“We’ve intentionally blown the biggest government bond bubble in history,” confessed Andy Haldane, Director of Financial Stability at the Bank of England. The bursting of that bubble was a risk he felt “acutely.” He saw “a disorderly reversion” as the “biggest risk to global financial stability.” Seatbelts are being fastened; the clicks can be heard around the world.
Federal Reserve
The Day The Big Fat Junk-Bond Bubble Blew Up
by Wolf Richter • • Comments Off on The Day The Big Fat Junk-Bond Bubble Blew Up
Junk bonds had a phenomenal run. With each truckload of money that the Fed delivered to the markets, valuations soared and yields plunged. Desperate investors, mauled by the Fed’s zero-interest-rate policy, took on risks no questions asked. But suddenly the feeding frenzy turned into a brutal rout – a harbinger of things to come in other markets.
Jobs Barely Keep Up With Population Growth
by Wolf Richter • • Comments Off on Jobs Barely Keep Up With Population Growth
So, 175,000 jobs were created in May. The gains for March and April were revised down by 12,000. The unemployment rate ticked up to 7.6%, from 7.5%, or as the BLS said in its politically correct manner “was essentially unchanged.” With disturbing racial disparities that we’ve become inured to. A showcase of the dreary impact of the Fed’s policies on jobs!
Fed’s Fisher Hilariously Slams Fiscal-Policy Chaos, Slugs QE, And Throws In Funny Video Spoof of Congress
by Wolf Richter • • Comments Off on Fed’s Fisher Hilariously Slams Fiscal-Policy Chaos, Slugs QE, And Throws In Funny Video Spoof of Congress
Every President His Bubble – And Its Aftermath
by Wolf Richter • • Comments Off on Every President His Bubble – And Its Aftermath
During their second term, Presidents become obsessed with “legacy.” One of the yardsticks to measure success is the stock market. Many people can relate to it. Retirement depends on it. It’s mentioned even on NPR several times a day. Outside of a few shorts, everyone wants it to go up. But President Obama must now be biting his fingernails down to the quick.
“The Mother Of All Shorts”
by Wolf Richter • • Comments Off on “The Mother Of All Shorts”
The Dow and S&P 500 are stumbling like drunken but determined sailors from one all-time high to the next, despite lousy employment and economic data, and declining corporate revenues. Bonds have done the same, and their 100-year graph has assumed the terrifying shape of open crocodile jaws, worse even than in 1999 and 2007.
The Infallible Fed At Verge Of (Not) Admitting Failure
by Wolf Richter • • Comments Off on The Infallible Fed At Verge Of (Not) Admitting Failure
“Labor market conditions are affected by factors outside a central bank’s control,” admitted Richmond Fed President Lacker as the employment report bounced around the world. Yet for years, the Fed has proclaimed that the heroic motivation for its selfless money-printing mania was the deep desire to improve the unemployment fiasco for average Americans.
Aftermath Of A Bubble And What Rises From The Ashes
by Wolf Richter • • Comments Off on Aftermath Of A Bubble And What Rises From The Ashes
Bubbles are a funny thing. Participants don’t see them. Outsiders shake their heads, then get sucked in themselves. Central banks create them but deny their existence. Money piles in on top of money. Risks no longer exist. Result: mayhem, capital destruction, devastation of the industry…. and a new beginning for the lucky ones. Take natural gas.
“During The Last Crisis, We Had China,” Now We Have No One
by Wolf Richter • • Comments Off on “During The Last Crisis, We Had China,” Now We Have No One
There could not possibly be any clouds on the horizon with the Dow and the S&P 500 setting all-time highs, while the German DAX is marching relentlessly towards 8,000 and the Japanese Nikkei is soaring. But just then, a deeply connected representative of the world’s real economy spoils the rosy scenario.