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Author: Adam Button

Tough to see how the Fed could survive another financial crisis intact

It's not surprising that the Fed is facing criticism as the economy stagnates. What's shocking where it's coming from and how quickly it's grown aggressive.

It's like a tipping point has been met in the past month and now the knives are out.

In yesterday's WSJ, former Fed Governor and QE supporter Kevin Warsh destroyed the Fed. He said it was filled with groupthink and more concerned about growing its own power than the economy.

Today it's WSJ Fed mouthpiece Jon Hilsenrath who has suddenly bitten the hand that feeds him. His article, titled 'Years of missteps fuelled disillusion with the economy and Washington'.

"Once admired globally for their command of the economic system, central bankers now are blamed by the left and right for bailouts during the financial crisis and for failing to foresee and manage forces suffocating the global economy in its aftermath," Hilsenrath writes.

In other words: You promised us all the answers, we trusted you and you've let us down.

No cult of personality at the Fed

One of the problems at the Yellen herself. Even for a central banker she's bland. That's oftentimes an advantage but in a world that's looking for inspiration, she's lacking. Earlier in her tenure she projected some certainty and confidence but after getting burned on a series of poor forecasts she's unsure and hesitant.

The bigger part of the problem is political. The Fed and other central banks have become easy punching bags for politicians who don't have any solutions of their own. The risk is that all the complaining forces them to reshuffle the Fed.

Then what? You might end up with some kind of Donald Trump of central banking.

What's lacking almost everywhere is answers. Few mainstream leaders even pretend to have them but they never lack in criticism. The world is gravitating to people with confidence and solutions, even if they're untried.

Some kind of crisis is coming. I don't think the Fed can survive it intact. Even another few years of lacklustre growth will be the end of Yellen.

Kuroda-style or something else?

What's harder to understand is what's coming next. The BOJ has played every card in the modern central banker deck and has still come up short.

In my ideal world, central bankers would leave rates near zero, forget more QE and defer to politicians for answers. The problem is that politicians appoint central bankers and there's always a yes-man waiting in the wings.

So we're inevitably headed for a world of central bank experimentation and the risks far outweigh any possible benefits.

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Author: Greg Michalowski

EURUSD to break beyond previous high at 1.1366: Morgan Stanley

Targeting 1.1600 Morgan Stanley is out with a Global FX Strategy. Plain and simple. Buy EURUSD. They say: "A weaker USD, looser financial conditions and the Brexit risk event out the way have meant that there are sings of businesses starting to grow around the world.  We are not saying that all is rosy and that growth rates will reach average pre-2007 level, but we believe that the FX markets right now will respond to changes in economic circumstances and surprises. In fact, the MSCI world equity index has become more correlated with global economic surprises"

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Author: Adam Button

Fed's Kaplan: We can afford to be patient on a rate hike

Kaplan on Bloomberg Radio - Expects US GDP growth to rebound in the second half Ahhhhh the H2 rebound prediction, a Fed tradition since 2007. - Progress on inflation goal is frustratingly slow

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Author: Greg Michalowski
1

Crude oil up on the day be remains below MA resistance

200 hour MA capping the topside Crude oil is up marginally today (up 0.45% to $46.97) and traded as high as $47.30, but has been able to remain below the 200 hour MA currently at $47.34. The testing and holding keeps the sellers more in control from that perspective.  

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Author: Greg Michalowski

US auctions 7 years debt at 1.423%

Bid to cover 2.38 vs 2.51 at the previous auction The US treasury auctioned off 7 year debt at a yield of 1.423%. The high yield was less than 1 basis point above the 1 PM when issued level.  

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Author: Greg Michalowski
1

Hard to make a living today

It is what it is I outlined that the 1.3202-10 area was a level where you could expect to see traders leaning.  Well, traders leaned and took the price back to the lows. In fact, the price mad new lows for the day and even fell below the 1.1372 support.

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Author: Adam Button
3

Fed's Kashkari goes to Twitter to fight back criticism

Fed's Kashkari takes a stab at Kevin Warsh Minneapolis Fed President Neel Kashkari didn't like criticism from an op-ed in the WSJ yesterday from former Fed Governor Kevin Warsh.

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Author: Adam Button

Sell a bounce in cable - Westpac

Westpac says to sell a 1.34 handle GBP/USD is down 50 pips to 1.3179 but it's been in a short-term climb lately. If it continues, Westpac is poised to sell. Tim Riddell at Westpac writes:

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Author: Adam Button
29

Trump lags badly in latest poll

Hillary Clinton leads by 10 points in Quinnipiac Poll A poll from Quinnipiac shows Hillary Clinton at 51% and Donald Trump at 41% in a two way race (remainder is undecided).

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Author: Greg Michalowski
2

Forex trading: EURUSD trades at NY session lows as London exits

The low after better Durable goods breached Let's not do cartwheels. After all the NY session in the EURUSD is about 22 pips, but a new NY session low is being mad in the last few minutes of trading as London traders exit for the day. Yippee.  Watching the 1.1270 level next (it is only 4 pips away I know).  It was the swing low from Monday.

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Author: Adam Button
2

Tough to find enthusiasm for Yellen's Jackson Hole speech (and that's the risk)

Banks looking for a ho-hum speech We're seeing more chatter about a disappointing Jackson Hole. The things is, the market has grown awfully complacent in the past two months. Yellen's speech is certainly the biggest thing on the calendar but market watchers have already concluded that she won't say much to  ramp up volatility.

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Author: Greg Michalowski
8

Forex technical analysis: NZDUSD finds support leaning against 100 hour MA

Remains near highs The NZDUSD remains near high levels. Earlier in the week RBNZ Wheeler said that the RBNZ did not see need for "rapid ease".  Although near the high, the price has had a difficult time getting buyers too excited at the levels. Case in point, the recent highs in August took our prior highs but only by a few pips. In other words, there is not a whole lot of momentum on the "breaks".   

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Author: Adam Button
2

Kansas City Fed -7 vs -15 prior

Kansas City area manufacturing index - Prior was -15 (unrevised) - Composite index -4 vs -6 prior There aren't many indicators less market-moving than the KC Fed.

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Author: Greg Michalowski
2

EIA US natural gas stockpiles rose 11 BCF last week.

That is an increase of 0.33% say EIA Inventories rosse by 3.35 trillion cubic feet. The inventories are for immediately available withdrawals. Below is a table of the changes by region and also vs a year ago and the 5-year average.  As the table shows the inventories are higher.

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Author: Greg Michalowski
10

USDJPY may go to 85.00 says Sumitomo Mitsui Banking Corp

BOJ hits policy brickwall Bloomberg is reporting that Daisuke Uno, Tokyo based chief strategist at Sumitomo Mitsui Banking Corp is saying the USDJPY could hit 85.00 as the BOJ policy hits a brickwall.  He speculates that the BOJ may drop its 2-year plan for its inflation target.  

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Author: Adam Button
2

Fed's Kaplan: We should be able to hike rates in 'not too distant future'

Fed's Kaplan on CNBC - Bond market predominantly driven by global search for yield - We are making progress on employment, slow progress on inflation - Case for hiking rates 'strengthening' Kaplan has taken the same slightly-hawkish tone before but there's still good news for the US dollar here and it's a sign of what's to come at Jackson Hole.

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Author: Greg Michalowski
1

Markit Services PMI 50.9 v s 51.8 estimate

Composite 51.5 vs 51.8 last The Markit services PMI came in at 50.9 vs 51.8 estimate. This is down from 51.4 last month. A reading above 50 is consider expanding, but the index is more toward the lower extreme of the historical data.

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Author: Greg Michalowski

US stocks get off to a negative start today

Durable good not helping - two-year note yield 0.7756%, +1 basis point  - five-year note yield 1.1540%, +1 basis point - 10 year note yield 1.5765%,+2 basis points

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Author: Greg Michalowski
5

Forex technical analysis: GBPUSD finding support near a familiar area

Something about 1.3175 area The GBPUSD moved to new session lows after the better US durable goods order data, and a new low for the day was also made at 1.3172 vs 1.3177, but there is something about the 1.3172-77 area in the GBPUSD over the last few days. Looking at the hourly chart below, sans a few bars (one on August 19 and 4 yesterday), the line area has been a dividing area between bulls and bears. Stay above it bullish. Move below it bearish (unless it fails - we always look for momentum on a break).  

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Author: Greg Michalowski
2

Forex technical analysis: USDJPY moves higher after better Durable goods data

Tests day highs but runs into familiar highs. The US durable goods data were better than expectations and that has helped the push the USDJPY a bit higher (the move from low to high has been about 20 pips).  The problem.  We have seen 100.60/61 on two other peaks over the last two trading days.  We need to rise above it technically.  After that the 100.65 trend line and then the log jam should open up. 

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