Dick Young writes in the most recent issue of Richard C. Young's Intelligence Report: If you have been with me for a while, you've read two of my most recent issues—Embrace Russia, Ditch the Saudis and Turks and Crack! You're in Your Tomb (about the real threat of an EMP attack knocking out America's power grid). Well, there is more, much more, to be concerned about. Young Research subscribes to a $50,000/year European database that allows us to gauge the turning points in the economic and monetary cycles that underpin the financial markets. Many months ago, I concluded that the American … [Read more...]
How to Invest your Portfolio after the Fed Move
I was driving into work earlier this week listening to Bloomberg Radio, and there was a guest on from one of Wall Street’s big banks. She was an investment strategist and she was being quizzed about what the Fed would announce later that day. Her opinion wasn’t much different than you would hear from any other strategist on the Street, but as I was listening, I was struck by how distorted global financial markets have become over recent years. This strategist proceeded to explain how the Fed was stuck between a rock and a hard place because if it didn’t hike rates, inflation would rise … [Read more...]
Greenspan Warns on Inflation
Former Federal Reserve Chairman Alan Greenspan talks with David Westin about central bank investments, potentially funding infrastructure investment through 30-Year treasuries, and why he sees a return of inflation. He speaks on "Bloomberg ‹GO›." (Source: Bloomberg) … [Read more...]
This Fed Policy has cost Savers Billions
A study of Federal Reserve policy has shown that savers have lost billions thanks to misguided actions by the Fed. CNBC reports: Various academic studies have shown that the low interest rates have pushed even more money into mattresses as savers have sought to make up for not getting returns by putting away more money. The overall savings rate went from 3.3 percent in 2006 to 5.2 percent in 2016, according to research from NerdWallet, a personal finance information site. NerdWallet took those rates, then applied them to average disposable personal incomes and used as a baseline a … [Read more...]
Will Yellen Change the Rules Again?
As the chart below makes clear, the Fed is meeting is now meeting its congressionally mandated objectives. The same objectives Yellen & Co., has thrown in the face of the public at every Fed meeting to justify a continued ultra-loose monetary policy when none was needed. Now that the mandate has been met, look for the Fed to dream up new and even less credible ways to keep the monetary spigot wide open. … [Read more...]
A Gift from the Banks
Wow! This was a shocker. Yesterday the bankers in Frankfurt came unglued. In an attempt to stimulate the euro-area economy, Mario Draghi and his compatriots at the European Central Bank threw everything they could think of at the European financial system. Not only did the ECB lower interest rates further into negative territory, offer banks another sweet financing deal, and expand the rate of money printing, they also decided to include corporate bonds in their bond buying program. Yup, the ECB is now directly financing private businesses in the euro-area to stimulate growth. Sounds more … [Read more...]
Are Big Interest Rate Hikes Coming?
Fed Made to Look like Fools
Following its December meeting, the Fed announced to the world it was hiking interest rates for the first time in almost a decade—a meager 0.25%—and that further increases would come at a gradual pace looking at “realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation.” With the economy already at maximum employment by the Fed’s definition of the term and inflation heading higher, economists read the Fed statement to mean an interest rate hike at every other meeting. Then came January. Global markets fell sharply to start the … [Read more...]
Winter is Coming: Is the Economy headed for Recession?
This is an interesting chart from the latest Bank of America Merrill Lynch Global Fund Manager Survey (h/t 361 Capital). The chart shows the percentage of fund managers classifying the current stage of the economic cycle. The four stages are early-cycle, mid-cycle, late-cycle (winter), and recession. Over the last six –to-eight weeks, a majority of global fund managers have come to the realization that we are late in the cycle. The fine readers of our premium strategy reports were ahead of the curve on this. We’ve have been writing for months that the economy is in the Winter stage of the … [Read more...]
Japan Jumps on the Monetary Crazy Train
Last week the Bank of Japan decided to go negative with interest rates. The BOJ cut rate on new reserve deposits held at the bank to -0.10% from +0.10% and hinted that it could reduce rates further into negative territory. Why did the BOJ decide that it needed to punish banks with negative rates to stimulate its economy? Apparently after years of running the printing presses at full tilt to buy up everything from government bonds to Japanese stocks (the BOJ owns half of the ETF market in Japan), in what has turned out to be a futile attempt to hit a 2% inflation target, the BOJ has decided … [Read more...]
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