Federal Reserve

Lousy Jobs Data: Five Years Of QE Fail, Yet Fig Leaf For Taper

by Wolf Richter •  • Comments Off on Lousy Jobs Data: Five Years Of QE Fail, Yet Fig Leaf For Taper

Today’s employment report is special. Exactly five years ago, the Fed kicked off its zero interest rate policy and QE to create the “wealth effect”: the elite would borrow for free and buy assets to drive up asset prices and make those people immensely rich; in return, they’d spend some crumbs of this new wealth, which would create jobs, say, at luxury retailers.

Plagued By Indigestion, Fed Issues Asset-Bubble Warning

by Wolf Richter •  • Comments Off on Plagued By Indigestion, Fed Issues Asset-Bubble Warning

Hidden in the middle of the 25-page minutes of the last meeting, under the most wooden and convoluted prose, the Fed issued a doozie of a warning: it fretted about financial stability. It named soaring forward P/E ratios, stock buybacks, margin credit, and leveraged loans.

Bernanke’s Delirious Praise For His Handiwork, The Concentration Of Power At the Top Banks

by Wolf Richter •  • Comments Off on Bernanke’s Delirious Praise For His Handiwork, The Concentration Of Power At the Top Banks

Bernanke wanted to reflect on the “accomplishments of the past eight years,” demolish the “sceptics” that still doubted the Fed was the best thing since sliced bread, and pat himself on the back. His policies “have helped promote the recovery,” he said. The “recovery” of what?

Fizzing Optimism For Wild Financial Engineering In 2014

by Wolf Richter •  • Comments Off on Fizzing Optimism For Wild Financial Engineering In 2014

Nothing could have been a more pungent metaphor for the current investment climate than the headline, “Macau gambling revenue hits record $45 bn in 2013.”

So This Isn’t Exactly A Rosy Outlook For 2014, Or Something

by Wolf Richter •  • Comments Off on So This Isn’t Exactly A Rosy Outlook For 2014, Or Something

Central banks rule! We’ve seen it in 2013. They’ve accomplished the impossible: separating stock markets from the economies they’re based on. But in 2014, the US and China are trying to unwind these crazy policies – without taking down the entire global economy.

Cracks Forming In Housing Bubble II (But This Time It’s Different)

by Wolf Richter •  • Comments Off on Cracks Forming In Housing Bubble II (But This Time It’s Different)

Number one is Palo Alto, epicenter of Silicon Valley craziness, where home prices are now 40% higher than they were at their prior bubble peak. What are we calling this phenomenon? Bubble? Nope. “Housing recovery.” But the middle class has hit a wall.

What Happens Next, Now That The 10-year Treasury Yield Hit The Psycho-Sound Barrier Of 3%

by Wolf Richter •  • Comments Off on What Happens Next, Now That The 10-year Treasury Yield Hit The Psycho-Sound Barrier Of 3%

Treasuries have been skidding, and the 10-year yield hit the psycho-sound barrier of 3%. What happened last time this phenomenon occurred? Well, yields bounced off and fell – because the mayhem they’d triggered gave the Fed conniptions and caused it to back off.

Financial Engineering Wildest Since The 2007 Bubble

by Wolf Richter •  • Comments Off on Financial Engineering Wildest Since The 2007 Bubble

Financial engineering had a glorious year. Now finally, after five years, the crazy fun is back, and the good thing is: this time, it’s different. This time, the smart money is selling!

The Multi-Pronged Mortgage Debacle Next Year (So Long, “Housing Recovery”)

by Wolf Richter •  • Comments Off on The Multi-Pronged Mortgage Debacle Next Year (So Long, “Housing Recovery”)

Now part three, after soaring home prices and mortgage rates. It was drowned out by the hullaballoo over the Fed’s taper announcement. It came from Fannie Mae and Freddie Mac. It will drive up mortgage payments even more.

Junk-Debt Time Bomb: Ticking Till The Fed’s Money Dries Up

by Wolf Richter •  • Comments Off on Junk-Debt Time Bomb: Ticking Till The Fed’s Money Dries Up

Discount retailer Loehmann’s did what other retailers – and a large number of other junk-rated companies – will do once the Fed allows a sense of reality into the markets: it filed for bankruptcy. Investors had refused to fund further losses.