Tag Archives: John Williams

ZeroHedge: Bernanke’s Testimony to Congress and FOMC Minutes Preview

Posted by on May 20, 2013 Comments Off

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Orginally posted http://www.tothetick.com/bernankes-testimony-to-congress-and-fomc-minutes-preview

THE IMPORTANCE OF BERNANKE’S TESTIMONY

Fed chairman Ben Bernanke’s testimony to Congress will be important in setting the tone for the markets (particularly the dollar, equities and US treasuries), as traders hunt for clues on when the Fed is likely to ease its rate of asset purchases.

The greenback surged last week, with the dollar index reaching a three-year high, on the back of traders’ expectations that improving US economic data will lead the Fed to begin tapering its programme of quantitative easing, possibly as early as the middle of this year.

Minutes from the FOMC’s latest policy meeting in May will follow Bernanke’s testimony. However, it is likely that Bernanke’s testimony may take the edge off this release, in terms of market impact.

FOMC POLICYMAKER UNCERTAINTY

Bernanke’s testimony is crucial, given the mixed messages from Fed officials in recent weeks. For example, Charles Plosser has suggested decelerating the rate of asset purchases, also suggesting that the Fed shortens the duration of the bonds it currently holds.

Some FOMC members, like John Williams, are in favour of tapering asset purchases by the end of this year. On the other hand, Eric Rosengren has argued that now is not the time for the Fed to taper its asset purchases.

And this week, Richard Fisher came out in favour of slowing purchases of mortgage securities, saying the housing sector no longer needs the Fed’s support.

Read more »

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ZeroHedge: Dull Overnight Session Set To Become Even Duller Day Session

Posted by on May 17, 2013 Comments Off

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Those hoping for a slew of negative news to push stocks much higher today will be disappointed in this largely catalyst-free day. So far today we have gotten only the ECB’s weekly 3y LTRO announcement whereby seven banks will repay a total of €1.1 billion from both LTRO issues, as repayments slow to a trickle because the last thing the ECB, which was rumored to be inquiring banks if they can handle negative deposit rates earlier in the session, needs is even more balance sheet contraction. The biggest economic European economic data point was the EU construction output which contracted for a fifth consecutive month, dropping -1.7% compared to -0.3% previously, and tumbled 7.9% from a year before.

Elsewhere, Spain announced trade data for March, which printed at yet another surplus of €0.63 billion, prompted not so much by soaring exports which rose a tiny 2% from a year ago to €20.3 billion but due to a collapse in imports of 15% to €19.7 billion – a further sign that the Spanish economy is truly contracting even if the ultimate accounting entry will be GDP positive. More importantly for Spain, the country reported a March bad loan ratio – which has been persistently underreproted – at 10.5% up from 10.4% in February. We will have more to say on why this is the latest and greatest ticking timebomb for the Eurozone shortly.

Perhaps the most amusing news of the day was Japan’s report of a surge in machine orders in March, up 14.2% on estimates of 3.5% – the biggest one month rise since January 2003. Read more »

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ZeroHedge: Fed Unleashes Another Taper Hint… Or Not

Posted by on May 16, 2013 Comments Off

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Last week it was Fed’s WSJ lapdog hinting at a tapering. Now it is up to the Fed’s own John Williams to provide an even stronger hint at what may be coming as soon as this summer. From Bloomberg:

  • WILLIAMS SAYS FED MAY REDUCE QE IN SUMMER, HALT BY YEAR END

However, promptly following this is the following headline which we can only hope has a typo in it:

  • WILLIAMS: UNEMPLOYMENT WON’T FALL BELOW 6.5% UNTIL MID-2105 (er, sic?)

And just to confuse everyone, as the Fed enjoys doing, here is the conclusion:

  • WILLIAMS SAYS SLOWING QE WOULDN’T MEAN TIGHTENING IN POLICY

Bottom line: nothing will change.

    

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ZeroHedge: Surging Q1 Japan GDP Leads To Red Nikkei225 And Other Amusing Overnight Tidbits

Posted by on May 16, 2013 Comments Off

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In a world in which fundamentals no longer drive risk prices (that task is left to central banks, and HFT stop hunts and momentum ignition patterns) or anything for that matter, it only makes sense that the day on which Japan posted a better than expected annualized, adjusted Q1 GDP of 3.5% compared to the expected 2.7% that the Nikkei would be down, following days of relentless surges higher. Of course, Japan’s GDP wasn’t really the stellar result many portrayed it to be, with the sequential rise coming in at 0.9%, just modestly higher than the 0.7% expected, although when reporting actual, nominal figures, it was up by just 0.4%, or below the 0.5% expected, meaning the entire annualized beat came from the gratuitous fudging of the deflator which was far lower than the -0.9% expected at -1.2%: so higher than expected deflation leading to an adjustment which implies more inflation – a perfect Keynesian mess. In other words, yet another largely made up number designed exclusively to stimulate “confidence” in the economy and to get the Japanese population to spend, even with wages stagnant and hardly rising in line with the “adjusted” growth. And since none of the above matters with risk levels set entirely by FX rates, in this case the USDJPY, the early strength in the Yen is what caused the Japanese stock market to close red.

Europe had a quiet session, with April CPI frozen at 1.2% Y/Y and -0.1% M/M, same as last month, same as expected. Trade data came a tad stronger than expected with the trade balance for March printing at €18.7 billion compared to the €11.5 billion expected, up from €12.7 billion. Read more »

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ZeroHedge: The Annotated Hilsenrath

Posted by on May 12, 2013 Comments Off

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In a weekend dominated by discussion of the "Taper Tantrum", i.e., interpretations of what Hilsenrath "said" after the close on Friday, what the Fed wanted him to say, what the market's response to what he said or did not say would be, and what the next steps may be, we present this convenient annotation of Hilsenrath's complete recital courtesy of Mike O'Rourke from Jones Trading.

Hilsenrath Highlights

The WSJ’s Jon Hilsenrath published a story Friday evening titled “Fed Maps Exit From Stimulus – Timing of Wind-Down Is Uncertain, but Focus Is on Managing Unpredictable Market Expectations.”  We suspect the twitter taper caper on Thursday opened the window for the FOMC to provide some clarity as to where policy stands.  Here are some key questions.  Is this story important?  Can it be taken at face value and should markets move?  The answer is yes, yes and yes.  The WSJ placed the article prominently on the cover of the Saturday edition, so they believe they have an important story.  It is a Hilsenrath story, and in the post-recession QE era the Fed has used him to foreshadow almost every major monetary policy move.  Finally, in a tape where QE is the dominant theme, any indication of policy slowing or reversing course is meaningful.

We think the headline in and of itself is interesting “… Focus Is on Managing Unpredictable Market Expectations.” Are market expectations really highly unpredictable?  Has this Fed done anything done but promise excessive monetary support for the US economy?  The market only expects what the Federal Reserve has conditioned it to expect.  Nearly every time the stock market dipped over the past 3 years, a new asset purchase program was launched. Read more »

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ZeroHedge: The Next Capital Control: Banning The €500 Bill

Posted by on April 9, 2013 Comments Off

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As SF Fed’s John Williams notes (here), cash is king, but the strange thing is that while credit/debit transactions rise exponentially, the cash in circulation is also rising at a rapid pace. So where does all the cash go? The short answer is into large-denomination bills and out of the country by his findings. While low denomination bills suffer (as we discussed here) it is worth asking who is ‘hoarding’ the $100 bills? This is the question that BofAML asks in Europe as the huge EUR500 Bill (the developed world’s highest value note in circulation) remains in great demand (apparanelty by shady offshore types). This is not good news for the central banks of the world as they run dry of monetary policy tools to drive velocity in money (or spending).

BofAML’s proposal: Ban the EUR500 Bill; force those shady people who ‘stack’ these high denomination bills to spend that money into circulation. This would appear to be the latest ‘capital control’ strawman, ‘floated’ to eliminate the people’s right to keep cash segregated from a banking system and out of broad electronic circulation. So in both the US and Europe, high denomination bills are being hoarded (or exported to ‘safe’ havens) as Williams notes, “around the world, during periods of political unrest or war, cash – especially the currency of a stable country… – is seen as a safe asset that can be spirited out of harm’s way with relative ease.”

This, of course, is not what the elites want – and we suspect a “ban the EUR500 Bill” legislation will be coming soon to the EU Commission.

The US Fed is worried about it (pdf here)

According to one estimate, the share of U.S. currency held abroad rose from about 56% before the tumultuous events of the past five years to nearly 66% in 2012. The chart below shows the surg ein high denomination notes dominates the low (sub-$50) deonomination for currency in circulation…

Read more »

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ZeroHedge: The Fed’s Own Fear Scale Soars: Holdings of Cold Hard Cash

Posted by on April 9, 2013 Comments Off

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Wolf Richter   www.testosteronepit.com   www.amazon.com/author/wolfrichter

In 1969, notes greater than $100, including the cool $10,000 note  that would still pay for a lot of things, were retired due to “declining demand.” Prematurely, it turns out. Because demand for cold hard cash, despite plummeting use of it for transactions, has surged. Reason: fear.

Modern payment technologies have been taking over transactions. Since 2000, transaction volume via debit cards skyrocketed 18.4% per year, electronic bank transfers 13.5% per year, and credit cards 3.7% per year, reported San Francisco Fed President and CEO John Williams in “Cash Is Dead! Long Live Cash!” Conversely, use of checks dropped by 5.8% per year.

Cash does have advantages: it’s reliable even during blackouts or after earthquakes when nothing works anymore; and it’s anonymous so that companies can’t track you when you by pita bread and hummus, information that years later might lead a promotion-hungry genius at some counter-terrorism office to send drones after you. Read more »

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How to Survive the Illusion of Recovery

Posted by on February 9, 2013 No comments

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theaureport.com / By JT Long / February 8, 2013

There is no economic recovery, and there are no signs that a recovery is coming, says Shadowstats.com author John Williams. In this Gold Report interview, he blames mal-adjusted inflation statistics for creating an alternate reality that overestimates economic activity in a way that is unsustainable. Williams warns that eventually the painful truth will be so difficult that even government manipulation won’t be able to deny it and that is when hyperinflation will take its toll on those who have not taken his advice for preserving purchasing power and securing wealth.

The Gold Report: The last few years have been very volatile for investors, particularly resource equity investors. The mainstream media, citing government statistics of improved employment rates and housing starts, called an end to the recession and is forecasting a slow recovery in 2013. You are looking at the same indicators, but coming up with different numbers. Let’s start with the unemployment rate. What are you seeing and why is it different than what we are hearing everywhere else?

John Williams: I contend that the economy effectively hit bottom in June 2009, followed by a period of somewhat volatile stagnation, and it is beginning to turn down anew. There never was a recovery and no economic data shows the type of recovery that the official gross domestic product (GDP) report is showing. The GDP shows levels of activity now that are above where the economy was before the recession. It’s been above that level now for more than a year. No other major economic series has shown a full recovery, shy of perhaps inflation-adjusted retail sales, which is due to a problem with the inflation rate used to adjust the series. Generally, the illusion of recovery has resulted from the government’s use of understated inflation.

TGR: Are you predicting a double-dip recession?

JW: It’s more like the pattern a fellow would take going off a ski jump. A plunge and then moving forward, maybe up a little bit and then plunging anew. The economy officially will be recognized as a double-dip recession at some point, but in reality it’s all part of the ongoing economic crisis that we’ve seen for the last five or six years.

READ MORE

Thanks to BrotherJohnF

ZeroHedge: Precious Metals Surge Ahead Of Today’s "Uneventful" FOMC Meeting

Posted by on January 30, 2013 Comments Off

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As soon as the much-weaker-than-expected GDP print hit the tape this morning, precious metals began to rise. Led by Silver, it appears the physical demand of recent weeks is creeping into the reality of prices (suppressed or otherwise) as bad is good enough for moar help from Ben and his buddies. The upward move in the PMs is as good a predictor of what to expect (i.e., not even a hint of tightening) as the sell-side crew, which is expecting merely another boring FOMC statement.

 

Via Goldman Sachs,

  • After substantial policy changes announced at the December FOMC meeting – including a shift to outcome-based forward guidance and the introduction of open-ended Treasury purchases – the January meeting will likely be relatively uneventful.
  • We expect few changes to the statement, with the economic assessment relatively unchanged. Any changes to the language around Treasury and MBS purchases may be important clues about future balance sheet policy.
  • With 4 new voters for 2013, we see some risk that St. Louis Fed President Bullard or Kansas City Fed President George will dissent, although we do not see this as a foregone conclusion.

Following the substantial policy changes announced in December – including the shift to outcome-based forward guidance and the introduction of open-ended Treasury purchases – the January meeting will likely be relatively uneventful. Although data surprises according to our US-MAP have on net been negative over the inter-meeting period, we expect few changes to the economic assessment.

Read more »

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ZeroHedge: Guest Post: Monetary Malpractice – Dysfunctional Markets

Posted by on January 27, 2013 Comments Off

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Via Gordon T. Long of GordonTLong.com,

One of the first axioms of analysis is: “Garbage In, Garbage Out”! If your data is flawed, everything you do with it and the decisions stemming from it are flawed and dangerous to your financial health. Experienced analysts will often be found relentlessly checking, rechecking and validating their inputs and assumptions.

If only our economists and the sell side analyst community were this diligent. But then it isn’t their money. Only a year-end bonus for the ‘extras’ in their life is at risk.

If economic practitioners were held to higher standards of accountability, they simply wouldn’t accept the raft of fundamental data points that are the pillars of most economic assessment. I am talking specifically about government inflation numbers such as CPI and PPI, the Deflator and GDP growth statistics and true debt levels using sound GAAP accounting principles and reflecting off balance sheet special purpose entities, contingent liabilities and financial guarantees. The list of government reporting irregularities is pervasive and for unknown reasons, simply accepted.

It is incredulous that we can just accept, without challenging, the statistical hyperbole of Hedonics, Substitution, Imputation and Proportional Distribution, justifying inflation numbers that don’t even pass the common sense of an unemployed high school dropout. I don’t mean to disparage the high school dropout, but I do point the figure at the ‘six figure’ analysts who accept this tripe as gospel, and from whose analysis fiduciary investment decisions are made with the unsuspecting public’s hard earned savings.

This problem has been going on long enough that flawed data has resulted in broad based asset mispricing and malinvestment.  Data points have become so distorted, as to be delusional, and have left the markets dysfunctional. Read more »

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