Many
have wondered if the Fed is ignorant to the problems their policy
prescriptions cause, or if they've just resigned to walking society down
the path to destruction knowingly. It increasingly looks like the
latter. Indeed, the Fed may very well understand that its "lower for
longer" policy is leading the economy and global markets straight into
disaster. However, as the same time, the central bank - feeling trapped
after 10 years of unprecedented stimulus which if undone would result in
a historic crash - is backed into a corner and has no choice but to
accept this growing risk, as the world's punch drunk central bankers
continue to try at all costs to keep the bloated economic "expansion"
going.
Indeed, the Fed itself acknowledges this risk, because according to
the minutes of the FOMC policymaking meeting from March 19 and March 20.
"A few participants observed that the appropriate path for policy,
insofar as it implied lower interest rates for longer periods of time, could lead to greater financial stability risks" the minutes read.
Chairman Powell himself understands very well the risks that he is taking: he has previously pointed out publicly that the last two "expansions" ended in the dot com bubble burst and then the housing bubble burst, according to Bloomberg.
But it is the Fed's willingness to continue down this path, despite
seeing the dangers, that is disturbing. It’s a classic example of
putting a Band-Aid on the problem now at the cost of the future. Holding
rates down while pursuing maximum employment and 2% inflation is a
policy that has proven to lead to disaster.
Tobias Adrian, a senior International Monetary Fund official said: "Easy financial conditions today are good news for downside risks in the short-term but they’re bad news in the medium term."
元IMF職員Tobias Adrianはこう言った:「現在の緩和的金融条件は短期的な相場下落対策には望ましいが、中期的には悪い結末を招く。」
The Fed's dilemma - obvious to everyone but them - is that the neutral rate of interest (i.e. "r star") is simply too low - something we discussed back in 2015 -
so low that, in fact, that instead of keeping the economy at an
equilibrium, it simply encourages more risky behavior by investors.
FEDはジレンマに陥っているーー彼ら以外の誰にも明らかなことだーー中立金利(r star )が低すぎるーーZeroHedgeが2015年に議論したことだがーーこれがここまで低いと経済を均衡維持するだけではなく、投資家がよりリスクを取りやすくなっている。
The neutral rate has continued to fall as a result of rising debt, an
aging population and slower productivity growth. Bloomberg has been using a term
called "FAST-star" instead of "R-star" to denote a rate level that
ensures financial stability. A setting above it stifles risk-taking
while the setting below it encourages excess. The Fed's neutral rate -
"R-star" - falls well below this suggested rate.
The dovish shift by the Fed at the end of the year last year helped
prompt a massive stock market rally, even after raising rates from 2.25%
to 2.5%. So far the S&P 500 index is up 16% in 2019. However, the
one beating the drum the most in favor of dovish policy – President
Donald Trump – continues to complain that rate increases have held back the economy. 昨年暮れのFEDのハト派姿勢転換は巨額の株式ラリーを引き起こした、たとえ金利を2.25%から2.5%に引き上げた後でもラリーとなった。2019年にはS&P500は16%も上昇した。しかしながら、ハト派政策転換を鐘太鼓でもてはやすのはーー他ならぬDonald Trump大統領だーー彼はいまでも金利引き上げが景気後退を引き起こすと愚痴を言う。
Yet some policymakers at last month's FOMC meeting believe that risks
can be offset by, drumroll, "counter-cyclical macro prudential policy
tools, combined with regulatory and supervisory measures." This is the
same tool and measures that failed to spot the last two financial crises
until both were well underway.
Additionally, there is another problem
to this thinking: even in a best case scenario, the Fed has a limited
set of tools. This was even acknowledged by Fed Vice Chairman for
Supervision Randal Quarles during a March 29 speech.
Meanwhile, Powell has said that he doesn't see a high risk of
financial instability at this point, a comment that may soon be proven
to be as accurate as Ben Bernanke's assertion that "subprime was
contained" prior to the housing crisis. Powell instead argues that the
Fed tries to keep the system safe by requiring large banks to hold
excess capital and undergo stress tests.
And at some points, Fed presidents have sounded open to the idea of
using higher interest rates to cull the markets a little bit. For
instance, New York Fed President John Williams said in October "that the
central bank’s rate increases would help reduce risk-taking in
financial markets, though he added that was not their principal
purpose."
かつてはときに応じて、FED議長によっては、市場の行き過ぎを抑制するために高金利とすると公言していた。たとえば、New York FED議長 John Williamsの10月の発言はこうだ、「中央銀行が金利を引き上げることで金融市場での過剰なリスクテイクを抑圧するだろう」、ただしそれが一義的な目的ではないということも付け加えた。
But that type of talk has faded since then.
しかしそれ以降こういう発言は消え失せた。
Jonathan Wright, a professor at Johns Hopkins University and a former
Fed economist said: "There doesn’t seem to be the same idea of having
tighter monetary policy so as to lessen the risk of asset bubbles
developing."
In April former Treasury Secretary Lawrence Summers concluded: "There
are reasons for fearing the economic consequences of very low
rates. These include a greater propensity to asset bubbles and
incentives to substantially increase leverage."
Ultimately, the Fed indeed has no choice: either it inflates away the
debt - which is where MMT will come in very handy in a few years as
helicopter money is unleashed under the guise of "QE for the people" -
or it's game over for the status quo anyway. If it means creating the
biggest asset bubble in the process, so be it.
Amazonで買物をしてContrarianJを応援しよう Silver Outperforming Gold 2 Adam Hamilton July 26, 2019 3232 Words Silver has blasted higher in the last couple weeks, far outperforming gold. This is certainly noteworthy, as silver has stunk up the precious-metals joint for years. This deeply-out-of-favor metal may be embarking on a sea-change sentiment shift, finally returning to amplifying gold’s upside. Silver is not only radically undervalued relative to gold, but investors are aggressively buying. Silver’s upside potential is massive. ここ2週シルバーは急騰した、ゴールドを遥かに凌ぐものだ。これは注目すべきことだ、もう何年もシルバーはひどいものだった。この極端に嫌われた金属が大きく心理を買えている、とうとうゴールド上昇を増幅するに至った。シルバーは対ゴールドで極端に過小評価されているだけでなく、投資家は積極的に買い進んでいる。シルバーの潜在上昇力は巨大なものだ。 Silver’s performance in recent years has been brutally bad, repelling all but the most fanatical contrarians. Historically silver prices have been mostly ...
結局、中国は隣国日本で20年前に起きたことを学んでいなかったということでしょう、というかどの国もどの政府も十分成熟するまでは「わかっちゃいるけどやめられない」ということでしょうね、きっと。 Spooked By Apple? Wait ‘Til China’s Bubble Bursts Written by Jesse Colombo | Jan, 3, 2019 Apple stock plunged nearly 10% on Thursday after the company cut its revenue forecast due to slowing iPhone sales in China. Apple’s woes dragged U.S. stock indices lower by more than 2% as fears of a more extensive China-driven slowdown spread. アップルの株価は火曜に約10%下落した、同社が中国でのiPhone売上原則を予想したためだ。アップルの弱さが米国株式指数を2%以上押し下げた、中国主導でさらなる原則が広がるのではという懸念からだ。 From the New York Times : ニューヨークタイムスによると: For years, no matter what was happening elsewhere, global companies bet billions upon billions of dollars that China’s consumers would keep spending money. 長年、他国で何が起きようとも多国籍企業は中国消費は巨額を維持することに賭けてきた。 Now, just when the world economy could use their financial firepower, they are no longer so quick to open their wallets. 今や、世界経済が金融弾薬を用いてももはや彼らの財布を緩めることはできない。 The latest sign of a slowdown in...
Gold Stocks Surge Higher Adam Hamilton February 22, 2019 2932 Words The gold miners’ stocks surged strongly this week, blasting to new upleg highs. The mounting gains are naturally driving more interest in this small contrarian sector, shifting sentiment towards bullish. Despite their accelerating rally, gold stocks still remain fairly low technically and deeply undervalued relative to gold. So their strengthening upleg likely has plenty of room to run considerably higher in coming months. 今週金鉱株は力強く上昇し新高値となった。上昇が積み上がりこの小さなコントラリアンセクターはさらに注目を集めている、これが心理を強気なものにする。ラリーが加速するが、金鉱株はテクニカル的にはまだ安値で、対ゴールドでとても過小評価されている。というわけで力強い上昇は今後数ヶ月まだかなりな上昇余地がある。 The gold miners’ stocks are ultimately leveraged plays on gold, which overwhelmingly drives their profits. The much-maligned yellow metal has enjoyed a strong upleg since mid-August, when record gold-futures s...
Barrick’s average quarterly production since Q4’16 plunged an astounding 8.6% YoY. The reason Barrick’s management blew $6.5b in stock buying Randgold is they desperately needed more production to mask the precipitous drop in their own. Barrick’s total 2018 production of 4525k ounces was 18.0% below the 5516k it mined only a couple years earlier in 2016. At best adding Randgold just regains those losses. Barrickの平均四半期生産は2016Q4以来なんとYoYで8.6%下落している。Barrickの取締役が$6.5Bも投じてRandgoldの株式を購入した理由は、彼らはなんとしても急落する自らの生産量を隠すために生産量増加としたかったからだ。Barrickの2018全生産量は4525Kオンスで、わずか2年前の5516kオンスから18.0%も少ない。Randgoldを買収したところでこの下落を補うに過ぎない。 And GOLD has been suffering the same production struggles as ABX. Over its past 4 reported quarters, Randgold’s gold mined has fallen an average of 7.4% YoY. Can bringing two rapidly-depleting major gold miners together magically make a stronger one? I doubt it. Barrick’s reported production will enjoy a big temporary boost...
Gold Miners’ Profits to Soar Adam Hamilton October 18, 2019 2741 Words The gold miners are likely to report blowout profits in this spinning-up Q3’19 earnings season. Higher production, stable costs, and much-higher gold prices should combine for some super-impressive results. That’s going to leave the still-undervalued gold miners much more attractive fundamentally, supporting bigger capital inflows and much-higher stock prices. Q3 should prove the gold miners’ best quarter in years. 金鉱会社は2019Q3決算で巨額の収益を報告する可能性が高い。生産量が高く、コストは安定し、ゴールド価格高騰が重なり、素晴らしい決算報告となりはずだ。まだ過小評価の金鉱株がファンダメンタルズ的により魅力的になりつつある、こうなるとさらなる資金を呼び込み株価は高まるだろう。Q3は一年でもっとも良い四半期となるはずだ。 Stock prices are ultimately dependent on underlying corporate earnings. Over the long term all stock prices gravitate towards some reasonable multiple of their underlying companies’ profits. Herd greed and fea...