In central banking as in diplomacy, style, conservative
tailoring, and an easy association with the affluent count greatly and results
far much less.
Did the Fed’s Plunge
Protection Team screw up on Thursday’s close, or did they send a signal that
things have changed, and that the Fed is finally ready and willing to allow for
a correction in the US stock market? The
PPT generally stabilises the final hour’s trading, usually via the S&P
futures contracts, so was Thursday a signal or did someone merely bungle the
close? Is it still “buy the dip,” or has the game changed at the central banks?
Either way, it was
carnage, fear and uncertainty, coupled with massive paper wealth destruction
across the planet. Though the central banksters managed to prevent a Black
Friday in US stocks, the wealth destruction let loose in the system has hardly
begun to play out. The next Lehman just took a giant leap closer, but where?
America, China, or Europe?
Below, when rigged central
banksterism fails, even the one percent get taken to the cleaners.
It’s morally wrong to let a sucker keep his money.
Ebenezer Squid, with apologies to W. C. Fields.
Dow bounces more than 300 points Friday, but still posts worst week in 2 years
- The Dow Jones industrial average swung more than 1000 points in volatile trading Friday.
- The Dow and the S&P 500 both ended the week 5.2 percent lower, their worst performance since January 2016.
- The Dow average experienced two drops of more than 1,000 points and two gains of more than 300 points during this volatile week.
https://www.cnbc.com/2018/02/09/us-stock-futures-dow-data-earnings-market-sell-off-and-politics.html
Worst Week in 2 Years for Stocks Ends on High Note: Markets Wrap
By Sarah Ponczek and Randall Jensen
Updated on 9 February 2018, 21:21 GMT
U.S.
equities ended their worst week in two years on a positive note, but rate-hike
fears that pushed markets into a correction remain as investors await American
inflation figures on Feb. 14.
The S&P
500 tumbled 5.2 percent in the week, its steepest slide since January 2016,
jolting equity markets from an unprecedented stretch of calm. At one point,
stocks fell 12 percent from the latest highs, before a furious rally Friday
left the equity benchmark 1.5 percent higher on the day. Still, the selloff has
wiped out gains for the year.
Signs
mounted that jitters spread to other assets, with measures of market unrest
pushing higher in junk bonds, emerging-market equities and Treasuries. The Cboe
Volatility Index ended at 29, almost three times higher than its level Jan. 26.
. The VIX’s bond-market cousin reached its highest since April during the week,
and a measure of currency volatility spiked to levels last seen almost a year
ago.
Pressure on
equities came from the Treasury market, where yields spiked to a four-year
high, raising concern the Federal Reserve would accelerate its rate-hike
schedule. Yields ended the week at 2.85 percent, near where they started, as
Treasuries moved higher when equity selling reached its most frantic levels.
Commodities including oil, gold and industrial metals moved lower Friday. The
dollar, euro and sterling all declined.
Traders are
now focusing on next week’s U.S. consumer-price data after a week in which the
10-year yield pushed as high as 2.88 percent. Equity investors took the signal
to mean interest rates will rise as inflation gathers pace, denting earnings
and consumers’ spending power.
More
February 9, 2018 / 12:26 AM
U.S. stocks end bumpy week up sharply; oil prices drop three percent
NEW YORK (Reuters) - U.S. stocks ended with a more than 1
percent gain on Friday after another session of whipsaw trading, though the Dow
and S&P 500 posted their biggest weekly losses since January 2016.
“I don’t see
any reason to think that we’re setting a pattern for next week or the rest of
the year. The only pattern we’re setting is more volatility,” said Rob Stein,
chief executive officer of Astor Investment Management in Chicago.
The Dow had
a more than 1,000-point difference between its high and low. Wall Street’s fear
gauge, the Cboe Volatility Index, also known as the VIX .VIX, ended lower on
the day but it remained well above its recent trading range.
Benchmark
10-year note yields closed a volatile week little changed as stocks gained and
investors were likely wary of holding positions over the weekend. Oil prices
fell more than 3 percent.
----European shares fell 5.3 percent for the week, their biggest weekly drop since January 2016, and an index of world stocks also suffered its largest weekly percentage drop since January 2016. It was barely higher on Friday.
The pan-European FTSEurofirst 300 index .FTEU3 lost 1.40 percent and MSCI's gauge of stocks across the globe .MIWD00000PUS gained 0.04 percent.
Emerging market stocks lost 1.74 percent.
Earlier, the Shanghai Composite Index .SSEC tumbled as much as 6.0 percent to its lowest since May 2017, and the blue chip CSI300 index .CSI300 dived 6.1 percent.
More
Stock and bond investors are now paying the price for the Fed’s dangerous experiment
Thu, 02/08/2018
The Federal Reserve’s changing
of the guard — the end of the Janet Yellen’s tenure and the beginning of the
Jerome Powell era — has me remembering what it was like to grow up in the
former Soviet Union.
Back then, our local grocery
store had two types of sugar: The cheap one was priced at 96 kopecks (Russian
cents) a kilo and the expensive one at 104 kopecks. I vividly remember these
prices because they didn’t change for a decade. The prices were not set by
sugar supply and demand but were determined by a well-meaning bureaucrat (who
may even have been an economist) a thousand miles away.
If all Russian housewives (and
house-husbands) had decided to go on an apple pie diet and started baking pies
for breakfast, lunch, and dinner, sugar demand would have increased but the
prices still would have been 96 and 104 kopecks. As a result, we would have had
a shortage of sugar — a common occurrence in the Soviet era.
In a capitalist economy, the
invisible hand serves a very important but underappreciated role: It is a
signaling mechanism that helps balance supply and demand. High demand leads to
higher prices, telegraphing suppliers that they’ll make more money if they
produce extra goods. Additional supply lowers prices, bringing them to a new
equilibrium. This is how prices are set for millions of goods globally on a
daily basis in free-market economies.
In the command-and-control
economy of the Soviet Union, the prices of goods often had little to do with
supply and demand but were instead typically used as a political tool. This in
part is why the Soviet economy failed — to make good decisions you need good
data, and if price carries no data, it is hard to make good business decisions.
When I left Soviet Russia in
1991, I thought I would never see a command-and-control economy again. I was
wrong. Over the past decade the global economy has started to resemble one, as
well-meaning economists running central banks have been setting the price for
the most important commodity in the world: money.
Interest rates are the price
of money, and the daily decisions of billions of people and their corporations
and governments should determine them. Like the price of sugar in Soviet
Russia, interest rates today have little to do with supply and demand (and thus
have zero signaling value).
For instance, if the Federal
Reserve hadn’t bought more than $2 trillion of U.S. debt by late 2014, when
U.S. government debt crossed the $17 trillion mark, interest rates might have
started to go up and our budget deficit would have increased and forced
politicians to cut government spending. But the opposite has happened: As
our debt pile has grown, the government’s cost of borrowing has declined.
The
consequences of well-meaning (but not all-knowing) economists setting the cost
of money are widespread, from the inflation of asset prices to
encouraging companies to spend on projects they shouldn’t. But we really don’t know
the second-, third-, and fourth derivatives of the consequences that
command-control interest rates will bring. We know that most likely every
market participant was forced to take on more risk in recent years, but we
don’t know how much more because we don’t know the price of money.
Quantitative
easing: These two seemingly harmless words have mutated the DNA of the global
economy. Interest rates heavily influence currency exchange rates. Anticipation
of QE by the European Union caused the price of the Swiss franc to jump 15% in
one day in January 2015, and the Swiss economy has been crippled ever since.
Americans
have a healthy distrust of their politicians. We expect our politicians to be
corrupt. We don’t worship our leaders (only the dead ones). The U.S.
Constitution is full of checks and balances to make sure that when (often not
if) the opium of power goes to a politician’s head, the damage he or she can do
to society is limited.
Unfortunately,
we don’t share the same distrust for economists and central bankers. It’s hard
to say exactly why. Maybe we are in awe of their Ph.D.s. Or maybe it’s because
they sound really smart and at the same time make us feel dumber than a toaster
when they use big terms like “aggregate demand.” For whatever reason, we think
they possess foresight and the powers of Marvel superheroes.
more
So, Goldman is a serial arsonist that has turned betting against its clients' interests into a science. The Times article makes it clear that shorting subprime and luring gullible investors into the trap, was standard operating procedure. Goldman's CEO Lloyd Blankfein dismisses the criticism with a wave of the hand saying, "They were sophisticated investors," which is the same as saying "buyer beware".
It's worth noting that shorting subprimes exacerbated the pain in housing by creating incentives for originators to issue more mortgages to people with poor credit. This prolonged the housing boom and deepened the recession when the bubble finally burst. The eventual downturn was largely engineered by Wall Street.
http://www.counterpunch.org/whitney04192010.html
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