Jim Grant: Markets Trust Too Much in the Presence of Central Banks Nonetheless, James Grant sees no reason to sound the all-clear signal. The sharp thinking and highly regarded editor of the iconic Wall Street newsletter, Grant’s Interest Rate Observer, argues that historically low interest rates are distorting the perception of investors. Principally, Mr. Draghi has robbed the marketplace of essential information», he criticizes the head of the European Central Bank for example. Highly proficient in financial history, Mr. Grant also questions the strategy of the Swiss National Bank. He fears that the voluntary depreciation of the Franc undermines the status of Switzerland as a global financial
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Nonetheless, James Grant sees no reason to sound the all-clear signal. The sharp thinking and highly regarded editor of the iconic Wall Street newsletter, Grant’s Interest Rate Observer, argues that historically low interest rates are distorting the perception of investors. Principally, Mr. Draghi has robbed the marketplace of essential information», he criticizes the head of the European Central Bank for example. Highly proficient in financial history, Mr. Grant also questions the strategy of the Swiss National Bank. He fears that the voluntary depreciation of the Franc undermines the status of Switzerland as a global financial center.
..... After those three sharp monthly increases in a row, the index has now risen 3.1% year-over-year (not seasonally adjusted), the fastest increase since January 2012.
......the growing desperation within the media and amongst proponents of the Russiagate conspiracy theory that the evidence of collusion between the Trump campaign and the Russians that they counted on is failing to turn up. To understand the reason for this alarm it is merely necessary to compare the time line of the Watergate scandal – the scandal which provides the benchmark for all political scandals involving US Presidents – with the progress or rather lack of it of the Russiagate scandal.
The practice of treating any and all pullbacks in risk assets as opportunities to accumulate more has become entrenched in global equity markets, especially in the U.S., according to analysts at Bank of America Merrill Lynch. “Investors no longer fear shocks but love them,” a team led by global equity derivatives researcher Nitin Saksena wrote in a note Tuesday. “Since 2013, central banks have stepped in (or communicated that they may step in) to protect markets, leaving investors confident enough to ‘buy-the-dip.’”
There is a pervasive belief and not just in Economics that tax cuts are some magic economic elixir. This really isn’t surprising given that they are simply the fiscal side of something like QE. It is hard-coded, literally, into Economists and their models that “stimulus” always works. What’s different now where a tax proposal is finally on the table is that there is a clear numbers problem. What I mean by that is after ten years of monetary “stimulus” that had no effect, to reconcile that lack of recovery has meant a material write down for economic potential.
Questions like Ron’s that suggest the decay of capitalism and free markets should raise concerns for anyone’s market thesis, bullish, bearish or agnostic. What stops a central bank from manipulating asset prices? When do they cross a line from marginal manipulation to absolute price control? Unfortunately, there are no concrete answers to these questions, but there are clues.
The upcoming FOMC announcement seemed a good opportunity to return to this topic, but what we are actually most eager to show is a chart that compares the cumulative gain one would have achieved if one had invested exclusively in the 2 days preceding every FOMC announcement (i.e., for the duration of the FOMC meeting) with the gain that would have been achieved by being invested exclusively on all other days. The total gain achieved by the SPX as such is shown as well.......The statistics discussed above are yet another (indirect) hint that broad stock market returns are largely dependent on monetary inflation and hence on the actions taken by central planners. Everything else is secondary.
The next governor of the Bank of Japan faces a "job from hell." That’s according to Takeshi Fujimaki, a banker-turned-lawmaker who sees any attempt by Japan’s central bank to exit its program of unprecedented easing as triggering a Greek-like debt crisis.
We like to highlight that although Sweden’s property bubble is not the longest running (that accolade goes to Australia at 55 years), it is probably the world’s biggest, even though it gets relatively little coverage in the mainstream financial media.
Do we really want to cede to folks of the temperament of Mikhail Saakashvili an ability to instigate a war with a nuclear-armed Russia, which every Cold War president was resolved to avoid, even if it meant accepting Moscow’s hegemony in Eastern Europe all the way to the Elbe? Watching Saakashvili losing it in the streets of Kiev like some blitzed college student should cause us to reassess the stability of all these allies to whom we have ceded a capacity to drag us into war......Alliances, after all, are the transmission belts of war.