On Opex Day, It’s All About The Dollar: Futures, Oil Levitate As USD Weakness Persists

It may be option expiration day (always leading to abnormal market activity) but it remains all about the weak dollar, which after crashing in the two days after the Fed’s surprisingly dovish statement has put both the ECB and the BOJ in the very awkward position that shortly after both banks have drastically eased, the Euro and the Yen are now trading stronger relative to the dollar versus prior.

As DB puts it, “the US Dollar has tumbled in a fairly impressive fashion since the FOMC on Wednesday with the Dollar spot index now down the most over a two-day period since 2009” which naturally hurts those countries who have been rushing to debase their own currencies against the USD.

For now this is felt most acutely in Japan, where the Nikkei continues to tumble, tracking every move in the USDJPY. “There’s concern for exporters,” said Nobuyuki Fujimoto, a senior market analyst at SBI Securities Co. “If the yen’s trading around 114 to the dollar, then companies will expect profits next fiscal year, but when it’s 110, most exporters will post losses.” Worse, after last night’s record plunge in the 10Y JGB yield (more shortly), the Japanese curve is now inverted and the BOJ will have to cut rates at least once more in the immediate future, in the process also forcing additional Yen weakness.

Europe will soon realize the same, because as Bloomberg writes, ECB bond buying backstop or no, following a 12% rebound since a low last month, the Stoxx Europe 600 Index is trading near its highest valuation of the year even as analysts keep slashing profit estimates for European companies. which is odd considering the same is taking place in the US and the strong dollar is blamed.

The flipside, of course, is that the weak dollar has provided a relief trade for commodities, and has pushed crude back up over $40/barrell (a price above which US shale production will soon return), and sending commodity metals to multi month highs. The combination of the weak dollar and higher commodities have pushed up the beaten down energy sector, although it remains to be seen if this will translate into actual earnings gains. The Fed “has provided a strong boost for commodities,” said Niv Dagan, executive director at Peak Asset Management LLC in Melbourne. “The fact that U.S. interest rates won’t rise any time soon – and we’ve seen the ECB announce additional stimulus and the Bank of Japan moving to negative interest rates – does provide that additional confidence to the market.”

The MSCI Asia Pacific excluding Japan Index is back to where it was in December, having rebounded 15 percent since hitting a four-year low in January. U.S. crude retreated, after soaring 11 percent in the last two days, and copper traded near a four-month high. South Korea’s won posted its biggest two-day gain since 2010 versus the dollar and the yen traded near a 16-month high. Ten-year bond yields sank to all-time lows in Japan and Taiwan.

In short, for now the “central bank accord” profiled yesterday is working, to give the impression that inflation is returning when really all the CBs have done is agree to weaken the dollar for the time being so as to not offset each other’s currency devaluation efforst.

Elsewhere, Chinese stocks jumped another 1.7%, bringing its weekly gain to 5.2% and closing just shy of 3,000 after data showed the Chinese housing bubble is accelerating, with prices increasing in the most cities since March 2014.

Market Wrap

  • S&P 500 futures up 0.2% to 2035
  • Stoxx 600 up 0.2% to 341
  • FTSE 100 up 0.3% to 6221
  • DAX up 0.3% to 9917
  • German 10Yr yield down 3bps to 0.21%
  • Italian 10Yr yield down 3bps to 1.24%
  • Spanish 10Yr yield down 2bps to 1.41%
  • S&P GSCI Index down 0.3% to 336.8
  • MSCI Asia Pacific up 0.1% to 129
  • Nikkei 225 down 1.2% to 16725
  • Hang Seng up 0.8% to 20672
  • Shanghai Composite up 1.7% to 2955
  • S&P/ASX 200 up 0.3% to 5183
  • US 10-yr yield down 3bps to 1.87%
  • Dollar Index up 0.28% to 95.03
  • WTI Crude futures down 0.2% to $40.11
  • Brent Futures down 0.5% to $41.34
  • Gold spot down 0.2% to $1,255
  • Silver spot up 0.7% to $16.02

Top Global News

  • TransCanada Locks in Growth With $10.2 Billion Pipeline Deal: Will pay $25.50 a share, representing a 10.9% premium to Columbia’s closing price on March 16, will also assume ~$2.8b of debt; will fund the purchase with proceeds from asset sales and a C$4.2b offering of new shares; is its biggest-ever deal
  • TransCanada Bought a Power Plant Only to Sell It Six Weeks Later
  • Adobe Beats Estimates as Demand Surges for Cloud Services: 1Q adj. EPS 66c, est. 61c; 1Q rev. $1.38b, est. $1.34b.
  • Pearson Moves to Reassure Staff That Valeant Isn’t Going Broke: CEO Mike Pearson took a step to reassure his employees on Wed., saying in a memo to workers that the co. won’t go bankrupt, apologizing for recent turmoil, shrs down 51% Tues.
  • Ackman’s Horror Week Gets Worse as Valeant Fall Threatens Rating: Standard & Poor’s warned it might cut Pershing Square’s credit rating to the cusp of junk-bond status
  • Apple Prepares to Unveil Smaller IPhone With Narrower Ambitions: Analysts see Apple selling 15 million lower-end devices a year
  • Apple Embraced by Bond Buyers While Others Left Out in the Cold
  • JPMorgan Boosts Buyback by $1.88 Billion With Fed’s Blessing: Would be on top of the $6.4b in buybacks approved by regulators in last year’s capital plan
  • CFTC Brought in to Police Murky Market for Biofuel Credits: Refiners spent at least $1b on ethanol credits in 2015
  • Fed That Can’t Go It Alone Pulls Carpet From Under Bond Yields: Treasury 10-year yields see biggest weekly drop since Jan. 29; shallower rate path consistent with global backdrop: Barclays
  • Dow’s Freakish Bounce Makes Investors Whole, Can’t Erase Doubts: Crude rally, patient Fed boost benchmark by 12% since Feb. 11
  • Lockheed’s GPS Satellites Face New Delays Over a Cracked Part: Flawed capacitors from Harris Corp. may add 3 months to delays
  • Viacom Gets Interest From 3 Dozen Cos. on Paramount Stake: WSJ: Players “include some Asian interests,” WSJ cites CEO Philippe Dauman in an interview.
  • Facebook, Twitter in Race to Win Right to Stream Live TV: NYP: Facebook, Twitter approached programmers about a deal for rights to stream conventional TV programming: New York Post
  • Orix Said to Plan $1b on Acquisitions Via U.S. PE Firm: Reuters: Plans to spend $1b over 3-5 yrs on acquisitions via a private equity firm it has set up in the U.S., Reuters reports
  • Twitter to Shut TweetDeck for Windows on April 15: VentureBeat

Looking at regional markets, we as usual start in Asia where stocks traded mostly higher following a strong US lead where DJIA and S&P 500 closed in positive territory YTD after continued USD weakness boosted the commodity complex.

ASX 200 (+0.3%) coat-tailed on the commodity advance in which iron ore gained around 5% and WTI rose above USD 40/bbl to its highest since Dec. Nikkei 225 (-1.25%) underperformed after JPY continued to strengthen against USD to the detriment of local exporter competitiveness.

The Shanghai Composite Index advanced 1.7 percent and was up 5.2 percent
for the week, its best performance in four months. New-home prices
gained in 47 Chinese cities in February, compared with 38 in January,
according to a government report; also helping was the PBoC which upped its liquidity injections as not a day passes any more with some central bank engaging in drastic asset price reflating easing.

Hong Kong’s Hang Seng Index
rose to a two-month high. Tencent Holdings Ltd. jumped as much as 4.5
percent as investment in social networking and games helped Asia’s
biggest Internet company post a better-than-expected 45 percent jump in
quarterly sales.

10yr JGBs traded higher amid the risk-averse sentiment seen in Japanese stocks, with firm bids seen in afternoon trade after strong results from the BoJ’s JPY 1.26tr1 JGB purchasing operations which saw 10yr and 20yr yields decline to new record lows, while the BoJ were also said to purchase government debt under repo agreements for the 1st time in 5 years.

BoJ minutes from January 28th-29th policy meeting stated that negative rates were desirable to reach price goal and that underlying inflation trend is steadily progressing. BoJ minutes also stated that negative rates are to permit additional easing in 3 dimensions and that BoJ offered 2 options which were to expand QQE or adopt QQE with negative rates.

Asian Top News

  • Yuan Strengthens After PBOC Raises Fixing by Most Since November: Dollar declines to 5-mo. low following Fed comments
  • China Overseas Land Profit Advances 22% as Property Values Rise: Profit attributable to shareholders rose to HK$33.3b ($4.3b) last year, from HK$27.2b in 2014
  • Emerging-Market Stocks Near Bull Market After Fed Turns Dovish: Rally will probably last for next 3 mos., CBA’s Ji says
  • BOJ Minutes Show No Talk of More QQE Before Adopting Minus Rate: BOJ voted 5-4 on rate, one opponent of policy is leaving board
  • Default Jitters Calm for Indian Lenders on $12 Billion Boost: RBI allowed banks to treat some balance sheet items as equity
  • Leissner’s Work With Indonesia Financier Drew Goldman Scrutiny: Bank ended work on Newmont copper deal after in- house review
  • Indonesia Group Seeks $1 Billion for Newmont Copper Asset: Financing would include $750m loan, rest in mezzanine

In Europe, equities have kicked off the final session of the week in a tentative fashion, with major indices relatively flat amid light news flow . In terms of a sector breakdown, energy names are once again among the underperformers, with the commodity complex coming under modest pressure as WTI futures reside around the USD 40/bbl level. Bunds have continued their move higher this morning, on track to end the week over a point higher, with today’s price action bolstered by dovish rhetoric from ECB’s Praet and Draghi.

European Top News

  • UBS Bonus Pool Surges 14%, as Other Lenders Cut Compensation: Bonus pool swelled to CHF3.5b from CHF3.06b; CEO Ermotti received bonus of 11.5 million francs, up 37%
  • Praet Says ECB Rates Can Still Fall If Shocks Worsen Outlook: Central bank’s chief economist says recovery remains fragile
  • Generali Fourth-Quarter Profit Rises on Higher Operating Income: Net income rose to EU304m from EU81m million yr earlier
  • Former Porsche Executives Acquitted in Stuttgart Trial: Former Porsche CEO Wendelin Wiedeking and ex-CFO Holger Haerter were acquitted of charges they manipulated shares of Volkswagen in 2008 in a failed bid to buy the carmaker
  • Sunrise Gains After Germany’s Freenet Takes Stake in Carrier: Gained as much as 9.8% after Freenet agreed to buy a 23.8% stake
  • EDF Said to Plan Approval of Hinkley Point Nuclear Plant by May: Still plans to make the final decision to go ahead with an GBP18b nuclear power plant in the U.K. before its AGM in May
  • trategists Now See Virtually No Europe Stock Gains in 2016: Newest forecasts see weakest year since 2011 for region

In FX, it has so far been a very quiet session in Europe this morning, but with some notable volatility — against the USD — a welcome period of consolidation playing through across the board. The USD index has attempted a modest recovery of sorts, regaining some ground against GBP, where Cable has dipped back into the low 1.4400’s after the rejection of 1.4500. EUR/USD has drifted down into the mid 1.1200’s, but the commodity currencies have conceded lesser ground as risk sentiment has stabilised again.

In this respect, we have seen some basing out in spot and cross JPY rates also, but USD/JPY especially, is looking fragile above 111.00, though a move back to 112.00 would settle nerves . Little on the data slate until North American comes in; Michigan sentiment in the US and CPI in Canada are stand out, while Fed speakers Dudley, Rosengren and Bullard all make an appearance later today. NOK towards the better levels seen in the wake of the rate cut yesterday, but CHF trade very tight after the SNB provided the familiar rhetoric.

The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, gained 0.2 percent following a two-day slide of more than 2 percent that drove it to an eight-month low. The Fed cited weaker global growth and turmoil in financial markets for its decision to reduce the number of interest-rate increases forecast for 2016.

In commodities, WTI prices have started to consolidated around the USD 40/bbl after reaching highs of USD 40.55/bbl, and Brent has also slightly fallen of its recent highs and currently resides at USD 41.17/bbl. In addition to the dollar’s decline, crude was supported this week by data showing U.S. output fell to the lowest level since November 2014 as well as a planned freeze on production by countries including Saudi Arabia and Russia.

Gold prices have started to retrace after recent strengthening following the FOMC with the 1250.00/oz level firmly in its sights. Copper prices have erased recent gains after a recent rally over the last week and Iron Ore prices increase slightly on the session after continued improvement in the Chinese property sector. The Bloomberg Commodity Index held near a three-month high.

Bulletin Headline Summary from RanSquawk and Bloomberg

  • European equities have started the session off on a tentative footing with newsflow and data very much on the quiet side after what has been another busy week in the market
  • The USD index has attempted a modest recovery of sorts, regaining some ground against GBP, where Cable has dipped back into the low 1.4400’s after the rejection of 1.4500
  • Looking ahead, highlight Include Canadian CPI, US U. of Mich. Sentiment, Fed’s Dudley, Bullard and Rosengren
  • Treasuries higher in overnight trading, global equity markets mixed and oil drops; today’s economic calendar brings U. of Michigan Sentiment and three Fed speakers.
  • Policy makers across the world are acting in ways that suggest there may have been more to last month’s Group of 20 meeting in Shanghai than mere platitudes about promoting global economic growth. That’s led some analysts to conclude that there is indeed a secret Shanghai Accord
  • European Union leaders risked a showdown with Turkey over efforts to create a legal migration route to end the chaotic crossings of the Aegean Sea, as pressure from countries including Cyprus led the EU to retreat from earlier sweeteners
  • UBS, which cut its securities unit to focus on wealth management, raised its bonus pool by 14% in 2015, to 3.5 billion francs ($3.6 billion) from 3.06 billion francs, leaving it the only major European lender to award bankers with higher compensation
  • The ECB still has room to cut interest rates should the euro area’s economic recovery falter, Executive Board member Peter Praet said
  • Deutsche Boerse AG and London Stock Exchange Group Plc want to create a European trading champion. They just don’t want regulators to think it’s too big to fail
  • Investors at home and abroad can’t get enough 10-year Japanese government bonds, driving the yield to an unprecedented minus 0.135%
  • The yuan headed for the biggest two-day gain in a month after China’s central bank raised its reference rate by the most since November following a decline in the dollar. The PBOC boosted its fixing by 0.51% to 6.4628 against the greenback
  • $10.775b IG corporates priced yesterday; weekly volume $30.385b, March $116.805b, YTD $411.055b
  • No HY priced yesterday, MTD 13 deals for $7.315b, YTD 38 deals for $22.165b
  • BofAML Corporate Master Index OAS 2bp lower yesterday at +178, -32bp MTD, +0bp YTD; T1Y range 221/129
  • BofAML High Yield Master II OAS 12bp lower yesterday at +682, -53bp MTD, -12bp YTD; T1Y range 887/438
  • Sovereign 10Y bond yields lower; European, Asian equity markets mixed; U.S. equity- index futures rise. WTI crude oil, copper, gold fall

US Event Calendar

  • 10:00am: U. of Mich. Sentiment, March P, est. 92.2 (prior 91.7)
    • Current Conditions, March P, est. 106.8 (prior 106.8)
    • Expectations, March P est. 82.5 (prior 81.9)
    • 1 Yr Inflation, March P (prior 2.5%)
    • 5-10 Yr Inflation, Mar P (prior 2.5)

Central Banks

  • 9:00am: Fed’s Dudley speaks in New York
  • 11:00am: Fed’s Rosengren speaks in New York
  • 2:30pm: Fed’s Bullard speaks in Frankfurt

DB’s Jim Reid concludes the overnight wrap

Twenty-four hours on and there’s been little stopping the positive sentiment feeding its way through risk assets. With a dovish Fed to thank for that, yesterday saw the Dow (+0.90%) close in positive territory (+0.32%) for the first time in 2016. As a reminder it was down as much as -10% on the year during the February lows. The S&P 500 (+0.66%) had also joined the positive YTD club briefly but just failed to hold onto the stronger earlier gains by the end of play, while it was another strong session for US credit with CDX IG closing 2bps tighter. European equity markets were a little softer (the firmer Euro to blame) but, and playing catch-up, European credit markets were in rally mode with iTraxx Main and Crossover 6bps and 16bps tighter respectively.

Meanwhile the US Dollar has tumbled in a fairly impressive fashion since the FOMC on Wednesday with the Dollar spot index now down the most over a two-day period since 2009. It is emerging market currencies which have been the biggest beneficiaries of that, while yesterday also marked a landmark day for Oil as we saw WTI (+4.52%) close above $40/bbl for the first time in 2016. It’s now up a fairly remarkable +54% from the intraday lows of last month.

Doing little to hurt matters was further evidence of an improving US manufacturing sector yesterday. Indeed, on the back of a much better than expected improvement in the NY Fed empire manufacturing survey earlier this week, yesterday’s Philly Fed manufacturing survey showed the headline business conditions index rising an impressive 15.2pts to 12.4 (vs. -1.5 expected) and the best print since February last year. The details of the survey were encouraging also with new orders in particular a standout with the monthly increase the most since 2005, while shipments and employment also improved. All-in-all the data is certainly an encouraging sign for hopes of further improvement in this month’s ISM manufacturing reading which we’ll get two weeks today.

So in the past 8 days we’ve seen the ECB, BoJ and Fed meetings come and go and we can add the BoE, SNB and Norges Bank to that list after their respective policy meetings yesterday. Of the latter three the only change was a 25bps cut from the Norges Bank (as expected) to a record low 0.5% with plenty of signs that the Bank may be prepared to ease further later in the year. Despite only two of those six central banks actually having loosened policy, there’s no doubt that it’s been a decidedly dovish period. In the Fed’s case we’ve seen expectations for tightening scaled back, while the remainder appear to either be on hold in the near term or weighing the prospects for potential future easing later in the year. It’s worth taking a look at what the above action/lack of action has done for asset prices lately. Covering the period in the moments prior to the ECB last Thursday up to last night’s closing prices, the biggest impact has been in credit markets which is unsurprising given the news of potential corporate-bond buying from the ECB. In Europe we’ve seen Main and Crossover tighten 16bps and 53bps respectively, while US cash credit spreads have also performed very well with IG and HY 11bps and 75bps tighter respectively. Interestingly European equities are virtually unchanged with the Stoxx 600 -0.1% in that time. The S&P 500 is +2.6% however, driven by the last two days of gains. The USD index is 2.7% weaker, while the Euro (+3.0%) has failed to stick to the immediate post-ECB weakening script. Oil has rallied a robust +5.2%, Gold is +0.7% while moves in sovereign bond markets are perhaps most interesting. That’s more due to the lack of change in yields in the time period than anything substantial with 10y Treasuries just 2bps higher in yield, 10y Bund yields 1bp higher and 10y BTP yields (as a proxy for peripherals) 10bps lower. Clearly the volatility in between for all assets has to be acknowledged however.

Glancing at our screens this morning, bourses in Asia are closing the week on a high note generally and following much of the lead again from Wall Street last night. There are gains for the Hang Seng (+0.62%), Shanghai Comp (+1.88%), Kospi (+0.18%) and ASX (+0.33%), although bourses in Japan are weaker again have been weighed down by an appreciating Yen. The Nikkei is currently -1.28%. The other notable news this morning is out of China where the PBoC has strengthened the Yuan fix by the most since November (+0.51%) following those moves in the US Dollar yesterday. Elsewhere, Oil is continuing to hold those big gains, while credit markets in Australia and Asia are a couple of basis points tighter. The lone data has come out of China where property prices have continued to firm in February, gaining in 47 cities compared to 38 cities in January.

Moving on. With regards to the remainder of yesterday’s data, initial jobless claims printed at 265k for last week (vs. 268k expected) which was up a modest 7k on the prior week. There was further labour market data in the form of JOLTS job openings covering the month of January which came in slightly ahead of consensus at 5.54m (vs. 5.50m expected). Both the hiring and quits rates were reported as declining. Finally the Conference Board’s leading index was up a less than expected +0.1% mom in February (vs. +0.2% expected). Meanwhile in Europe the only data of note was the final revision to the February CPI report for the Euro area which was confirmed at -0.2% yoy at the headline, but revised up one-tenth at the core to +0.8% yoy.

Over at the BoE, as expected we saw no change in policy after a unanimous confirmation vote of 9-0. The bulk of the minutes showed little in the way of new information with domestic consumption reported as being robust and that the near term outlook for inflation was little changed since the inflation report last month. More interesting were the comments around the upcoming June Brexit referendum. The minutes made mention to there appearing to be ‘increased uncertainty surrounding the forthcoming referendum’ and that ‘uncertainty is likely to have been a significant driver of the decline in sterling’. The minutes also noted that ‘it may also delay some spending decisions and depress growth of aggregate demand in the near term’.

Looking at the day ahead now and what is a slightly lighter calendar relative to that of recent days. This morning in Europe the only data of note are the February PPI data for Germany and Q4 wage data out of France. In the US this afternoon the lone release will be the first read of this month’s University of Michigan consumer sentiment survey, where current consensus is for no change to current conditions but a modest pickup in expectations. Today will also see the first Fedspeak post FOMC so it’ll be worth keeping an eye on the individual comments from Dudley (due 1pm GMT), Rosengren (due 3pm GMT) and Bullard (due 7pm GMT).


via Zero Hedge http://ift.tt/1nTTnyW Tyler Durden

Movie Review: Midnight Special – New at Reason

Midnight SpecialIn a Fort Worth motel room, two men and an eight-year-old boy are packing up to move on. We hear a TV news report: a search is underway for the boy, who has been abducted.

But that isn’t what’s really going on. One of the men, Roy Tomlin (Michael Shannon), is the boy’s father; the other is Roy’s friend Lucas (Joel Edgerton), a Texas state trooper. And the boy, whose name is Alton (Jaeden Lieberher) and who wears strange blue goggles and big noise-blocking headphones, is actually calling the shots here. Alton says there’s someplace he has to be in exactly four days, and Roy and Lucas are trying their best to get him there. At the same time, a swarm of FBI agents, a nervous NSA analyst and a pair of end-times religious fundamentalists are doing their best to stop them. It’s all pretty strange, and it keeps getting stranger, writes Kurt Loder.

View this article.

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Silver Fundamentals: The Numbers Don’t Lie

 

 

 

Hold your real assets outside of the banking system in one of many private international facilities  –>  http://ift.tt/1M1FiG5 

 

 

 

Silver Fundamentals: The Numbers Don’t Lie

Written by Jeff Nielson (CLICK FOR ORIGINAL)

 

 

 

Silver Fundamentals: The Numbers Don’t Lie - Jeff Nielson

 

 

 

“Statistics can be used to say anything.”

Many readers are familiar with this cliché, but few understand its real significance Numbers don’t lie, meaning the raw data which we collect on a nearly infinite number of subjects. Statistics, on the other hand, are rarely just raw data. Instead, they are numbers that have been massaged (i.e. manipulated) with various adjustments.

Deception and deceit enters into the picture when our governments (and charlatan economists ) create their statistics, and do so by making adjustments which are completely indefensible from an analytical standpoint. These adjustments don’t improve upon the raw data in terms of adding clarity, but rather they pervert the data into numbers which cease to have any resemblance to the real world.

Thus, with their adjusted statistics, these frauds-with-numbers can make the U.S. Great Depression look like a recovery. An even more obvious example is found in all the imaginary “jobs” the U.S. government claims to have created during its imagined recovery .


Fewer and fewer people are working in the U.S. every year, and virtually every month. Since the start of the “recovery,” the U.S. economy has lost an additional 3+ million jobs. The “11 million new jobs” boasted of by the political puppets, and manufactured by charlatan economists, never existed. They were completely created with mammoth – and bogus – adjustments.

 

“Numbers don’t lie – people do.”

This brings us to the silver market, and some numbers that illustrate some unequivocal truths. There are few better sources for numbers on silver than precious metals icon, Eric Sprott. In a recent interview withThe Daily Coin , Sprott provided a few interesting numbers.

Silver is mined at an 11:1 ratio to gold. This is raw data. This becomes significant when we look more raw data numbers: the natural occurrence of these two metals in the Earth’s crust. Silver is approximately 17 times as plentiful as gold. Therefore, all things being equal, we should expect silver to be mined at a near-identical ratio of 17:1.

Instead, silver is under-produced by roughly 50%. How? Why?

We know it could not possibly be due to lack of interest or demand. Historically, over a span of thousands of years, the price ratio between silver and gold was a very steady 15:1. This means that (over thousands of years) humanity has exhibited a slight price preference for silver. It occurs at a 17:1 ratio, but people have been willing to pay for it at a slightly higher 15:1 ratio.

In more modern times, we have proof that humanity’s desire for silver hasn’t waned at all. As was explained in a previous commentary , the silver market has been in a state of supply deficit for thirty consecutive years – something totally unprecedented with any other commodity market in history.

Indeed, it is impossible for any other commodity on the planet to ever experience a supply deficit of this magnitude, with one exception: gold. What makes gold and silver totally unique in this respect? Being“precious,” we have conserved these metals over thousands of years, and as a result humanity has accumulated gigantic stockpiles of them. In fact, nearly all the gold ever mined has been conserved.

However, this is no longer true with silver. In addition to being a more brilliant metal than gold, silver is incredibly useful. Over the past quarter century, more silver-based patents have been created than with any other metal on the planet. But not only does silver have unparalleled versatility, it is an extremely potent metal, meaning that in many of its commercial applications it is used in only trace amounts.

Why is this of significance? Because in such tiny quantities it is economically impractical to ever recycle any of this silver, at prices anywhere near the (absurd) levels of recent decades. Thus this silver is being consumed in tiny amounts, but in billions and billions of consumer products, over a span of decades.

Unlike gold, our stockpiles of silver are disappearing. As previously mentioned, for at least the last thirty years, the only way that our strong demand for silver could be satisfied has been through consuming portions of these stockpiles. Perhaps no one has studied this dynamic longer and more closely than noted silver researcher Ted Butler.

Butler argues that consumption of the world’s silver (on a net basis) dates back more than 70 years , to World War II. This begs the obvious question of how much (above-ground) silver is left in the world, but no one can supply a precise answer. Estimates have ranged from a high of 6:1 (versus gold), all the way down to where some commentators argue that the stockpile of gold is now larger than the dwindling stockpile of silver.

Give these numbers, there could never possibly be any legitimate explanation as to why silver is under-produced by 50%. In fact, there is only one illegitimate explanation: price suppression . Let’s toss out some more numbers. In the 1990s the price of silver was manipulated to a 600-year low.



We’re not talking about minor, subtle price suppression here, but rather a massive, systemic attack on this market, which began (originally) a hundred years ago. Another silver historian, Charles Savoie, provides the background here, in his noted chronology The Silver Stealers.

Savoie points out that during World War I, the British Empire conscripted vast numbers of soldiers into its army from India’s immense population. But these soldiers would not accept banker-paper for wages. They would only fight if paid in hard silver – the “Peoples’ Money.”

By the end of World War I, a large percentage of the world’s silver had flowed into India. Enter the Old World Order , the oligarch crime syndicate which readers know today as “the One Bank.” Both contemporary sources like Bill Still (The Money Masters) and historical sources like Charles Lindbergh Sr. ( The Economic Pinch) document how this crime syndicate was already pulling the strings of our puppet governments a hundred years ago.

These Western oligarchs ordered the British government to loot all the silver from India after World War I. Once that had been done, the Old World Order then commanded that much of that silver be dumped into the global market, virtually all at once. It was these massive twin crimes which distorted (and destroyed) the historic 15:1 price ratio which had existed for roughly 5,000 years.

Silver has been under-priced, both versus gold and in absolute terms, ever since. However, it was only in the 1990s that the One Bank took this price suppression to a criminal extreme. The 600-year low they produced by that systemic price manipulation literally destroyed the global silver mining industry .

Well over 90% of all silver mining companies were bankrupted. Since this era of extreme silver price-suppression began, roughly 80% of the world’s silver is now produced as a by-product of other mining (primarily lead, zinc, and copper) – further proof of extreme price manipulation.

There is no other explanation as to why (for thousands of years) we got most of our silver from primary silver mines, but no longer do so today. Because of this extreme, systemic price suppression, only the world’s richest deposits of silver can still be mined at a (small) profit.

This brings us back to another number provided by Eric Sprott in his recent interview. Silver is currently being purchased (in investment demand) at a 50:1 ratio to gold. For the significance of this shocking number, we need merely refer back to two other numbers already presented.

Silver is currently mined at an 11:1 ratio to gold (including all by-product production). It exists in the Earth’s crust at a 17:1 ratio. How can it be purchased and consumed at a 50:1 ratio? It can’t – not without leading to an inevitable inventory default once the last ounce of the world’s stockpiles is consumed.

Anything that is under-priced will be over-consumed.

This economic tautology has been presented in several previous commentaries . The hypothetical example used most often is chocolate bars. Imagine if chocolate bars only cost a dime. This was the actual price of chocolate bars, before Paul Volcker assassinated the gold standard and unleashed the One Bank’s“inflation” upon us.

If chocolate bars were priced at 10 cents apiece today, in our ultra-diluted dollars, all chocolate bars would disappear from store shelves in a few days. Worse still, no chocolate bar manufacturer could remain in business selling its chocolate bars that cheaply.

All the world’s chocolate bars would disappear. No more would be produced. The only bars remaining would be the tiny number hoarded and stockpiled by chocolate lovers. This brings us back to silver.

As previously documented, over a span of thousands of years humanity has exhibited a slight preference for silver over gold, in relative terms. This is not surprising, given that silver is the more brilliant of the two metals, and today, the more useful of the two metals. Yet the price ratio today has not shrunk from the historic 15:1 ratio, to reflect the decimation of global silver stockpiles. Instead, it has soared to a totally absurd level of today more than 80:1.

Again, there is no legitimate explanation for the current (ultra-suppressed) price for silver. Conservatively, silver should be priced at a minimum of a 6:1 ratio to gold, reflecting the maximum ratio of silver-to-gold stockpiles – i.e. priced over $200/oz. Arguably, silver should be priced at least as high as gold (if not higher), reflecting that the world might now have more gold than silver. This translates into a current price for silver at or above $1,200/oz (USD).

Perhaps by coincidence, a previous commentary pegged a “starting point” for the price of silver at $1,000/oz. This number came via a totally separate line of reasoning. It began with an observation by analyst Rob Kirby that, historically, the average wage for workers was 1 ounce of silver per week. With the average (paper) wages of the workers of today being approximately $50,000/year, this would require that the workers’ 1 ounce of silver (per week) be priced at roughly $1,000.

Numbers don’t lie – people do. And the “numbers” on silver tell an unequivocal story.

      1) Silver price suppression has been more extreme and more continuous than any other form of price manipulation by the One Bank crime syndicate.

      2) The near-total destruction of the global silver mining industry is a direct result of this systemic crime.

      3) If silver was ever priced anywhere close to a fair and rational level, we would see the resurrection of the global silver mining industry. Once again, most of the world’s silver would come from silver mines, as had been the case for thousands of years.

      4) An absolute minimum price for silver today would be $200/oz. However, a very strong case can be made that the current price of silver should be at least $1,000/oz (USD).

The world will eventually run out of silver, and it will happen soon. Roughly one billion ounces of stockpiled silver has been consumed over just the last decade alone. The numbers don’t tell us that this silver default might happen, they tell us that it will happen.

 

 

Please email with any questions about this article or precious metals HERE

 

 

 

 

Silver Fundamentals: The Numbers Don’t Lie

Written by Jeff Nielson (CLICK FOR ORIGINAL)

 

 

 

 

 


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U.S. Dollar Index – Is Rising Inflation The Fed`s Nightmare Scenario (Video)

By EconMatters

Is a rising inflation problem going to force the Fed`s hand into raising interest rates faster than the financial markets currently have priced in with many asset classes from bonds, the U.S. Dollar, and equities.

© EconMatters All Rights Reserved | Facebook | Twitter | YouTube | Email Digest | Kindle  


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“Free Trade Agreements” Used to Help American Workers … Now They Hurt Them

Trump and Sanders have whipped up a lot of popular support by opposing “free trade” agreements.

But it’s not just politics and populism … mainstream experts are starting to reconsider their blind adherence to the dogma that more globalization and bigger free trade agreement are always good.

UC Berkeley Economics professor Robert Reich – Bill Clinton’s Secretary of Labor – wrote last month:

Suppose that by enacting a particular law we’d increase the U.S. Gross Domestic Product. But almost all that growth would go to the richest 1 percent.

 

The rest of us could buy some products cheaper than before. But those gains would be offset by losses of jobs and wages.

 

This is pretty much what “free trade” has brought us over the last two decades.

 

I used to believe in trade agreements. That was before the wages of most Americans stagnated and a relative few at the top captured just about all the economic gains.

 

Recent trade agreements have been wins for big corporations and Wall Street, along with their executives and major shareholders.

 

***

 

But those deals haven’t been wins for most Americans.

 

The fact is, trade agreements are no longer really about trade.

Indeed, while it’s falsely called a “trade agreement”, only 5 out of 29 of the Trans Pacific Partnership’s chapters have anything to do with trade.  And conservatives point out that even the 5 chapters on trade do not promote free trade.

Reich continues:

Worldwide tariffs are already low. Big American corporations no longer make many products in the United States for export abroad.

 

***

 

Google, Apple, Uber, Facebook, Walmart, McDonalds, Microsoft, and Pfizer, for example, are making huge profits all over the world.

 

But those profits don’t depend on American labor – apart from a tiny group of managers, designers, and researchers in the U.S.

 

To the extent big American-based corporations any longer make stuff for export, they make most of it abroad and then export it from there, for sale all over the world – including for sale back here in the United States.

 

The Apple iPhone is assembled in China from components made in Japan, Singapore, and a half-dozen other locales. The only things coming from the U.S. are designs and instructions from a handful of engineers and managers in California.

 

Apple even stows most of its profits outside the U.S. so it doesn’t have to pay American taxes on them. [Background.]

 

This is why big American companies are less interested than they once were in opening other countries to goods exported from the United States and made by American workers.

 

They’re more interested in making sure other countries don’t run off with their patented designs and trademarks. Or restrict where they can put and shift their profits.

 

In fact, today’s “trade agreements” should really be called “global corporate agreements” because they’re mostly about protecting the assets and profits of these global corporations rather than increasing American jobs and wages. The deals don’t even guard against currency manipulation by other nations.

 

According to Economic Policy Institute, the North American Free Trade Act cost U.S. workers almost 700,000 jobs, thereby pushing down American wages.

 

Since the passage of the Korea–U.S. Free Trade Agreement, America’s trade deficit with Korea has grown more than 80 percent, equivalent to a loss of more than 70,000 additional U.S. jobs.

 

The U.S. goods trade deficit with China increased $23.9 billion last year, to $342.6 billion. Again, the ultimate result has been to keep U.S. wages down.

 

The old-style trade agreements of the 1960s and 1970s increased worldwide demand for products made by American workers, and thereby helped push up American wages.

 

The new-style global corporate agreements mainly enhance corporate and financial profits, and push down wages.

 

***

 

Global deals like the Trans Pacific Partnership will boost the profits of Wall Street and big corporations, and make the richest 1 percent even richer.

 

But they’ll bust the rest of America.

Similarly, the New York Times reports:

Were the experts wrong about the benefits of trade for the American economy?

 

***

 

Voters’ anger and frustration, driven in part by relentless globalization and technological change … is already having a big impact on America’s future, shaking a once-solid consensus that freer trade is, necessarily, a good thing.

 

***

 

The angry working class — dismissed so often as myopic, unable to understand the economic trade-offs presented by trade — appears to have understood what the experts are only belatedly finding to be true: The benefits from trade to the American economy may not always justify its costs.

 

***

 

In a recent study, three economists — David Autor at the Massachusetts Institute of Technology, David Dorn at the University of Zurich and Gordon Hanson at the University of California, San Diego — raised a profound challenge to all of us brought up to believe that economies quickly recover from trade shocks. In theory, a developed industrial country like the United States adjusts to import competition by moving workers into more advanced industries that can successfully compete in global markets.

 

They examined the experience of American workers after China erupted onto world markets some two decades ago. The presumed adjustment, they concluded, never happened. Or at least hasn’t happened yet. Wages remain low and unemployment high in the most affected local job markets. Nationally, there is no sign of offsetting job gains elsewhere in the economy. What’s more, they found that sagging wages in local labor markets exposed to Chinese competition reduced earnings by $213 per adult per year.

 

In another study they wrote with Daron Acemoglu and Brendan Price from M.I.T., they estimated that rising Chinese imports from 1999 to 2011 cost up to 2.4 million American jobs.

 

“These results should cause us to rethink the short- and medium-run gains from trade,” they argued. “Having failed to anticipate how significant the dislocations from trade might be, it is incumbent on the literature to more convincingly estimate the gains from trade, such that the case for free trade is not based on the sway of theory alone, but on a foundation of evidence that illuminates who gains, who loses, by how much, and under what conditions.”

 

***

 

The case for globalization based on the fact that it helps expand the economic pie by 3 percent becomes much weaker when it also changes the distribution of the slices by 50 percent, Mr. Autor argued.

 

***

 

The new evidence from trade suggests American policy makers cannot continue to impose all the pain on the nation’s blue-collar workers if they are not going to provide a stronger safety net.

 

That might have been justified if the distributional costs of trade were indeed small and short-lived. But now that we know they are big and persistent, it looks unconscionable.


via Zero Hedge http://ift.tt/1pPCneJ George Washington

Putin & The Failure Of Washington’s Propagandist Predictions

Authored by Paul Craig Roberts,

American presstitutes, such as the New York Times and the Wall Street Journal, expressed surprise at Russia’s support for the Syrian ceasefire, which Russia has been seeking, by Putin’s halt to attacks on the Islamic State and a partial withdrawal of Russian forces. The American presstitutes are captives of their own propaganda and are now surprised at the failure of their propagandistic predictions.

Having stripped the Islamic State of offensive capability and liberated Syria from the Washington-supported terrorists, Putin has now shifted to diplomacy. If peace fails in Syria, the failure cannot be blamed on Russia.

It is a big risk for Putin to trust the neocon-infested US government, but if ISIS renews the conflict with support from Washington, Putin’s retention of air and naval bases in Syria will allow Russia to resume military operations. Astute observers such as Professor Michel Chossudovsky at Global Research, Stephen Cohen, and The Saker have noted that the Russian withdrawal is really a time-out during which Putin’s diplomacy takes the place of Russian military capability.

With ISIS beat down, there is less danger of Washington using a peace-seeking ceasefire to resurrect the Islamic State’s military capability. Therefore, the risk Putin is taking by trusting Washington is worth the payoff if the result is to enhance Russian diplomacy and elevate it above Washington’s reliance on threats, coercion, and violence.

What Putin is really aiming for is to make Europeans realize that by serving as Washington’s vassals European governments are supporting violence over peace and may themselves be swept by the neoconservatives into a deadly conflict with Russia that would ensure Europe’s destruction.

Putin has also demonstrated that, unlike Washington, Russia is able to achieve decisive military results in a short time without Russian casualties and to withdraw without becoming a permanent occupying force. This very impressive performance is causing the world to rethink which country is really the superpower.

The appearance of American decline is reinforced by the absence of capable leaders among the candidates for the Republican and Democratic party nominations for president. America is no longer capable of producing political leadership as successive presidents become progressively worse.

The rest of the world must be puzzled how a country unable to produce a fit candidate for president can be a superpower.


via Zero Hedge http://ift.tt/1R7oijC Tyler Durden

Silver Soars Post-Fed As Gold Ratio Tumbles Most In 5 Months

Two weeks ago we hinted at the flashing red warning coming from 'a 4,000 year old' financial indicator. The Gold/Silver ratio had reached extremely high levels, which at the time we explained…

This isn’t normal.

In modern history, the gold/silver ratio has only been this high three other times, all periods of extreme turmoil—the 2008 crisis, Gulf War, and World War II.

This suggests that something is seriously wrong. Or at least that people perceive something is seriously wrong.

And as we concluded at the time…

Good times never last forever, especially with governments and central banks engineering artificial prosperity by going into debt and printing money.

 

These tactics destroy a financial system. And the cracks are visibly expanding.

 

So while the gold/silver ratio isn’t any kind of smoking gun, it is an obvious symptom alongside many, many others.

 

Now, the ratio may certainly go even higher in the event of a major banking or financial crisis. We may see it touch 100 again.

 

But it is reasonable to expect that someday the gold/silver ratio will eventually fall to more ‘normal’ levels.

 

In other words, today you can trade 1 ounce of gold for 80 ounces of silver.

 

But perhaps, say, over the next two years the gold/silver ratio returns to a more historic norm of 55. (Remember, it was as low as 30 in 2011)

 

This means that in the future you’ll be able to trade the 80 ounces of silver you acquired today for 1.45 ounces of gold.

 

The final result is that, in gold terms, you earn a 45% “profit”. Essentially you end up with 45% more gold than you started with today.

 

So bottom line, if you’re a speculator in precious metals, now may be a good time to consider trading in some gold for silver.

And, that appears to have happened…

As Silver has soared post-Fed…

 

Crushing the Gold/Silver ratio back to one-month lows (withthe biggest 2-day drop since October 5th 2015)…

 

But do not forget – even at 79x – this is an extreme level of fear – nothing has been 'fixed' as governments escalate their repression of financial freedom.


via Zero Hedge http://ift.tt/1prHjpy Tyler Durden

The Gloves Are Off: Trump Accuses Hillary Of Being “Involved In Corruption For Most Of Her Professional Life”

It’s popcorn time.

Barely 24 hours after Trump launched his first Hillary attack ad in which he showed a laughing Putin respond to a barking Hillary, and shortly after Hillary’s SuperPAC responded in kind with an ad of its own in which it used a Trump quote to mock him, the gloves are officially off, and now that both presidential candidates – both convinced they will face off against each other – are beyond the foreplay stage, the gloves have come off and the direct attacks are escalating rapidly.

So rapidly, in fact, that one may say Trump is risking a potential lawsuit with the following accusation (which, however, should not be too difficult to prove should one of Hillary’s SuperPACs sue him for libel).

This is what Trump tweeted moments ago.

This is more than your typical political ad hominem – this is a material allegation with legal implications that goes to the core of Hillary’s biggest weakness, her trustworthiness or complete lack thereof, and Trump’s charges will only escalate from here on out, hopefully with actual examples. We look forward to Hillary’s response.

One thing is certain: for the next six months, America will be entertained.


via Zero Hedge http://ift.tt/1nSMFcD Tyler Durden

Central Bankers’ Embarrassment Of Stitches

Authored by Danielle DiMartino Booth,

L'EMBARRASS DESRICHESSEShome

Leonor Jean-Christine Soulas d’Allainval was no Shakespeare. His first play, “L’Embarras des richesses,” was a three-act comedy that premiered in 1726 and was performed only four times in the hopeful playwright’s lifetime. At age 53 he died embarrassingly franc-less at the Hotel de Paris. That’s not to say Soulas did not leave his linguistic mark, however unintentionally. The title of his play directly translates to ‘the burden of wealth.’ But that meaning seems to have been lost in transit across the English Channel courtesy of a Brit.

That Englishman, John Ozell, an accountant and translator died wealthy thanks to his numerical acumen. It was however not his talent for accounting but rather his 1735 translation of Soulas’ play that would prove to be his more lasting legacy, perhaps intentionally. Today, ‘an embarrassment of riches,’ as it’s come to be universally known among idioms, simply means too much of a good thing.

In the here and now, a recent New York Times article chronicled the sun-setting on the current era of excess that has known no equal, including the Roaring Twenties. “For the ultrawealthy, 2015 was an embarrassment of riches,” the Times’ James Stewart wrote March 11th. He referenced such extravagances as $100 million penthouses, $179 million Picassos, $48 million blue diamonds and $13 million vintage Jaguars.

But something happened towards the middle of last year in this land of excess; embarrassment has given way to anxiety. In an apparent refutation of ‘show don’t tell,’ prospective buyers along Billionaires Row, Manhattan’s 57th Street between Columbus Circle and Park Avenue, have begun to blanch at the idea of movin’ on up. Evidently, the $6,000-plus per square foot price tag was easier to envision when the half dozen rising new towers were just so many deep holes in the ground.

Now that the fabulous-five, 1000-foot tall “supertall” towers are actually scraping the skyline, sales have plunged from their towering great heights. A meagre 189 Manhattan apartments sold last year for $10 million or more, a 12 percent decline from 2014. Similar tales of woe emanate from art and ‘priceless’ car auctions at which the wares on offer appear to indeed have no price, at least for which they’ve sold.

What’s a consignor to do? For starters, pray. Perhaps in Mandarin? A recent report found that despite the country’s well telecast economic slowdown, China now boasts 568 billionaires, topping the United States’ 535. Even on a city-to-city level, Beijing’s 100 billionaires now best New York’s 95.

The good news for Manhattanites with selling on the mind is that the Chinese are game to pay a tasty whim sum just to get their yuan out of the country. If you harbor any doubts as to their intent, just ask a few of the Big Apple’s resident billionaires who run a quaint private equity firm known as the Blackstone Group. These fine gentlemen make up part of the one-in-four American billionaires who work in finance and investments. Bless them.

Blackstone boasts the title of the world’s largest real-estate private equity fund manager by assets. Though the firm is known for holding its properties in portfolio for years, a resent, as in three months, acquisition of a luxury hotel portfolio is presently selling faster than a bell hop looking for a tip. And even for Blackstone, the resulting $450 million profit is nothing to sneeze at. Especially in light of the above mentioned shrinkage in apartment prices.

Plus, word is the buyer, China’s Anbang Insurance Group, is the party that did the approaching. It did seem as though the Waldorf Astoria, which the insurer with close ties to the Chinese government, acquired last year, along with a few Ritz Carltons, Four Seasons, a Hotel del Coronado and the Essex House thrown in for good measure would just about do the trick and appease the firm’s appetite for trophy U.S. hotels.

That is, until the news hit the wires days later that this once obscure Chinese insurer had bid $12.8 billion for Starwood Hotels, which boasts the Sheraton and Westin brands under their banner. It must be buy one, get one at double the price week for those with deep enough pockets, which is saying something about the depth of those pockets considering Anbang has been around for all of 12 years.

If this tale induces a sensation of déjà vu a la Rockefeller Center and Japanese buyers circa 1989, don’t let it. Don’t ask yourself whether the enthusiastic buyers are flush or flushing their yuan down the drain. Be comforted by what the cavalcade of bullish real estate strategist assure. The Chinese are not marking a top; they’re making rationale choices based on models that guarantee price appreciation based on recent trends. Hmmm.

The acquiescent acceptance of acquisition valuations makes the Chinese government’s latest stimulus measures that much starker in contrast. While there is unquestionably dry powder with which to sustain the overseas buying spree, there is also festering rot that needs to be cleansed from their domestic banking system.

And so we hear the latest, that the Chinese government will launch its answer to the U.S. TARP program, wherein Chinese commercial banks swap out bad debts to the government in exchange for equity in said bank. Reported non-performing Chinese bank loans rose to $614 billion in 2015, a decade high, even as their economic growth slumped to a 25-year low. Of course, the aim of the package is identical to that of all stimulus measures launched since 2008 — to spur yet more lending to lift economic growth. More and more yet of the same.

Which brings us to the European Central Bank (ECB) which added non-financial corporate bonds to the menu of fixed income instruments it can buy to achieve its goal of flooding the markets with 80 billion in euros every month so as to…drum roll, please…incentive, more lending. It seems that there were simply not enough sovereign bonds and asset-backed securities to get the job done, and that’s before the ECB expanded its quantitative easing (QE) program from 60 billion euros a month before last Thursday’s meeting

No doubt, with 900 billion euros outstanding, the ECB has an appreciably large pool of assets at which to aim its buyer-not-beware bazooka. A gut check, though, should prompt the question as to why European policymakers are so keen to increase their own QE program when the effort has produced so few results everywhere else it’s been attempted.

A fine point: at roughly $50 billion in outstanding bonds, life insurers top the list of eligible targets for ECB purchases. Just so we understand each other, ECB President Mario Draghi envisions buying non-financial corporate bonds in the sector most damaged by the policies he’s deployed since vowing to do whatever it takes to reignite inflation via record low interest rates. Recall that low interest rates are the bane of insurance companies that depend on reasonably high interest rates to make good on the long-term promises they’ve made to those who pay stiff premiums in exchange for those promises.

All of this is not to say that QE the world round has not had some redeeming qualities, especially for the uber wealthy who need never deign to Uber anywhere. Tally up China, the United States, India and the rest of the world and you find that worldwide billionaires now number 2,188, up 99 from 2014. Their collective net worth grew nine percent to $7.3 trillion last year alone, a figure that eclipses the GDPs of Germany and the U.K. combined. Jolly right, Herr.

So why is it the world’s central bankers are tripping over each other in an embarrassment of stitches to patch the splitting seams of the world economy with ineffectual sewing tools they’ve determined give new meaning to the other embarrassment, that of riches?

One thing is for certain. All of this quantitative pleasing has done little to lift the spirits of the world’s worker bees. Take the latest report on retail sales here in the U.S., which the Lindsey Group’s Peter Boockvar characterized as “mediocre” at best due to the current level of growth over the last year coming in at 2.9 percent. Not only is it punk compared to the five-year average of 3.5 percent; it’s downright depressed looking further back. In the boom-boom days of the dotcom bubble, spending was running at a 5.4-percent rate. Meanwhile, spending averaged 5.0 percent in the mid-2000s “goosed by mortgage equity withdrawals.”

Clearly, central bankers’ efforts are suffering from the law of diminishing returns, the phenomenon of benefits gained declining as a factor of the amount of money and energy invested. For now, at least, the other major player, the Bank of Japan, is standing down, perhaps because of the huge backlash to negative interest rates in that country. It remains to be seen, though, how long policymakers there will withstand a strengthening yen before succumbing to another stab at stimulus measures.

As for the Federal Reserve, the dichotomous signals the labor market and retail sales data have recently imparted are bound to have made the enunciating of “on the other hand” in today’s FOMC statement that much more challenging and maybe even a little embarrassing. The risk is always acute that the message gets lost in translation from Fedspeak to plain English as translators from days long since gone could easily attest. Perhaps, had central bankers simply taken to heart that well known idiom that cautions ‘a stitch in time saves nine’ early on, they would not now be so franticly stitching such a gaping gash in the world economy.


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