Tagged: doom

Bill White speaks

If there is one man that Blondemoney has ’nuff respect for, it’s Bill White, formerly chief economist of the BIS and the only person who vocally and sensibly warned about the financial crisis before 2008. So even though this article is written by the perma-panicker Ambrose Evans Pritchard at the Telegraph, take note of Mr White’s comments, from Davos:

On FX:
“We are in a world that is dangerously unanchored….We’re seeing true currency wars and everybody is doing it, and I have no idea where this is going to end.”
“The Japanese are now doing it as well but nobody can complain because the US started it”

On the impotence of QE:
“Sovereign bond yields haven’t been so low since the ‘Black Plague’: how much more bang can you get for your buck?”

QE won’t work in Europe: “Even after the stress tests the banks are still in ‘hunkering down mode’. They are not lending to small firms for a variety of reasons. The interest rate differential is still going up”

The dash to QE is being done in an “unthinking fashion”. Those who think the UK and US benefit because they started QE first are confusing “correlation with causality”

On inflation:
“There is a significant risk that this is going to end badly because the Bank of Japan is funding 40pc of all government spending. This could end in high inflation, perhaps even hyperinflation.”
Central banks: “They have created so much debt that they may have turned a good deflation into a bad deflation after all.”

On EM:
“The emerging markets got on the bandwagon by resisting upward pressure on their currencies and building up enormous foreign exchange reserves. The wrinkle this time is that corporations in these countries – especially in Asia and Latin America – have borrowed $6 trillion in US dollars, often through offshore centres. That is going to create a huge currency mismatch problem as US rates rise and the dollar goes back up.”

On the SNB:
“The only choice they had was to take a blow to the left cheek, or to the right cheek”

And finally….

“It ain’t over until the fat lady sings. There are serious side-effects building up and we don’t know what will happen when they try to reverse what they have done.”

The Day Today 8 August 2014

No surprise that Oil higher, stocks lower, and bonds, yen, swiss francs all up on the Iraq news. This “risk-off” wobble has been floating around ever since inflows into the overly exuberant junk bond market started to ebb a few weeks ago. From here, it’s a question of when the longer-term buy-on-dips crew emerge. Given that it’s summer, they may take their time. For the dollar, the plunge in US yields is significant – watch for 2.25% on the 10yr for signs of capitulation.

* Obama authorises targeted air strikes on Iraq http://on.ft.com/X60TdJ

* Biggest weekly outflow for junk bond funds, after July recorded the first losses in those funds since the taper tantrum last year {fifw NSN N9YP9H6JTSEU <go>} http://bit.ly/XLhfIE

* But RBI’s Rajan warns that it’s not credit markets that are frothy per se – it’s assets in general: ‘The problems arising are not so much from credit growth, which is relatively tepid in the industrial markets and has been much stronger in emerging markets, but from asset prices due to financial risk-taking and so on… Financial sector crises are not as predictable…The risks build up until, wham, it hits you” http://on.ft.com/1pfYhnO

* Much larger than expected China trade surplus suggests the PBOC will continue to be vigilant on inflows http://cnb.cx/V2A8oO

* EU stands ready to support farmers from sanctions fallout http://on.ft.com/XKXMI6

* What would shake the BOJ from their complacency? http://bloom.bg/1lGx4FQ

* RBA Lowers Growth, Inflation Forecasts; Says Rates on Hold http://bloom.bg/1onQSCO

* Take two Fed officials with similar backgrounds, present with data, and see diametrically opposed outcomes: Fisher vs Lockhart http://on.wsj.com/1lGxmww

* UK house prices more than 5x earnings, says the Halifax http://bit.ly/1zWKlT4

* And tomorrow’s headlines:
– Exploded cardinal preaches sermon from fish tank
– Aristocrat’s dung saves village from flood
– and Where now for man raised by puffins?

The Day Today 1 July 2014

* Fed’s Williams on rate rises “I still see that as sometime off”, data are “consistent” with mid 2015, but there is “uncertainty about where interest rates will go” based on forecasts by the FOMC. “I’ve been supportive of moving away from putting out communication that seems to say ‘the Fed is going to do this'” {fifw NSN N7ZUM16KLVR9 <go>}

* PIMCO Chief Economist sees rate rises in about a year {fifw NSN N80PL66JIJWC <go>}


* China Manufacturing Expands at Fastest Pace in 2014 as Economy Stabilizes {fifw NSN N80LT86K50YX <go>}

* China Gives Banks More Lending Capacity by Changing Loan Ratio http://bit.ly/1o24EI0


* RBA Holds Rates at Record Low as High Aussie Impedes Transition: The currency “is offering less assistance than it might in achieving balanced growth in the economy.” {fifw NSN N80PU36JIJV6 <go>}


* As they swallow a $9bn fine, BNP Paribas Seen Rerouting Dollar Clearing to Prevent Customer Defections {fifw NSN N80GRJ6KLVR5 <go>}


* Japan’s Companies Plan Investment Boost Even as Tax Rise Damps Sentiment: large companies plan to raise capital spending by 7.4% this fiscal year, above 6% forecast and higher than three months ago {fifw NSN N80KC56K50XU <go>}


* Russian Stocks Head for Lowest Level in a Month as Ukraine Cease-Fire Ends {fifw NSN N80UFQ6S973E <go>}


* Globe & Mail: The BIS singles out Canada, Australia, Sweden and other “small advanced economies” for maintaining ultra-low interest rates, pushing back a return to more normal levels. This has prompted a surge in credit growth – and housing values – relative to gross domestic product that is far beyond historic standards. http://bit.ly/TyAi6c


* Don’t forget about the weather: India Records Lowest June Rainfall in Five Years as El Nino Factor Looms {fifw NSN N80J1N6TTDS5 <go>}


The Day Today 28 Feb 2014

* Ukraine’s New Government Looks to IMF Bailout as Tensions Flare in Crimea {fifw NSN N1P31L6TTDSG <go>} Headlines this morning include: *SEVASTOPOL’S BELBEK AIRPORT BLOCKED BY RUSSIAN TROOPS: AVAKOV, *AVAKOV SAYS CRIMEAN AIRPORT OCCUPATION IS ARMED INTRUSION
* The sell-off in the Chinese yuan continues, with the PBOC “almost paying their own offer” as someone put it to me, with the currency hitting the weak end of the band

* Ahead of the ECB meeting next week, which will bring new staff projections out to 2016, and therefore provide a reason to do something…. Draghi Says ECB Ready to Act to Counter Downside Inflation Risks – “Inflation remaining low for a prolonged period of time is a risk in itself,” Draghi said yesterday. {fifw NSN N1OBRY6TTDSN <go>}

* Though ECB’s Jazbec said yesterday “Its a question whether it would be enough only to cut interest rates” – so will they opt for something more unconventional? We already know the Bundesbank have crossed the rubicon and said they’re not ideologically against unsterilising the SMP purchases (i.e. adding liquidity)
* London Gold Fix Shows Signs of Being Manipulated for Decade, Study Finds {fifw NSN N1O3OS6K50YN <go>}
* Japan’s GPIF cut domestic bond holdings to the least since the fund’s inception in 2006 and said it will invest in infrastructure {fifw NSN N1P65W6JIJVI <go>}
* In the shortest month of the year, a good short was hard to find…global stocks, bonds and commodities rose together for the first time in 7 months {fifw NSN N1OKVZ6JTSE9 <go>}
* Times: Auld acquaintance forgot as Scots firms threaten to go south of border http://thetim.es/1mK1Gvh
* WSJ: China’s top legislative body Thursday designated two new national days aimed at highlighting Japanese aggression during WW2 http://on.wsj.com/1fvrNfG
* Tonight the BBC will broadcast a documentary about war time London. People lived different lives then and did different things.

The Day Today 3 Oct

* Good summary of mkt reaction and how things could get messy from here, by Gavyn Davies: “Why have markets ignored Washington risk?” http://on.ft.com/1a1ttN2

* Shutdown will not slow Fed nomination, says Obama http://on.ft.com/15NiGUq * ‘The partial shutdown of the federal government is leading to layoffs and production disruptions at defense contractors and some manufacturing companies’ http://on.wsj.com/156gJoF * Bank CEOs Discussed Consequences of Default in Obama Meeting {NSN MU1XT96S9738<GO>} * (Non-voting dove) Rosengren Says Budget Conflict Warranted Forgoing QE Taper {NSN MU1ZCQ0D9L35<GO>}

* WSJ: Letta Hangs On but Bigger Challenges Abound http://on.wsj.com/GAum6J * FT: Berlusconi’s defeat is Italy’s victory {NSN MU1ZH83H65TS<GO>} http://on.ft.com/1g6fMBt

* Draghi Said to Task ECB Panel to Consider Bank Liquidity Options {NSN MU20SP6KLVRM <GO>} * ‘Nobody wants a liquidity accident’: Draghi Warns Europe’s Banks ECB Long-Term Loans Shouldn’t Replace Capital {NSN MU2Z0Q6JTSEI <go>}

* Kenneth Rogoff in FT: Britain should not take its credit status for granted http://on.ft.com/1bsQH4h * BOE Carney: Won’t Tighten Until UK Economy Growing Sustainably {NSN MU22736S972A<GO>} * BOE Fisher in the Mirror: Wages to rise and squeeze on family finances to end http://bit.ly/1a1tSPv

* China Services PMI 55.4 from 53.9 * Philippines upgraded to investment grade  {NSN MU2Z4Z6S973A <go>}