Wellington Denahan, the Chairman and CEO of Annaly Capital, a Mortgage REIT, ripped into the global Central Banking Cabal on her company’s conference call yesterday. It is well worth a read. The video below on Janet Yellen’s Senate hearing on Tuesday is also necessary viewing for all investors, but especially those unsure of the costs and risks of Fed policy. Wellington’s text and the Yellen video provide compelling perspective on just how distorted the global financial system has become. Wellington J. Denahan: Thank you, Willa. Good morning and, again, welcome to Annaly Capital's … [Read more...]
The Monday Melee: Emerging Market Future?
Emerging Market Debt Growth: Debt growth in emerging markets from 2007-2014 has put them nearly on par with developed countries in dollar terms. In the 2000-2007 era, emerging market debt growth represented 22% of the $37 trillion in new debt. In the last seven years, emerging market debt growth represented 47% of the $49 trillion total growth in debt. What We're Reading: The historical and cultural differences that divide Europe’s union: (Financial Times) "The Fed Is Nervous, And Maybe That's A Good Thing" (Forbes) A Muddle of Mixed Messages From the Fed (The Wall Street Journal) 4 … [Read more...]
Greek Drama: The Final Act?
Greece is back on the front pages of the financial press. Why is a country whose GDP is a rounding error in the $75 trillion global economy making headlines? Even at 175% of GDP, Greece’s outstanding government debt is about one-half of one percent of the world’s total. Greece made its way back into the headlines when its parliament failed to elect a new President in December, which resulted in snap elections. The snap elections were held on January 25th and the victor was the left-wing anti-austerity party Syriza, led by Alexis Tsipras (pronounced sipras). Tsipras campaigned on a … [Read more...]
What are They Waiting For?
The January jobs numbers were released this morning. The monthly gain in payroll employment topped expectations by a modest amount, but there were 147,000 more job gains in November & December than originally reported. The three month moving average of private monthly payroll gains is now at a post recovery high and higher than at any point during the last economic expansion. The last time private payrolls were increasing as fast as they are today was November of 1997—over 17 years ago. Wage growth also picked up last month after falling in December. Average hourly earnings are … [Read more...]
Liftoff?
Could it be that the U.S. has finally reached a state of economic acceleration fast enough to motivate the Fed to raise rates? Cleveland Fed president Loretta Mester thinks the economy is strong enough to support “liftoff” on rates. Mester indicates her desire to see a raising of rates in the first half of 2015, though she doesn’t go so far as to aggressively pressure the FOMC. Mester said in her speech (bold emphasis ours): In response to the financial crisis and deep recession, the Federal Reserve has run an extraordinarily accommodative monetary policy to promote its goals of price … [Read more...]
ECB Finally Gets its Own QE
After years of German opposition and legal wrangling, the ECB will finally get to pursue its own quantitative easing policy. Bloomberg’s Jeff Black and Simon Kennedy write: Mario Draghi led the European Central Bank into a new era with an historic pledge to buy government bonds as part of an asset-purchase program worth about 1.1 trillion euros ($1.3 trillion). The ECB president side-stepped German-led opposition to quantitative easing in a once-and-for-all push to revive inflation and the euro-area economy. The central bank will buy 60 billion euros per month of securities until … [Read more...]
IMF: Outlook Not So Good
While the U.S. has been enjoying some economic success of late, much of the world is looking gloomier. The IMF made a big cut in its World Economic Outlook Update released today. Global growth for 2015 was revised down to 3.5% from 3.8%, a big cut. The outlook for 2016 was also cut by .3 percentage points to 3.7% growth. IMF economist Olivier Blanchard said of the ramifications “At the country level, the cross currents make for a complicated picture. It means good news for oil importers, bad news for oil exporters. Good news for commodity importers, bad news for exporters. Continuing … [Read more...]
Consumers Pumped
Low prices for fuel and an increase in the number of employed Americans has pumped up consumers. The University of Michigan Consumer Sentiment survey released the mid-month estimate for January today. The result was the highest recorded in eleven years. … [Read more...]
How Much Gas Left in the Auto Sales Tank?
Since lows in 2010, auto sales have surged, and have been a bright spot in the U.S. economy. But how much of the surge has been catch up from the sharp drop that began in 2008? More importantly, can the surge continue now that the auto-buying levels of the 2004-07 era have been reached? With oil petering out, home sales flat, exports facing tougher competition from a stronger dollar, and a possible stall in auto-sales, where will new growth come from in the U.S.? … [Read more...]
Feeling Good
The Conference Board's index of consumer confidence was released this morning and consumers are feeling pretty good. More consumers believe jobs are plentiful now than did last month, and fewer think business conditions are bad. On the other hand, some more consumers believe that pay will decrease this year than did the month before. These mixed signals add up to reflect the flat readings over the last few months on my consumer confidence chart below. Confidence has remained near historic average readings for about six months. … [Read more...]
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