The Fed’s Latest Cock-and-Bull (Market) Story – Len Penzo dot Com

It’s time to take a seat again, chill out and revel in somewhat joe

Welcome to a different rousing version of Black Espresso, your off-beat weekly round-up of what’s been occurring on the planet of cash and private finance.

Wow! One other week has come and gone — so with out additional ado, let’s get this present on the highway.

The first responsibility of a person is to assume for himself.

— Jose Marti

The final responsibility of a central banker is to inform the general public the reality.

— Alan Blinder, former Vice Chairman of the Fed

Credit and Debits

Debit: It’s price noting that for the previous two weeks, the yield unfold between 10- and 2-year US Treasuries has gone from inverting to steepening. That is particularly important as a result of the harm from an inverted yield curve doesn’t really start with the inversion, however after it. In different phrases, the curve inverts first, performing as a warning — and then steepens into the recession. So buckle up.

Debit: Did you see this? For the primary time ever, Greece has issued negative-yielding debt. Sure, that Greece — the identical nation that, simply seven brief years in the past, had the biggest debt restructuring in historical past the place bondholders noticed their capital primarily evaporate into nothing. The world really has gone mad.

Credit score: On a associated notice, MN Gordon notes that, “In a world with $17 trillion in destructive yielding debt, and asset costs together with US Treasuries bubbled up past comprehension, the Fed has fabricated a monetary system that’s reliant on excessive central financial institution intervention to stay solvent.” Then once more, with worldwide debt at $244 trillion — that’s 318% of worldwide GDP– I suppose solvency is within the eye of the beholder.

Credit score: For his half, after the Fed introduced final week that it’s beginning but one other spherical of quantitative easing (QE), Graham Summers requested this : “If all the pieces is so nice, why is the Fed printing ($60) billion per 30 days?” Put your pencils down, youngsters; that was a rhetorical query. In addition to … we at all times save the tougher queries for this man:

Credit score: After all, the Fed insists it’s not implementing extra QE. However, as Sven Henrich factors out, at $60 billion per 30 days it’s a must to “ignore the truth that they’re working a program equal in measurement to the US army funds. Fed Chair Jay Powell (says), ‘The economic system is in place. Now right here’s a $60 billion month-to-month Treasury-buying program, a number of price cuts and each day repo operations.’ How silly do they assume we’re?” Sure, sure … that’s rhetorical too.

Credit score: As for individuals who are nonetheless questioning simply what the hell is happening with the central bankers in the Eccles constructing, MN Gordon completely summed up the true reasoning behind the Fed’s newest spherical of QE that, um … isn’t actually QE (wink, wink): “Powell should harm tomorrow’s credit score markets to allow them to perform right now; he should destroy credit score markets to save lots of them.” Horrifying? Sure. However that form of honesty is why Mr. Gordon can by no means be a central banker.

Credit score: Invoice Holter believes the bond market — to not point out the monetary system that drives it — has gone “completely nuts.” In truth, Holter warns that, “The total episode will finish as the largest credit score collapse in historical past.” Even worse, Holter reminds us that when the credit score market lastly does goes belly-up, so will fiat currencies, as a result of their worth is derived from a credit-based basis. Assume: the Weimar Republic circa 1920 – 1923.

Debit: If a credit score disaster does seem, “cash” printing will go into overdrive. Then, when the general public ultimately figures out that their foreign money is nugatory, they’ll start dumping their money for tangible items — which, in flip will quickly result in the foreign money’s demise. How briskly? Properly … again in 1923, after years of relentless cash printing by the Reichsbank, the German mark’s loss of life throes passed off over a brief nine-month span.

Credit score: This week the Dutch Central Financial institution (DCB) really introduced that: “If the system collapses, the gold inventory can function a foundation to construct it up once more. Gold bolsters confidence and creates a way of safety. If issues go unsuitable, costs might fall. However a gold bar at all times holds worth. This (is) the alternative of shares, bonds and different securities — all of which have inherent danger.” Wait … what?? Sure, of us … hell has formally frozen over.

Credit score: As Zero Hedge famous in regards to the DCB’s beautiful public admission this week, “Whereas predictions of a financial reset are hardly new, they’ve been relegated to the perimeter of mainstream monetary thought. And it’s beautiful to see a mainstream monetary establishment open up about the superior worth of limited-supply, non-fiat, sound-money property.” Then again, there are those that have an unusually sturdy affinity for fiat money:

Credit score: So when is the massive reset? Asset supervisor Daniel Oliver believes ‘QE for the individuals’ — Milton Friedman’s well-known helicopter drop of money — is coming: “The Fed desires inflation and it’s going to get it — good and onerous. Then they’ll face the identical selection that confronted the Reichsbank within the ’20s: proceed (QE) and drive client inflation; or don’t and let charges rise, which is able to crush the economic system. ‘QE for the individuals’ is the tip sport. Gold will anticipate it first.”

Final Week’s Ballot Outcome

Are you eligible to obtain a pension from a present or previous employer?

Greater than 1700 readers answered final week’s survey query and it seems that barely greater than 2 in 5 of them have the nice fortune of being eligible to reveive a pension from a present of previous employer. Consider it or not, yours really is eligible to obtain not one however — depend ’em — two pensions, because of greater than 30 years of employment with two main aerospace corporations. Though a type of solely pays sufficient for little greater than a pleasant restaurant meal as soon as a month. The huge query I’m grappling with is: How lengthy will each pension funds stay solvent?

You probably have a query you’d wish to see featured right here, please ship it to me at Len@LenPenzo.com and be sure you put “Query of the Week” within the topic line.

The Query of the Week

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By the Numbers

With Halloween lower than two weeks away, listed here are some numbers on the favored unofficial vacation:

$8,800,000,000 Quantity US customers will spend on the vacation this yr; that’s down from $9 billion final yr.

172,000,000 The variety of People who plan to rejoice Halloween or take part within the vacation actions this yr.

$3,200,000,000 The projected quantity People will spend on costumes in 2019.

$2,700,000,000 The projected quantity spent on Halloween decorations within the US this yr.

$2,600,000,000 The quantity People will spend on Halloween sweet in 2019.

69 The share of households that plan at hand out sweet this yr.

44 The share of People who say they’ll carve a pumpkin this yr.

17 The variety of People who plan to place a fancy dress on their pet in 2019.

Supply: 24/7 Wall St.

Ineffective Information: Anniversary Night time

For his or her anniversary, a pair went out for a romantic dinner. Their teenage daughters mentioned they might repair a dessert and go away it ready. When the couple received residence, they noticed that the eating room desk was superbly set with china, crystal and candles, and there was a notice on the desk that learn:

Expensive Mother and Dad, your dessert is within the fridge. We’re staying with associates tonight — so go forward and do one thing we wouldn’t do!

“Properly … ,” the husband responded dryly, “I suppose we may clear the home.”

(h/t: Sharon)

Different Ineffective Information

Listed here are the highest — and backside — 5 Canadian provinces and territories when it comes to the typical variety of pages considered per go to right here at over the previous 30 days:

1. Saskatchewan (1.91 pages/go to)
2. Manitoba (1.87)
3. Quebec (1.80)
4. Alberta (1.78)
5. British Columbia (1.70)

9. Prince Edward Island (1.40)
10. Newfoundland & Labrador (1.35)
11. New Brunswick (1.29)
12. Nova Scotia (1.20)
13. Northwest Territories (1.00)

Whether or not you occur to take pleasure in what you’re studying (like these loopy canucks in Saskatchewan, eh …) — or not (ahem, all you hosers residing on the frozen Northwest Territories tundra) — please don’t neglect to:

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Letters, I Get Letters

Each week I function essentially the most fascinating query or remark — assuming I get one, that’s. And folk who’re fortunate sufficient to have the one query within the mailbag get their letter highlighted right here whether or not it’s fascinating or not! You’ll be able to attain me at: Len@LenPenzo.com

After studying my article discussing sneaky pizza supply charges, long-time reader and top-commenter Karen Kinnane shared this:

I at all times choose up our pizza! I order on-line, use a coupon, pay with my United bank card to get miles, and drive residence with a few clear tub towels wrapping the field to retain the warmth. Should you’re not severely handicapped and need to lower your expenses, stand up and get your individual pizza.

Karen, when it comes your wonderful pizza recommendation, I’d say there’s not mushroom for enchancment!

Should you loved this, please ahead it to your family and friends. I’m Len Penzo and I authorized this message.

Photograph Credit score: (espresso) brendan-c


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