Tag Archives | US Federal Reserve

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US Fed’s QE2 programme hits consumer confidence, raises mortgage rates

Last November, the Chairman of the US Federal Reserve justified his $600bn QE2 programme to boost financial markets by claiming “higher stock prices will boost consumer wealth and help increase confidence“, whilst also leading to “lower mortgage rates“. And stock prices have indeed risen. As the above chart from PetroMatrix shows, there has been an […]

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Facts of the week

The Financial Times reports two interesting facts: • Japan’s leading seismologist warned Tokyo Electric Power in June 2009 that “tsunamis of a completely different scale have come before” in the region of the Fukushima Daiichi nuclear plant. One, in 869, had “destroyed a castle“. But no changes were made to the plant’s defences. • The […]

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The super-computers even confuse Bloomberg

The blog has worried for some time about the growing dominance of super-computers in financial markets. Their activities are based on arbitrage between markets, not on fundamental analysis. And their power means that no financial market now knows what it is actually pricing. The headlines above, from today’s Bloomberg Energy page, highlight the issue. Even […]

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‘Correlation trade’ keeps energy costs rising

After the events of the past few days in Egypt, it seems timely to look at the latest state of the ‘correlation trade’ currently ruling global financial markets. As the chart shows, prices for WTI crude oil (green line), continue to follow those of the S&P 500 (blue) in most remarkable fashion. The trade is […]

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The $600bn man

In October 2008, the blog featured the US Treasury official responsible for running the $700bn TARP rescue fund. He was 35 years old, and just 6 years out of business school. Apparently there was nobody available with more experience to take on the role of “choosing which US financial institutions live, and which die“, during […]

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Pressure mounts on US Fed’s QE2 Lifeboat

The US Fed’s new QE2 Lifeboat programme designed to raise asset prices got off to a bad start last week, with most stock markets falling, rather than rising. It has also begun to run into major opposition from advisors to the new Republican-dominated Congress, with an open letter published Monday in the Wall Street Journal […]

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Warsh calls for “better policies” as G-20 meets

US Fed Governor Kevin Warsh is one of the few policymakers to focus on reality rather than wishful thinking. He pointed out nearly 3 years ago that liquidity should not be mistaken for capital, although others continue to ignore this uncomfortable fact. Now, in advance of tomorrow’s G-20 meeting of the world’s richest economies, he […]

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Chemicals set for “strong” year-end as oil jumps 7%

Last week, the blog repeated its warning that crude oil was preparing for a big move, either up or down. And prices then jumped 7%, to a two-year high of $87.49/bbl. So the ‘triangle formation’ proved its predictive power again. As the above chart shows, from Petromatrix, the driver behind the move was the Large […]

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US wages continue to stagnate

The US Fed’s move to launch its QE2 Lifeboat continues its policy of focusing on measures to boost liquidity. Yet as the blog has long argued, today’s problems are based on a lack of solvency not liquidity. Therefore it worries that the Fed’s efforts are likely to miss the mark, again. The above slide, based […]

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US Fed launches its $600bn QE2 Lifeboat

So now its official. This week, the US Federal Reserve confirmed it was launching its ‘QE2 Lifeboat’. It will inject $600bn into the US economy, in yet another bid to kick-start full economic recovery. Clearly, this is a major initiative by the world’s most important central bank. Will it work? And what might it mean […]

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