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Tag Archives: Central Banks

Tending Towards Maximum Perversity

    Tending Towards Maximum Perversity According to Finagle’s corollary to Murphy’s law, “Anything that can go wrong, will — at the worst possible moment.”  Taken a degree further, per O’Toole’s corollary of Finagle’s law, and the second law of thermodynamics, “The perversity of the Universe tends towards a maximum.” Murphy’s law in action… not even Murphy himself was safe from it. [PT] No doubt, the perverse effect of central...

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The Four Dimensions of the Fake Money Order

  A Good Story with Minor Imperfections “If you don’t know where you are going, any road will get you there,” is a quote that’s oft misattributed to Lewis Carrol. The fact that there is ambiguity about who is behind this quote on ambiguity seems fitting. For our purposes today, the spirit of the quote is what we are after. We think it may help elucidate the strange and confusing world of fake money in which we all travel. Consumer...

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The Strange Behavior of the US Dollar in the Wake of Fed Rate Cuts

    A Change in Interest Rate Expectations In the last issue of Seasonal Insights I discussed the typical pattern of stock prices when the Federal Reserve cuts interest rates.  As one would expect, the stock market tends to stabilize after cuts in the federal funds rate. The issue is topical, as many investors and analysts expect rate cuts to be implemented soon given that signs of an economic slowdown are beginning to proliferate....

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Fed Chair Powell’s Plan to Pickle the Economy

  A Loose Relationship The Dow Jones Industrial Average made another concerted run at the elusive 27,000 milestone over the last several weeks.  But, as of this writing, the index has stalled out short of this psychosomatic barrier.  By our estimation, this is for the best. Since early 2018 the DJIA has gone nowhere, albeit in interesting ways… [PT] While not always apparent, the stock market generally maintains a loose connection to...

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Elizabeth Warren’s Plan to Bamboozle American Voters

  A Plan for Everything! The run-up to the presidential primaries offers a funhouse reflection of American life.  Presidential hopefuls, hacks, and has-beens turn to focus groups to discover what they think the American electorate wants. Then they distill it down to hollow bumper stickers. After that, they pump their fists and reflect it back with mindless repetition. A plea for clemency from Mr. 1/1024th crow. [PT] Change We Can...

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US Money Supply Growth and the Production Structure – Signs of an Aging Boom

  Money Supply Growth Continues to Decelerate Here is a brief update of recent developments in US true money supply growth as well as the trend in the ratio of industrial production of capital goods versus consumer goods (we use the latter as a proxy for the effects of credit expansion on the economy’s production structure). First, a chart of the y/y growth rate of the broad US money supply TMS-2 vs. y/y growth in industrial &...

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Why Fed Chair Powell is a Laughingstock

  Fake Work Clarity.  Simplicity.  Elegance.  These fundamentals are all in short supply.  But are they in high demand? As far as we can tell, hardly a soul among us gives much of a rip about any of them.  Instead, nearly everyone wants things to be more muddled, more complicated, and more crude with each passing day.  That’s where the high demand is. One can always meet the perils of overweening bureaucracy with pretend happiness…...

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The Liquidity Drought Gets Worse

  Money Supply Growth Continues to Falter Ostensibly the stock market has rallied because the Fed promised to maintain an easy monetary policy. To be sure, interest rate hikes have been put on hold for the time being and the balance sheet contraction (a.k.a.“quantitative tightening”) will be terminated much earlier than originally envisaged. And yet, the year-on-year growth rate of the true broad money supply keeps declining...

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Unsolicited Advice to Fed Chair Powell

    Unsolicited Advice to Fed Chair Powell American businesses over the past decade have taken a most unsettling turn.  According to research from the Securities Industry and Financial Markets Association, as of November 2018, non-financial corporate debt has grown to more than $9.1 trillion [ed note: this number refers to securitized debt and business loans, other corporate liabilities would add an additional $11 trillion for a total of...

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A Trip Down Memory Lane – 1928-1929 vs. 2018-2019

  Boom Times Compared It has become abundantly clear by now that the late 2018 swoon was not yet the beginning of the end of the stock market bubble – at least not right away. While money supply growth continues to decelerate, the technical underpinnings of the rally from the late December low were actually quite strong – in particular, new highs in the cumulative NYSE A/D line indicate that it was broad-based. Cumulative NYSE A/D line...

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