value to money.
3. Credit conditions will remain durably flexible
Even if the coordination of monetary policies between the main central banks is just an illusion, it does exist to a certain extent. It can be witnessed in the Swiss National Bank’s decision to give up its three-year-old cap on the value of the Swiss franc last January, just a few days before the official announcement of the European Central Bank's QE programme.
In the event of the Fed raising its rates in September, the global monetary printing will go on. The tightening in America will be very gradual. In addition, the ECB shouldn’t hike its rates before the end of 2016, at least, and the Bank of Japan is involved in a similar process which is not intended to end any time soon.
4. The Fed’s credibility depends on it
A rate hike in September has been in the consensus for months and has led to a repositioning of portfolios in favour of USD-denominated assets since last Spring. Any backward step from the Fed could weaken its credibility, its forward guidance strategy introduced in 2008, and support the idea that market upheavals drive its decisions.
Since the Swiss franc case occurred early 2015, central bankers’ credibility has been notably affected. A postponed rate hike might then blur the American central bank’s message.
If the Fed should decide to stick with the status quo this month – perhaps because of China’s situation – it is hard to see how the rate hike could wait until the end of the year. The Fed would quickly be short of valid arguments to justify this change in its strategy.
* * *
Finally, just in case there is still any confusion what a Fed rate hike means, we repeat what Bank of America said last week:
Should the Fed decide to raise interest rates, it will be the first Fed hike since June 29th 2006. In the 110 months that have since past, global central banks have cut interest rates 697 times, central banks have bought $15 trillion of financial assets, zero [or negative] interest rates policies have been adopted in the US, Europe & Japan. And, following the Great Financial Crisis of 2008, both stocks and corporate bonds have soared to all-time highs thanks in great part to this extraordinary monetary regime.
As noted above, a rate hike with a stroke ends this era.
Posted by: GoldCore
Post date: 09/09/2015 - 07:59
Silver premiums continue to move higher, while premiums on gold have remained steady. UK households are sitting on a £173 billion debt time bomb after once again being lured into a spending...
Krugman Joins Goldman, Summers, World Bank, IMF, & China: Demands No Fed Rate Hike
Submitted by Tyler D.
09/09/2015 15:12 -0400
The growing roar of 'the establishment' crying for help from The Fed should make investors nervous. While your friendly local asset-getherer and TV-talking-head will proclaim how a rate-hike is so positive for the economy and stocks, we wonder why it is that The IMF, The World Bank, Larry Summers (twice), Goldman Sachs, China (twice), and now no lessor nobel-winner than Paul Krugman has demanded that The Fed not hike rates for fear of - generally speaking - "panic and turmoil," however, as Krugman notes, “I think it would be a terrible mistake to move. But I’m not confident that they won’t make a mistake."
The IMF panics...
The Federal Reserve should hold off from raising interest rates until the first half of 2016, the International Monetary Fund said as it cut its U.S. growth forecast for the second time in three months.
The lender also said that the dollar was “moderately overvalued” and a further marked appreciation would be “harmful,” in a statement released in Washington on Thursday on its annual checkup of the U.S. economy.
“The FOMC should remain data dependent and defer its first increase in policy rates until there are greater signs of wage or price inflation than are currently evident,” the IMF said. Based on the fund’s economic forecast, and “barring upside surprises to growth and inflation, this would put lift-off into the first half of 2016.”
...
“There is a risk that a further marked appreciation of the dollar -- particularly one that takes place in an environment where policies to address growth deficiencies languish both in the U.S. and abroad -- would be harmful.”
The report also discussed financial stability, with the IMF pointing to higher risks in shadow banking, a potential lack of liquidity in fixed-income markets, and greater market risk-taking in the insurance industry
The World Bank raises the fear-mongery...
“I don’t think the Fed lift-off itself is going to create a major crisis but it will cause some immediate turbulence,” Mr Basu said. “It is the compounding effect of the last two weeks of bad news with that [China devaluation] . . . In the middle of this it is going to cause some panic and turmoil.
China (twice) demanded The Fed hold...
* U.S. FEDERAL RESERVE SHOULD DELAY RATE HIKE, COULD PUSH SOME EMERGING MARKETS INTO CRISIS - CHINA OFFICIAL
"China's exchange rate reform had nothing to do with the global stock market volatility, it was mainly due to the upcoming U.S. Federal Reserve monetary policy move," Yao said. "We were wronged."
Goldman Sachs offers up 7 reasons why Yellen should stay on hold... Shouldn't Be Close
1. We do not expect a rate hike at the September 16-17 FOMC meeting. This call was originally based on our interpretationof the June “dot plot” and Chair Yellen's July 10 speech, which suggested to us that her own expectation was liftoff in December, not September. If this interpretation was correct at the time, and if we are right in assuming that Yellen’s views are ultimately decisive, the key question is how the economy and the financial markets have performed relative to her expectations of 2-3 months ago. If developments have beaten her expectations, it is possible that she might now support a hike. In contrast, if developments have been in line with or weaker than her expectations, she will presumably resist a hike.
2. Even if we focus only on the economic data, it is difficult to argue that developments have beaten expectations. Although growth has been decent and the labor market has improved further, both wage and price inflation have fallen short of consensus expectations. Our wage tracker stands at just 2.1% as the Q2 employment cost index surprised on the downside, and core PCE inflation just made a four-year low of 1.24%. Moreover, the notion that the weakness in core inflation is principally due to the temporary effects of a stronger dollar and lower commodity prices does not look right; core PCE goods inflation, where such effects should be concentrated, is only 0.4pp below its 20-year average, a gap that is worth just 0.1pp for the overall core PCE index. This suggests that most of the inflation shortfall relative to the Fed’s 2% target is due to more persistent factors, including continued labor market slack.
3. Once we broaden the perspective to include financial markets, developments have been substantially worse than almost anyone expected in June or early July, leading many forecasters (ourselves included) to shave their expectations of future growth. Our GS Financial Conditions Index (GSFCI) is at the tightest level since 2010, as the dollar has appreciated further, credit spreads have widened, and stock prices have fallen substantially. At this point, our “GSFCI Taylor rule” suggests that actual financial conditions are much tighter than the level suggested by the current levels of employment and inflation relative to the Fed’s targets. In a similar vein, market inflation expectations have fallen back to the lows of early 2015; the five-year five-year forward TIPS breakeven stood at 1.88% on Friday, which we think is consistent with a market expectation for PCE inflation of just 1½%, half a point below the Fed’s target.
4. So how do we explain Vice Chairman Fischer’s relatively hawkish CNBC interview and speechat the Jackson Hole symposium? While Fischer did not comment directly on the timing of liftoff, he did provide a fairly upbeat interpretation of the labor market and inflation picture, which many have interpreted as a signal that he will support a hike on September 17. However, an alternative interpretation is a desire to avoid pre-empting the actual FOMC meeting, at a point in time when the market-implied probability of a September hike stood below 25%. In support of this interpretation, we would note that Fischer also gave a speech widely interpreted as hawkish just three weeks before the March 17-18 FOMC meeting, which featured sizable downward revisions to the committee’s inflation and funds rate paths.
5. There are also some logistical difficulties with a hike on September 17. Right now, the market-implied probability of a hike is 30%-35%. We believe that the FOMC will want to be reasonably sure that the first rate hike in nearly a decade is well anticipated by the market on the day it occurs. This implies that a strong signal between now and the meeting may be necessary to put the committee in a position where it feels it actually can hike without potentially causing a significant amount of market disruption. But again, the desire to avoid pre-empting the discussion at the meeting itself presumably argues against sending such a signal. The path of least resistance is therefore to wait, which might mean that the market-implied probability of a hike on the day of the meeting itself will be close to current levels. If so, we think that market pricing in itself would become a strong argument around the FOMC table against pulling the trigger on September 16-17 [ZH: which means that as many have suggested, it is the market's tantrums and not the Fed, which calls the shots].
6. If we are right about the will-they-or-won’t-they issue, the next question is what message the committee will send about future policy on September 17. On this, it is harder to be confident. The tightening of financial conditions has greatly strengthened the case of commentators such as former Treasury Secretary Summers that the committee should not be signaling a 2015 liftoff; taken literally, our GSFCI rule implies that the committee should be looking for ways to ease, not tighten, policy. And the simplest way to do that would be to signal a later liftoff than the market is currently discounting. Against this, many meeting participants will argue that the tightening of financial conditions could reverse quickly and a 2016 liftoff is too late given the further improvement in the labor market and the sharper-than-expected decline in the headline unemployment rate in recent months. In the end, our baseline expectation is that the message from the meeting, including the “leadership dots”, will remain broadly consistent with liftoff in December but Chair Yellen will make it clear in the press conference that financial conditions need to improve for the committee to actually hike this year.
7. Other aspects of the meeting are also likely to be mostly dovish. Although the unemployment rate path will once again have to come down, we expect this to be largely offset by a reduction in the committee’s estimate of the structural unemployment rate. The forecasts for real GDP growth, inflation, and the longer-term funds rate are also likely to decline modestly. That said, the Fed’s funds rate expectations are likely to remain well above the distant forward rate, which now suggests a market view of the equilibrium funds rate of just 2%. We agree with the Fed’s view that this is likely too low, although the question will not be definitively settled for several years.
Larry Summers...
a Federal Reserve decision to raise rates in September would be a serious mistake.
Now is the time for the Fed to do what is often hardest for policymakers. Stand still.
And now Paul Krugman joins the fray...
“I don’t think they are moving next week,” economist Paul Krugman says at conference in Tokyo on Wednesday when asked about timing of possible interest rate increase by U.S. Federal Reserve.
“I still think it would be a terrible mistake to move. But I’m not confident that they won’t make a mistake"
Fed keeps sounding like it’s eager to raise rates.
It’s almost as if there exists an urge at the Fed to repeat the mistakes of the BOJ and ECB.
* * *
Now Yellen is really cornered.. and just exactly how are the talking heads going to spin any of this as positive?
However, Saxo Bank offers four reasons why The Fed should hike rates in September... The probability of a rate hike in September is stronger than is generally believed. There is no perfect timing for the tightening monetary policy but several arguments confirm that the Fed is able to begin this month if it so desires. Here are the four we can see:
1. The Fed is on its way to achieving its dual mandate
With a 5.1% unemployment rate, the US economy is very near "full employment" and is preparing to enter its seventh year of expansion. Notably, the current period of growth is already 16 months longer than the average seen since 1945.
As for inflation, the Fed has nearly achieved its goal as inflation (excluding oil and energy) lies at 1.8%, very close to the 2% target.
Taking oil into account, of course, inflation is down significantly. But this near-deflation situation is an external factor on which the central bank has little influence and it cannot be the only driver of US monetary policy strategy.
2. The Fed is aware of the 'speculative bubbles' risk
Even if preventing speculative bubbles is not officially part of the Fed's dual mandate, this legitimate preoccupation is strengthened by the financialisation of the economy.
Economic literature dating from the beginning of the previous century underlines the necessity of central bankers' including the price of financial assets and real estate to get a more comprehensive view on actual inflation.
Recent speculative bubbles on stocks or real estate in several industrialised countries confirm this necessity.
In the United States, the excesses that led to the 2007 crisis appear to be drawing near again. Many stock prices are disconnected from companies’ balance sheets and first-time buyers can once again take out a loan worth 97% of the price of the property they intend to purchase.
Coming back to a more orthodox monetary policy implies obvious dangers, but the first benefit would be to return “real” value to money.
3. Credit conditions will remain durably flexible
Even if the coordination of monetary policies between the main central banks is just an illusion, it does exist to a certain extent. It can be witnessed in the Swiss National Bank’s decision to give up its three-year-old cap on the value of the Swiss franc last January, just a few days before the official announcement of the European Central Bank's QE programme.
In the event of the Fed raising its rates in September, the global monetary printing will go on. The tightening in America will be very gradual. In addition, the ECB shouldn’t hike its rates before the end of 2016, at least, and the Bank of Japan is involved in a similar process which is not intended to end any time soon.
4. The Fed’s credibility depends on it
A rate hike in September has been in the consensus for months and has led to a repositioning of portfolios in favour of USD-denominated assets since last Spring. Any backward step from the Fed could weaken its credibility, its forward guidance strategy introduced in 2008, and support the idea that market upheavals drive its decisions.
Since the Swiss franc case occurred early 2015, central bankers’ credibility has been notably affected. A postponed rate hike might then blur the American central bank’s message.
If the Fed should decide to stick with the status quo this month – perhaps because of China’s situation – it is hard to see how the rate hike could wait until the end of the year. The Fed would quickly be short of valid arguments to justify this change in its strategy.
* * *
Finally, just in case there is still any confusion what a Fed rate hike means, we repeat what Bank of America said last week:
Should the Fed decide to raise interest rates, it will be the first Fed hike since June 29th 2006. In the 110 months that have since past, global central banks have cut interest rates 697 times, central banks have bought $15 trillion of financial assets, zero [or negative] interest rates policies have been adopted in the US, Europe & Japan. And, following the Great Financial Crisis of 2008, both stocks and corporate bonds have soared to all-time highs thanks in great part to this extraordinary monetary regime.
As noted above, a rate hike with a stroke ends this era.
- Fenix
- Mensajes: 16334
- Registrado: Vie Abr 23, 2010 2:36 am
Re: Miercoles 09/09/15 Solicitudes de hipotecas
por Fenix » Mié Sep 09, 2015 3:04 pm
Life Insurance: Bad Bet, or Merely Sheer Stupidity?
Posted by: Sprott Money
Post date: 09/09/2015 - 05:58
If you were to tell someone that the life insurance they had purchased was “a bad bet” or (even more judgmentally) “sheer stupidity”, almost certainly that person would feel insulted.
Something Just Snapped At The Comex (Updated)
Submitted by Tyler D.
09/09/2015 11:32 -0400
Update: Earlier today, we said that we would "keep a close eye on today's Comex update to see if JPM reverses this "adjustment" and adds at least a few more tons of deliverable gold to its vault." Moments ago we got the daily update form the Comex and not only did JPM not reverse its registered to eligible adjustment, but more curiously, the second largest vault, that of Scotia Mocatta (behind only HSBC) saw a comparable adjustment, whereby 16,644 ounces of gold, or about half a ton, and 14% of its vault total, were adjusted away from "registered" and into the "eliglble" category.
This means that the already record low total registered holding across the Comex system, declined once again this time by 8.3% and hit a new all time low of 185,315, or less than 6 tons.
This means that what was already a record dilution factor, with over 200 ounces of paper gold claims for every ounce of deliverable gold, just soared even more, and following today's 8% drop, there is now a unprecedented 228 ounces of paper claims for every ounce of deliverable "registered" gold.
For those who missed the full story from earlier today, please read on.
* * *
Just over one month ago, when looking at the latest changes in registered gold held at the Comex ,we were stunned not only by the collapse in this series to a record low of just over 350k ounces or barely over 10 tons, but also by the surge in "gold coverage", or the amount of paper gold claims on physical gold, which exploded to a record high 124 per ounce.
This is what we said on August 3:
While on its own, gold open interest - which merely represents the total potential claims on gold if exercised - is hardly exciting, as we have shown previously it has to be observed in conjunction with the physical gold that "backs" such potential delivery requests, also known as the "coverage ratio" of deliverable gold.
It is here that things get a little out of hand, because as the chart below shows, all else equal, the 43.5 million ounces of gold open interest and the record low 351,519 ounces of registered gold imply that as of Friday's close there was a whopping 123.8 ounces in potential paper claims to every ounces of physical gold.
This is an all time record high, and surpasses the previous period record seen in January 2014 following the JPM gold vault liquidation.
Another way of stating this unprecedented ratio is that the dilution ratio between physical gold and paper gold has hit a record low 0.8%. Indicatively, the average paper-to-physical coverage ratio since January 1, 2000 is a "modest" 19.1x. As of Friday it had soared to more than 6 times greater.
One month ago we showed this record surge in gold claims as follows:
But if last month was shocking, then what the COMEX revealed yesterday was absolutely jaw-dropping.
Here is the most recent update provided by the CME on eligible and registered gold.
What it reveals is that while JPM saw another 90,000 ounces of gold once again withdrawn from its vault, this time in the eligible category, for some reason a whopping 121,124 ounces of registered gold were reclassified as eligible. In doing so, JPM's registered gold (red line in chart below) tumbled to a record low of just 19,718 ounces - an 86% collapse in just one day - and well under 1 ton of gold, some 600 kilos of physical gold available to meet delivery requests to be specific!
JPM's dramatic adjustment also meant that total Comex registered gold has likewise tumbled to the lowest in history of just 202,054 ounces - just over 6 tons - available for delivery.
Zooming in only on the registered gold since 2014:
Not surprisingly, the latest collapse in registered gold took place while the gold open interest remained flat, and in fact has been modestly rising in the past year as seen below:
Which brings us to the punchline chart: the Comex gold "coverage" ratio, or the amount of paper claims for every ounce of physical. As of Friday this number was literally off the chart (it would not have fit on the previous chart shown up top), soaring to a mindblowing 207 ounces of paper gold claims for every ounce of deliverable gold. This also means that the dilution ratio between physical gold and paper gold has hit a new all-time low of just 0.48%!
And while we know what caused this epic surge in potential claims on gold - namely the relentless outflow in registered gold - what we don't know is whether this is a systemic event, one which threatens the next Comex gold delivery request with an "insufficient product" response, and a potential default, or simply a one day abnormality.
What we do know is that, if only for one day, something at the Comex has snapped.
We will keep a close eye on today's Comex update to see if JPM reverses this "adjustment" and adds at least a few more tons of deliverable gold to its vault, and if not, perhaps a phone call or two may be in order.
Posted by: Sprott Money
Post date: 09/09/2015 - 05:58
If you were to tell someone that the life insurance they had purchased was “a bad bet” or (even more judgmentally) “sheer stupidity”, almost certainly that person would feel insulted.
Something Just Snapped At The Comex (Updated)
Submitted by Tyler D.
09/09/2015 11:32 -0400
Update: Earlier today, we said that we would "keep a close eye on today's Comex update to see if JPM reverses this "adjustment" and adds at least a few more tons of deliverable gold to its vault." Moments ago we got the daily update form the Comex and not only did JPM not reverse its registered to eligible adjustment, but more curiously, the second largest vault, that of Scotia Mocatta (behind only HSBC) saw a comparable adjustment, whereby 16,644 ounces of gold, or about half a ton, and 14% of its vault total, were adjusted away from "registered" and into the "eliglble" category.
This means that the already record low total registered holding across the Comex system, declined once again this time by 8.3% and hit a new all time low of 185,315, or less than 6 tons.
This means that what was already a record dilution factor, with over 200 ounces of paper gold claims for every ounce of deliverable gold, just soared even more, and following today's 8% drop, there is now a unprecedented 228 ounces of paper claims for every ounce of deliverable "registered" gold.
For those who missed the full story from earlier today, please read on.
* * *
Just over one month ago, when looking at the latest changes in registered gold held at the Comex ,we were stunned not only by the collapse in this series to a record low of just over 350k ounces or barely over 10 tons, but also by the surge in "gold coverage", or the amount of paper gold claims on physical gold, which exploded to a record high 124 per ounce.
This is what we said on August 3:
While on its own, gold open interest - which merely represents the total potential claims on gold if exercised - is hardly exciting, as we have shown previously it has to be observed in conjunction with the physical gold that "backs" such potential delivery requests, also known as the "coverage ratio" of deliverable gold.
It is here that things get a little out of hand, because as the chart below shows, all else equal, the 43.5 million ounces of gold open interest and the record low 351,519 ounces of registered gold imply that as of Friday's close there was a whopping 123.8 ounces in potential paper claims to every ounces of physical gold.
This is an all time record high, and surpasses the previous period record seen in January 2014 following the JPM gold vault liquidation.
Another way of stating this unprecedented ratio is that the dilution ratio between physical gold and paper gold has hit a record low 0.8%. Indicatively, the average paper-to-physical coverage ratio since January 1, 2000 is a "modest" 19.1x. As of Friday it had soared to more than 6 times greater.
One month ago we showed this record surge in gold claims as follows:
But if last month was shocking, then what the COMEX revealed yesterday was absolutely jaw-dropping.
Here is the most recent update provided by the CME on eligible and registered gold.
What it reveals is that while JPM saw another 90,000 ounces of gold once again withdrawn from its vault, this time in the eligible category, for some reason a whopping 121,124 ounces of registered gold were reclassified as eligible. In doing so, JPM's registered gold (red line in chart below) tumbled to a record low of just 19,718 ounces - an 86% collapse in just one day - and well under 1 ton of gold, some 600 kilos of physical gold available to meet delivery requests to be specific!
JPM's dramatic adjustment also meant that total Comex registered gold has likewise tumbled to the lowest in history of just 202,054 ounces - just over 6 tons - available for delivery.
Zooming in only on the registered gold since 2014:
Not surprisingly, the latest collapse in registered gold took place while the gold open interest remained flat, and in fact has been modestly rising in the past year as seen below:
Which brings us to the punchline chart: the Comex gold "coverage" ratio, or the amount of paper claims for every ounce of physical. As of Friday this number was literally off the chart (it would not have fit on the previous chart shown up top), soaring to a mindblowing 207 ounces of paper gold claims for every ounce of deliverable gold. This also means that the dilution ratio between physical gold and paper gold has hit a new all-time low of just 0.48%!
And while we know what caused this epic surge in potential claims on gold - namely the relentless outflow in registered gold - what we don't know is whether this is a systemic event, one which threatens the next Comex gold delivery request with an "insufficient product" response, and a potential default, or simply a one day abnormality.
What we do know is that, if only for one day, something at the Comex has snapped.
We will keep a close eye on today's Comex update to see if JPM reverses this "adjustment" and adds at least a few more tons of deliverable gold to its vault, and if not, perhaps a phone call or two may be in order.
- Fenix
- Mensajes: 16334
- Registrado: Vie Abr 23, 2010 2:36 am
Re: Miercoles 09/09/15 Solicitudes de hipotecas
por admin » Mié Sep 09, 2015 3:13 pm
DJIA 16253.57 -239.11 -1.45%
Nasdaq 4756.53 -55.40 -1.15%
S&P 500 1942.04 -27.37 -1.39%
Russell 2000 1147.40 -14.36 -1.24%
Global Dow
Nasdaq 4756.53 -55.40 -1.15%
S&P 500 1942.04 -27.37 -1.39%
Russell 2000 1147.40 -14.36 -1.24%
Global Dow
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Re: Miercoles 09/09/15 Solicitudes de hipotecas
por admin » Mié Sep 09, 2015 3:14 pm
Récord de aperturas de empleos en EEUU refleja falta de trabajadores calificados
Por Lucia Mutikani
WASHINGTON (Reuters) - Las aperturas de puestos de trabajo en Estados Unidos subieron en julio a un récord histórico, pero un ritmo de contrataciones ligeramente menor sugirió que los empleadores tenían dificultades para hallar mano de obra calificada, una tendencia que eventualmente podría impulsar los salarios.
Las aperturas de posiciones, una medida de la demanda de trabajo, se incrementaron en 430.000 a un total desestacionalizado de 5,8 millones, dijo el Departamento de Trabajo en un reporte mensual del miércoles, conocido como JOLTS por sus siglas en inglés.
Fue el nivel más alto desde que comenzó la serie en diciembre de 2000 y elevó la tasa de aperturas de puestos a 3,9 por ciento en julio después de mantenerse sin cambios en 3,6 por ciento por tres meses seguidos.
Sin embargo, las contrataciones descendieron a 5,0 millones en julio desde 5,2 millones el mes previo. La tasa de contratación bajó a 3,5 por ciento desde 3,7 por ciento en junio.
"Los datos ahora indican sin ambigüedades que el mercado laboral no logra proveer los trabajadores que las compañías necesitan. Usualmente, eso significa que los salarios se acelerarán, aunque la evidencia de eso ahora es mixta", dijo Ian Shepherdson, economista jefe de Pantheon Macroeconomics en Nueva York.
El informe JOLTS podría atraer la atención de los responsables de la Reserva Federal estadounidense, que se verán la próxima semana para discutir la política monetaria.
Los economistas están divididos sobre si el banco central estadounidense subirá su tasa referencial de interés en el encuentro del 16 y 17 de septiembre.
Si bien el mercado laboral se ajusta velozmente, eso no ocasionó un crecimiento de salarios, dejando la inflación bastante debajo de la meta de la Fed, de 2 por ciento.
La Fed, cuya decisión también está complicada por la desaceleración de la expansión global, especialmente en China y otros mercados emergentes grandes, no ha aumentado las tasas desde mediados de 2006.
"Si estos datos no ponen a la Fed en acción, nada lo hará", dijo Chris Rupkey, un economista de MUFG Union Bank en Nueva York.
El ajuste del mercado laboral fue enfatizado por una brusca baja en el número de buscadores de empleo sin trabajo por posición abierta, a un mínimo histórico de 1,44 desde 1,56 en junio.
(reporte de Lucia Mutikani, editado por Gabriel Burin. LEA)
Por Lucia Mutikani
WASHINGTON (Reuters) - Las aperturas de puestos de trabajo en Estados Unidos subieron en julio a un récord histórico, pero un ritmo de contrataciones ligeramente menor sugirió que los empleadores tenían dificultades para hallar mano de obra calificada, una tendencia que eventualmente podría impulsar los salarios.
Las aperturas de posiciones, una medida de la demanda de trabajo, se incrementaron en 430.000 a un total desestacionalizado de 5,8 millones, dijo el Departamento de Trabajo en un reporte mensual del miércoles, conocido como JOLTS por sus siglas en inglés.
Fue el nivel más alto desde que comenzó la serie en diciembre de 2000 y elevó la tasa de aperturas de puestos a 3,9 por ciento en julio después de mantenerse sin cambios en 3,6 por ciento por tres meses seguidos.
Sin embargo, las contrataciones descendieron a 5,0 millones en julio desde 5,2 millones el mes previo. La tasa de contratación bajó a 3,5 por ciento desde 3,7 por ciento en junio.
"Los datos ahora indican sin ambigüedades que el mercado laboral no logra proveer los trabajadores que las compañías necesitan. Usualmente, eso significa que los salarios se acelerarán, aunque la evidencia de eso ahora es mixta", dijo Ian Shepherdson, economista jefe de Pantheon Macroeconomics en Nueva York.
El informe JOLTS podría atraer la atención de los responsables de la Reserva Federal estadounidense, que se verán la próxima semana para discutir la política monetaria.
Los economistas están divididos sobre si el banco central estadounidense subirá su tasa referencial de interés en el encuentro del 16 y 17 de septiembre.
Si bien el mercado laboral se ajusta velozmente, eso no ocasionó un crecimiento de salarios, dejando la inflación bastante debajo de la meta de la Fed, de 2 por ciento.
La Fed, cuya decisión también está complicada por la desaceleración de la expansión global, especialmente en China y otros mercados emergentes grandes, no ha aumentado las tasas desde mediados de 2006.
"Si estos datos no ponen a la Fed en acción, nada lo hará", dijo Chris Rupkey, un economista de MUFG Union Bank en Nueva York.
El ajuste del mercado laboral fue enfatizado por una brusca baja en el número de buscadores de empleo sin trabajo por posición abierta, a un mínimo histórico de 1,44 desde 1,56 en junio.
(reporte de Lucia Mutikani, editado por Gabriel Burin. LEA)
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