http://www.prudentbear.com/2013/05/too-much-asset-inflation.html Tid bits from last weeks CBB
April 30 – Bloomberg (Shobhana Chandra): “Business activity in the U.S.
unexpectedly shrank in April for the first time in more than three years, a sign
manufacturing may be a smaller contributor to economic growth this quarter. The
MNI Chicago Report’s business barometer fell to 49 in April, the lowest since
September 2009, from 52.4 last month.”
Federal Reserve Watch:
May 3 –
Bloomberg (Steve Matthews): “Federal Reserve Bank of Richmond President Jeffrey
Lacker voiced opposition to bond purchases by the Fed, saying the buying
probably won’t spur growth beyond 2% while making an exit from stimulus more
challenging. ‘The benefit-cost trade-off associated with further monetary
stimulus does not look promising… The Fed seems to be unable to improve real
growth, despite striving mightily over the last few years, and further increases
in the size of our balance sheet raise the risks associated with the ‘exit
process’ when it’s time to withdraw stimulus.’”
May 1 – Bloomberg (Fergal
O’Brien): “Harvard Economics Professor Martin Feldstein comments on Federal
Reserve in CNBC interview: The Fed has ‘stopped talking about early exits or
slowing down but frankly I think they’re not accomplishing very much and they
are adding to risks in economy… There’s good reason -- not in the way they think
about it there’s good reason to be slowing down this process. There are some
serious bubbles developing in this economy.’ Feldstein says 10-year Treasury
yield not sustainable. ‘I think it has risks and it’s spreading over into things
like the stock market.’”
April 29 – Bloomberg (Willow Bay, Jeff Kearns
and Jeanna Smialek): “Former Federal Reserve Governor Kevin Warsh said the
central bank will probably press on with its ‘aggressive’ easing as growth this
year may fall short of the pace needed to put millions of Americans back to
work. Job growth requires a 3% to 3.5% expansion that won’t be in reach for the
world’s largest economy this year, Warsh said…”
"We are forming balloons......why is the German stock market at new highs with the economy doing so poorly......" said a noted economist on Bloomberg yesterday.
Because the STOCK MARKET and other RISKY asset classes is exactly where the record QE is going. SO you play or go home.
These foolish men are not concerned nor do they really know where this will end, the consequences of BUBBLE CREATION.
You may think I don't like a rising stock market by my comments, that is not true. I don't like a MANIPULATED, FED TARGETED stock market which now solely relies on the FED continuing what they are doing and perhaps even in greater doses to keep the asset inflation going.
We can't even create enough economic growth to create enough jobs for those looking, 3-3.5% GDP.
MAJORITY of jobs in the last report were "part-time".
Each time we have a boom that ends in a BUBBLE, the FED has stated "didn't see that coming". FED was not worried about housing market in 2006, saying " never been a case of year over year price decline.....NO BUBBLE, NO WORRY"....remember how that turned out.
How about the TECH BUBBLE of the pate 90'S, how did that work out? What helped cause and feed that? ULTRA LOOSE MONETARY POLICY, which ramped up into Y2K over FEARS over what might happen when the 1999 calendar turned over to 2000.
To fight that Recession, we got 1% rates, they held it there so long it helped create the next BUBBLE, the HOUSING REAL ESTATE MORTGAGE FINANCING BANKING CRISIS BUBBLE. How'd that turn out?
AGAIN, the FED or policy makers didn't see the excessive speculation going on? NO ONE stepped in to protect us, to put in measures that would have helped us to avoid an almost 1930 like Depression?
Now, it is a WORLDWIDE open spigot, money printing, QE war from the world's Central banks, everyone is IN THE POOL HERE!!!!!
OF COURSE the worlds stock markets are soaring, even as WEAK economic data comes in.
GOOD is GOOD and BAD is even better, so it insures MORE And MORE of the same.
0% rates, no place safe for Conservative investors, savers.....if everyone isn't in the pool, they will be soon. IS there a BEAR left standing now? IS there a CHORUS of non believers and furry folk running around? EVEN perennial bear Roubini sees no trouble for at least 2 more years.
Good news is good, bad news is great....so it would appear BULLS have nothing to worry about. The current policies and 0% rates will continue until they don't.
BUT when you consider how ULTRA LOW RATES misprice risk, if you understand YES THIS IS A BULL RALLY, but NO it cannot stand on its own 2 feet.
AS soon as the FED signals they will pull back, even a little, or inflation is undeniable, or LONG TERM RATES RISE out of control of the FED to signal GAME OVER....
..THAT will leave a HORDE, a CADRE of players that will want to make their way to the exits.....LIKE NEVER BEFORE.
Also keep in mind, that to SAVE US in 2008-2009, the Banks were bailed out, AIG etc and most of the risk was taken off THEM, and given to US the avg people. WE are now saddled with all of their debt and malfeasance, and they are free again to use FREE (FED) MONEY and let their computer algorithms run the market, jump in front of your trades, use unlimited leverage and derivitives with basically no one policing or giving a hoot as long as the trickle down (thought this was Rep Reagonomics?) stock market inflation would spur the real economy. WELL HELOOO IT IS NOT!!! BUT THESE IDIOTS PERSIST!. I'm not a Bernanke hater, I'm a BAD POLICY hater!
Help me see where you can reach prosperity and economic job creating growth by printing money and leaving rates at 0%. How has it worked out since 2008? No one can stop them, but at least they should have courtesy to use a rubber while f'ing us!
The market can fall a lot faster than it rises, most of 2007-2009 losses came in a matter of months, it took 5 years to gain it back.....all through FED QE pumping and printing.
We now have a full scale CRACK ADDICT MARKET, GD help us when we run out of crack, or an unintended consequence raises its head, with ultra, near historic NEAR ZOMBIE like indifference to fear, the next PRICK of this NEW BUBBLE, the depth to where it takes us could surpass anything experienced so far.
If what I suggest is possible, what can we do to protect ourselves, and will we see it coming?