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 Junk Bond Bubble In Pictures: Deflation Up Next by Tyler Durden Fri, 07/19/2019 - 14:37 Authored by Mike Shedlock via MishTalk, The widely discussed "everything bubble" is, in reality, a corporate junk bond bubble on steroids sponsored by the Fed ... 幅広く議論されている「everything bubble」は実際に企業ジャンク・ボンドバブルにも言えることであり、これはFEDによりドーピング注入されている・・・ The highest grade AAA corporate bonds yield 2.75%. BBB-rated corporate bonds, just one step above junk, 3.5%. BB-rated bonds yield just 4.28%. 最高級ランクAAA企業債権の金利は2.75%だ。あとひとランク悪化でジャンク・ボンド入りするBBB債権金利は3.5%。BB格付け債権の金利でもわずか4.28%でしかない。 Corporate Bond Spreads 企業債権金利のスプレッド The spread between Prime AAA bonds and lower-medium grade bonds (see chart below) is just 0.77 percentage points. 最上位AAA債権と低中ランク債権のスプレッドがわずか0.77%しかない。 The spre...
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 ...
Class 8 Heavy Truck Orders Crash 68% in January by Tyler Durden Wed, 02/06/2019 - 17:25 Among the latest dismal news about the strength of the US economy, on Tuesday ACT Research released preliminary truck orders for January 2019 which showed that Class 8 truck orders collapsed an astounding 68% for January. The decline is being attributed to a 300,000+ vehicle backlog potentially prompting fleets to halt purchases in the near term. 米国経済に関し最近憂鬱なニュースが多い中で、火曜にACT researchが2019年1月のトラック発注を開示した、1月にClass 8のトラック発注がなんと68%も急落した。この発注減は短期的に300,000台超の潜在在庫を生み出す。 Specifically, in January Class 8 net orders were 15,800 units (14,700 SA; 176,400 SAAR), down 68% YoY and down 26% MoM. Class 5- 7 January net orders were 23,400...
最後の2段落だけ訳をいれておきました。 Fed’s Risky QE4 Stock Ramp Adam Hamilton January 31, 2020 3567 Words The US stock markets dramatically surged mostly in a straight line since mid-October. This extraordinary rally started when the Federal Reserve announced it would resume expanding its balance sheet for the first time in years. The deluge of new liquidity from that quantitative-easing bond buying has again acted like rocket fuel for stock markets. After shooting vertically they are in real trouble when the Fed pulls back. In early October the flagship US S&P 500 stock index (SPX) slumped to 2888. That was a mild 4.6% pullback from late July’s latest record high. The SPX was still having a great year though, up 15.2% year-to-date at that point thanks to extreme Fed easing . After the SPX had plunged 19.8% mostly in Q4’18 in a severe near-bear cor...
一定のエネルギーが外部から流入する系ではその流入量が普遍一定でも、散逸構造、自己組織化をすることが知られています。散逸構造では空間時間的な周期構造が生じます。たとえば隔離された無人島にうさぎときつねを放した場合、時間とともに均衡値に近づきますが、完全な定常状態にはならずその前後で周期的な変動が起きます、うさぎを捕食しすぎてが減るとキツネの食料が減りキツネの個体数上昇には限界が生じ、その後うさぎの個体数が増えます。うさぎの数もその島の植物総量に限界があります。 株式市場にも30年前後のバリュエーション変動があります。管理人はこの原因はたぶん投資家の世代交代に起因するものだと感じています。多くの人の投資寿命は30年前後です。私を含めて現在投資をしている人は英國や日本で政府債務解消のための金融抑圧など記憶にもないでしょう、学校の歴史でも教えてくれません。あの米国でも金本位制のなかで国民からゴールドを強制買い上げし、ゴールド価格を改定したり個人がゴールド保有を長年禁止していたことを多くの人は知らないでしょう。少なくとも私は学校の歴史で習った覚えがありません。 また大統領任期に関連した8年前後の変動があります、政党は政権を維持するために選挙に向けて財政刺激策を行いますが選挙後にはこれが息切れします。大統領選挙前数ヶ月の株価動向と選挙結果、民主共和転換、の相関は90%を超えています。トランプのときもそうでした、YellenはFRB議長としては珍しい熱心な民主党員で、FEDバランスシート正常化の先送り、二回目の金利引き上げの先送りをしたのですが、2016年秋には株価が徐々に下落してしまいました。 次に短いのが1年の変動で気候に関する人の気分や新学期・新年度に関するものです。もっと短いのが週間の変動で、月曜や金曜は特異的な動きをします。こういう繰り返しは左の参考図書「市場のサイクルは永遠に」に解説されています。 Are We In A Secular Bull Market? Written by Lance Roberts | Jan, 7, 2019 Just recently, Jeff Saut from Raymond James made a very interesting statement with re...