Goldman: The Last Time This Happened Was Just Months Before The Start Of The Great Depression

Ah Goldman, never change.

One week after Goldman's chief equity strategist David Kostin predicted a three-year bull market of "rational exuberance", lifting his 2018 S&P price target from 2,500 to 2,850 rising to 3,100 in 2020, and stating that should the exuberance turn "irrational", the S&P could rise as high as 5,300 by the end of 2020, another Goldman strategist, Christian Mueller-Glissmann, has decided it may be a good idea to play bad cop and cover all bases.

And so, in a report released on Tuesday "The Balanced Bear - Part 1: Low(er) returns and latent drawdown risk" this now bearish Goldmanite warns that in the medium-term, the two likely scenarios are either i) a "slow pain" deflation scenario of low yields and high valuations "which persist as macro is stable but there are less windfall gains from rising valuations and less carry - as a result, returns are likely to be lower across assets", or ii) a "fast pain" drawdown scenario in which there is "either a material negative growth or inflation/rate shock, or a combination of both, which drives a drawdown in 60/40 portfolios."

For those confused, don't worry - you read it right. While on one hand Goldman is predicting nothing but blue skies for the "medium-term" of the next three years, predicting no recession and double digit equity upside, at the very same time, the very same Goldman is also forecasting either a "slow" or "fast" pain scenario, which while different, share one thing in common (as the name implies): "pain."

No surprise, Goldman talking out of both sides of its mouth, the only question being while the client-facing "research" is obviously crap and meant to get clients to do the opposite of what Goldman's prop traders are doing, it remains debatable on what side Goldman's prop is axed. Is the bank pulling a CDO and shorting everything it sells to its clients, or has the bank assured further S&P upside, even as valuations no "longer make sense" to quote, well, Goldman?

We don't know the answer, nor do we care. For those who do, here is Mueller-Glissmann summary:

We think a period of low(er) returns (scenario 1) is more likely than a full-fledged bear market in 60/40 portfolios (scenario 2), at least in the near term. But there will likely be a balancing act with slowing growth and rising inflation. And at current low yield levels and with the ‘beginning of the end of QE’, bonds might be less effective hedges for equities and are likely a larger drag on balanced portfolios. And rising inflation could move the central bank put ‘more out of the money’, requiring a larger ‘growth shock’ for central banks to ease policy. Also current easing options are more limited for central banks as rates are still low and QE purchases have only just been reduced.

 

And once the balanced bear comes, it might be larger and faster. Duration risk in bond markets is much higher this cycle and vol of vol in equities has increased since the mid-80s. While we think investors should lower duration and run higher equity allocations in scenario 1, they should consider hedging at least the risk of smaller equity drawdowns in the near term. We like shorter-dated S&P 500 put spreads. In part 2, we intend to explore different strategies to enhance balanced portfolio returns while managing drawdown risk in case of a bear market.

Ultimately, like every other forecast to come out of Goldman, it's garbage: want bullish, read Kostin; want bearish - either a little or lot - stick to Glissman. Just remember to use your friendly, Goldman salesperson who will gladly collect the trade commission whatever you do.

That said, there was one useful data point in the 26 page pdf: a chart showing that not only are we nearing the longest 60/40 bull market without a 10% return drawdown, but that the last time we were here was sometime in the late 1920s... and the Great Depression would follow in just a few months.

As Goldman observes: "we are closing in on the longest 60/40 bull market in history - there has been no 10% drawdown in real terms since 2009. A passive long-only balanced portfolio has delivered attractive risk-adjusted returns since the 90s. A favourable ‘Goldilocks’ macro backdrop, supported by the ‘Great Moderation’ and the central bank put, has boosted returns in both equities and bonds. However, after the recent ‘bull market in everything’, valuations across assets are as expensive as they have been this century, which reduces the potential for returns and diversification in balanced portfolios.

Some more statistics:

We are nearing the longest bull market for balanced equity/bond portfolios in over a century - a simple 60/40 portfolio (60% S&P 500, 40% US 10-year bonds) has not had a drawdown of more than 10% since the GFC trough (8.7 years) and has delivered a 143% return (11% p.a.) since then.

And when was the last time a balance portfolio had such a tremendous return? Goldman answers again:

"The longest run has been during  the Roaring 20s, ending with the Great Depression. The second longest run was the post-war ‘Golden age’ in the 50s - the 90s Boom has been in third place but is now fourth, after the current run.

In other words, one would have to go back to some time in early 1929 to be looking at the kind of returns that a balanced "60/40" portfolio is generating today.  In fact, the current period of staggering returns without a 10% total drawdown is now 8.7 years. How long was the comparable period in the 1928s? 9.1 years. Which means that if history is any guide, the second great depression is just around the corner.

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Tilt! Game Over…

Authored by Jeff Thomas via InternationalMan.com,

Anyone who’s ever played a pinball machine can attest to the fact that the player easily becomes wrapped up in it, to the point of the exclusion of all else happening around him. He hits the flippers rapidly, glancing up from time to time at his increasing score. It becomes irresistible to jiggle the table frequently, in an effort to get the ball to go where the player wants it to go.

And, of course, every player is familiar with the disappointment that comes when he’s overplayed his body English and the machine stops suddenly, lighting up a sign that says, “Tilt! Game Over.”

Much of the world is now embroiled in an economic game similar to pinball. The stakes are becoming ever greater, the flipper buttons are being pressed ever faster, and those who are desperately attempting to keep the collapsing system going are shoving the table ever more recklessly.

At this point in the world economy, the number of possible triggers that could take the system down is growing ever more rapidly.

And, for those who are paying attention, the list of dominoes that we’ll see fall is becoming ever more starkly apparent. Let’s have a look at just some of the more basic dominoes:

  • Creditor countries dumping US Treasuries back into the US market. (This has already begun and will continue until the dollar crashes.)
  • Cessation of the US dollar as the petrodollar. (This is about to begin, but will take several years to play out fully.)
  • Economic sanctions by the US against Russia and China (that are unlikely to have the support of the US’s allies).
  • Implementation of tariffs, resulting in a tariff war.
  • A rise in interest rates (as was consciously created in 1929 by the Fed in order to trigger a timed crash).
  • Bursting of the bond market bubble.
  • A major stock market crash.
  • Dramatic increase in mortgage defaults.
  • A spike in commodity prices, coinciding with a drop in asset values (inflation and deflation at the same time—the worst possible combination).
  • Collapse of the paper gold market.
  • A switch to the new IMF cryptocurrency and a major effort to end the use of cash. (This will succeed to some extent, but will create a worldwide monetary black market.)
  • US defaults on its debt. (This, too, will occur over several years.)
  • Collapse of the dollar.

Many of these events will be black swans.

As can be expected, some of the events will be sudden, whilst others will take time to play out. In addition, although they’re likely to occur roughly in order, several will be in play at any given time.

Although each of these events can be anticipated, they won’t come with warning notices. Their actual occurrences will be unheralded. (As an example, when a stock market crash occurs, investors will wake up to discover that it’s occurred whilst they were sleeping.)

And, just as in pinball, the end of the game will come quite suddenly. The moment that the player will know that it’s “Game Over” will be when he goes to his ATM and finds that the screen is dark. The machine has been made inoperative overnight. Annoyed, he’ll go to the next-nearest ATM, but will find that that one, too, is shut down. He’ll go to others and, at some point, will realise that they’re all shut down.

Without spending cash in his wallet, he’ll then go to the local gas station or supermarket and attempt to pay with his credit cards but will find that they’ve all been made inactive. In trying to sort out the problem with the manager, he’ll be told that all credit cards for all his customers have been denied that day.

The realization will suddenly hit that money has ceased to flow. For how long? The television news programmes will state that it will be temporary, but they don’t define “temporary.”

Those few individuals who understood that an economic crisis was brewing will take inventory of how much cash they have remaining in their wallets and how much they’ve stashed at home, and realise that this total now represents their total purchasing power.

Overnight, wealth is no longer measured in saleable assets, since, if virtually no one has spending money, they have no means of payment. Therefore, the fellow who thought that, if he found himself in a pinch, he could always sell the Harley in the driveway, or perhaps the family boat, for some quick cash, can no longer locate a buyer who can pay him—at any price.

Of course, many people will do all they can to contact their bankers, demanding that they be allowed to remove their money on deposit and extract the contents of their safe deposit boxes, but they’ll receive a recording, saying, “We’re sorry for the inconvenience, but the bank will be temporarily closed until further notice.”

At this point, “wealth” will change its definition to include only the cash in hand, plus whatever might be bartered.

Recently, I received an email from an associate in Canada, who asked, “When will I know when I really have to make a move?” My answer was, “You won’t. But there will be an actual day when you’ll know that you’ve waited too long and it’s now too late. That day will be the day that you visit the ATM and find it closed.”

That’s it. “Game Over.”

So, are we all doomed? Well, no, not at all. Those who are proactive can remove themselves from the system now, before the system reaches the “Tilt!”

If the reader lives in one of the jurisdictions that’s likely to be the most impacted (EU, US, Canada, etc.), he would be wise to liquidate his possessions there and move the proceeds to a jurisdiction that’s less likely to be impacted and which has a long reputation for economic stability. He should place his wealth (no matter how great or little) in precious metals and real estate overseas—again, in a safer jurisdiction.

He should retain some money (in cash and precious metals) at home, or nearby—enough to cover a few months’ expenses.

If he can afford to, he should then create a bolt-hole in a jurisdiction that he can go to quickly, should the crisis overtake him.

However, even those who recognize that their home country may soon become an economic prison camp are likely to dither, failing to prepare adequately. Sadly, they’re likely to find themselves in the position of the fellow in the photo above, discovering that “Game Over” has arrived before he could ready himself.

*  *  *

This isn’t all bad news. A select group of investors will not only endure the collapse—they’ll actually come out the other side much wealthier. There are practical steps you can start taking today to make yourself one of them. Find out how in our Guide to Surviving and Thriving During an Economic Collapse. Click here to download your free PDF copy now.

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“The Cover-Up Begins To End”: Judicial Watch Hints At Explosive New Clinton-Lynch Tarmac Docs

Back on June 29, 2016, Obama's Attorney General, Loretta Lynch, tried to convince us that the following 'impromptu' meeting between herself and Bill Clinton at the Phoenix airport, a private meeting which lasted 30 minutes on Lynch's private plane, was mostly a "social meeting" in which Bill talked about his grandchildren and golf game.  It was not, under any circumstances, related to the statement that former FBI Director James Comey made just 6 days later clearing Hillary Clinton of any alleged crimes related to his agency's investigation.

Not surprisingly, following the above media clip several concerned watchdog groups filed FOIA requests seeking any and all DOJ and/or FBI documents related to what was either (i) a really poorly timed meeting, in the best case, or (ii) a clear attempt by a former President of the United States to apply leverage over the current Attorney General to obstruct justice and get his wife elected President, in the worst case. 

After originally being told by the FBI there were no documents to produce in response to their July 2016 FOIA request, Judicial Watch's Tom Fitton was subsequently told in October 2017 that the FBI had simply overlooked 30 pages worth of relevant docs...30 pages which Fitton now says will mark the "beginning of the end" of the DOJ's "cover-up" when they're released this Thursday.

FBI Hid Clinton/Lynch Tarmac Meeting Records. But the cover-up begins to end -- thanks to @JudicialWatch -- the day after tomorrow. @RealDonaldTrump needs to clean house at FBI/DOJ.

Of course, Fitton expressed his frustration with the botched FOIA response back in October after describing the FBI as "out of control" and saying it's "stunning that the FBI ‘found’ these Clinton-Lynch tarmac records only after we caught the agency hiding them in another lawsuit."  Per Judicial Watch:

“The FBI is out of control. It is stunning that the FBI ‘found’ these Clinton-Lynch tarmac records only after we caught the agency hiding them in another lawsuit,” stated Judicial Watch Tom Fitton. “Judicial Watch will continue to press for answers about the FBI’s document games in court. In the meantime, the FBI should stop the stonewall and release these new records immediately.”

 

This case has also forced the FBI to release to the public the FBI’s Clinton investigative file, although more than half of the records remain withheld.  The FBI has also told Judicial Watch that it anticipates completing the processing of these materials by July 2018.

 

There is significant controversy about whether the FBI and Obama Justice Department investigation gave Clinton and other witnesses and potential targets preferential treatment.

So what say you?  Will Judicial Watch finally manage to release documents that expose collusion between a former U.S. President, the FBI and the sitting Attorney General to cover-up a massive Clinton scandal or will they simply release more heavily redacted documents that tell us precisely nothing.  We'll let you know on Thursday.

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<b>Crude Oil</b> Down In Asia On API Estimates, All Eyes On OPEC

Investing.com - Crude oil eased in Asia on Wednesday as disappointing US industry inventory estimates dampened sentiment and as attention turns to an OPEC meeting in Vienna on output curb extensions. On the New York Mercantile Exchange crude futures for January delivery fell 0.10% to $57.67 a ...

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What is your exit plan, and how long will it take to execute?

 

"You know, fighting in a basement offers a lot of difficulties. Number one being, you're fighting in a basement."

  

- Lt. Aldo Raine. 


Like most libertarians, private property ownership and personnel security are two passions of mine where we all clearly benefit from always having an exit plan.  

This article probably does not cover anything professional traders and old mobsters don't fully grok, but dilettantes and newbies will certainly benefit from either developing or reviewing their exit points and expected latency for each and every position. Please understand that heading for the exits is always risky!  The retreat is when most of the casualties of war occur, as explained in the excellent book, On Killing: The Psychological Cost of Learning to Kill in War and Society, by Lt. Col. Dave Grossman.  We haven't made any profit until we close out the trade, and twenty years of a building wealth can be destroyed by a bad divorce. 

Exit plans often take the form of if/then statements.  For example:

  • Investments - If the price XYZ doubles, then I will sell half, and pray it is the worst decision I ever made
  • Relationships - If he hits me just once, then I will move out and file for divorce
  • Residency - If martial law is instituted, then we are leaving the country
  • Terminal illness - If I require life support for more than two weeks, then kiss me and pull the plug
  • Home security - If the alarm goes off in the middle of the night, do not turn on the lights, roll out of bed, grab the Benelli, and take cover

Sure, like Mike Tyson says, "Everybody has a plan until they get punched in the mouth."   However, the planning process allows us to identify potential problems when we still have time to solve them.  As Benjamin Franklin said, "If you fail to plan, you are planning to fail!"

Let's say that you followed my guide to buying Bitcoin and losing it in a boating accident, and you are still using Coinbase to buy and sell BTC, or have linked your account to GDAX.  What is your maximum daily sell amount in dollars, and how does that relate to the size of your account?  Do you know?

GDAX limits for deposits, withdrawals, trades, and balances

 

Withdrawal: $10,000/day for individual accounts and $50,000/day for institutional accounts. To be considered for higher withdrawal limits, please go to your Settings within GDAX and click "Increase Limits."

 

https://support.gdax.com/customer/portal/articles/2426595

 

If your limit is $10,000, that is about one bitcoin per day, today, but may represent only a half a bitcoin very soon.  If you have 10 BTC in the account, it could take you more than a week to close the position.  This is obviously not a good situation and reminds me of the great scene from the film, Inglorious Bastards, when Brad Pitt's character, Lt. Aldo Raine and his team are doing some exit planning for an upcoming rendez-vous in enemy territory...

 

I won't spoil the movie for you, but I will say that Aldo ain't stupid. 

The beautiful mrs_horseman accompanied me for dinner last weekend, and because we have been together so long, and have trained together, we each know exactly where we are going to sit, where the exits are, and exactly how we would vaminos in the event that we choose to do so in a hurry or under duress.  We don't even need to talk about it anymore.  The entire discussion is non verbal.  

Exit plans are useful in a wide variety of circumstances.  For example, if you commute into a major city, or live in one, then it is probably a good idea to have a plan to get the fuck out if the shit hits the fan and when everyone else is freaking out.

 

To this end, please consider my articles...

Elevated freeways are perfect kill zones

 

I have had several requests from friends to review the self-rescue gear we carry in our Get Back Home (GBH) bags, probably due to the recent but not unexpected flooding we have had this spring. 

 

http://www.zerohedge.com/news/2016-06-10/elevated-freeways-are-perfect-k...

 

...and...

What you gonna do when the bombs start to fall?

 

Let's imagine for a few minutes that the ongoing-global-currency war and proxy wars somehow, unexpectedly, blow up into a world war directly involving you, wherever it is that you live.  Specifically, imagine that one side is able to achieve surprise, and as you sit at your desk, today, the power and all telecommunications go out without warning.  Within 15 minutes, everyone notices a large amount of what is obviously military aircraft activity, evidenced by sonic booms, and soon there are several very bright flashes on the horizon in the direction of the closest military base. 

 

The odds of this actually happening are not zero. 

 

http://www.zerohedge.com/news/2015-10-22/what-you-gonna-do-when-bombs-st...

 

If you are like many Americans and most or all of your liquid wealth is kept in the possession of your bank, then a little exit planning is surely in order, considering the prevalence of this sort of thing:

Systems down all Thursday afternoon for multiple banks in Texas

 

For example, some banks and credit unions in Texas were giving hand-written receipts for deposits, and limiting cash withdrawals to $300!  Other banks were not making wire transfers for Friday payrolls of corporate customers.

 

http://www.zerohedge.com/news/2017-03-02/systems-down-all-thursday-after...

 

Unlike enjoying dinner in a nice restaurant, some positions may take a long time to Assess, Design, Develop, Implement, and Evaluate good exit strategies.  One of my friends tells a story of working in Nigeria, and the very complicated exit plan he and his associates had to get the fuck out of out of Lagos, involving ropes, swimming, sailing, and satellites.  Along those lines...

hedgeless_horseman's annual Twelve Days of Christmas shopping list for the ZeroHedge readers in your life

 

2) Nigel Calder's Cruising Handbook: A Compendium for Coastal and Offshore Sailors $39

 

If ever someone's world turns to complete shit, and you want them to know which sailboat to beg, barter, or steal from the marina, and how to sail it, then this book is the ticket.

 

http://www.zerohedge.com/news/2017-11-14/hedgelesshorsemans-annual-twelv...

 

What positions in your life could use a little exit planning?

Peace, prosperity, liberty, and love,

-h_h

The post What is your exit plan, and how long will it take to execute? appeared first on crude-oil.news.

The post What is your exit plan, and how long will it take to execute? appeared first on Forex news forex trade.

Continue Reading

What is your exit plan, and how long will it take to execute?

 

"You know, fighting in a basement offers a lot of difficulties. Number one being, you're fighting in a basement."

  

- Lt. Aldo Raine. 


Like most libertarians, private property ownership and personnel security are two passions of mine where we all clearly benefit from always having an exit plan.  

This article probably does not cover anything professional traders and old mobsters don't fully grok, but dilettantes and newbies will certainly benefit from either developing or reviewing their exit points and expected latency for each and every position. Please understand that heading for the exits is always risky!  The retreat is when most of the casualties of war occur, as explained in the excellent book, On Killing: The Psychological Cost of Learning to Kill in War and Society, by Lt. Col. Dave Grossman.  We haven't made any profit until we close out the trade, and twenty years of a building wealth can be destroyed by a bad divorce. 

Exit plans often take the form of if/then statements.  For example:

  • Investments - If the price XYZ doubles, then I will sell half, and pray it is the worst decision I ever made
  • Relationships - If he hits me just once, then I will move out and file for divorce
  • Residency - If martial law is instituted, then we are leaving the country
  • Terminal illness - If I require life support for more than two weeks, then kiss me and pull the plug
  • Home security - If the alarm goes off in the middle of the night, do not turn on the lights, roll out of bed, grab the Benelli, and take cover

Sure, like Mike Tyson says, "Everybody has a plan until they get punched in the mouth."   However, the planning process allows us to identify potential problems when we still have time to solve them.  As Benjamin Franklin said, "If you fail to plan, you are planning to fail!"

Let's say that you followed my guide to buying Bitcoin and losing it in a boating accident, and you are still using Coinbase to buy and sell BTC, or have linked your account to GDAX.  What is your maximum daily sell amount in dollars, and how does that relate to the size of your account?  Do you know?

GDAX limits for deposits, withdrawals, trades, and balances

 

Withdrawal: $10,000/day for individual accounts and $50,000/day for institutional accounts. To be considered for higher withdrawal limits, please go to your Settings within GDAX and click "Increase Limits."

 

https://support.gdax.com/customer/portal/articles/2426595

 

If your limit is $10,000, that is about one bitcoin per day, today, but may represent only a half a bitcoin very soon.  If you have 10 BTC in the account, it could take you more than a week to close the position.  This is obviously not a good situation and reminds me of the great scene from the film, Inglorious Bastards, when Brad Pitt's character, Lt. Aldo Raine and his team are doing some exit planning for an upcoming rendez-vous in enemy territory...

 

I won't spoil the movie for you, but I will say that Aldo ain't stupid. 

The beautiful mrs_horseman accompanied me for dinner last weekend, and because we have been together so long, and have trained together, we each know exactly where we are going to sit, where the exits are, and exactly how we would vaminos in the event that we choose to do so in a hurry or under duress.  We don't even need to talk about it anymore.  The entire discussion is non verbal.  

Exit plans are useful in a wide variety of circumstances.  For example, if you commute into a major city, or live in one, then it is probably a good idea to have a plan to get the fuck out if the shit hits the fan and when everyone else is freaking out.

 

To this end, please consider my articles...

Elevated freeways are perfect kill zones

 

I have had several requests from friends to review the self-rescue gear we carry in our Get Back Home (GBH) bags, probably due to the recent but not unexpected flooding we have had this spring. 

 

http://www.zerohedge.com/news/2016-06-10/elevated-freeways-are-perfect-k...

 

...and...

What you gonna do when the bombs start to fall?

 

Let's imagine for a few minutes that the ongoing-global-currency war and proxy wars somehow, unexpectedly, blow up into a world war directly involving you, wherever it is that you live.  Specifically, imagine that one side is able to achieve surprise, and as you sit at your desk, today, the power and all telecommunications go out without warning.  Within 15 minutes, everyone notices a large amount of what is obviously military aircraft activity, evidenced by sonic booms, and soon there are several very bright flashes on the horizon in the direction of the closest military base. 

 

The odds of this actually happening are not zero. 

 

http://www.zerohedge.com/news/2015-10-22/what-you-gonna-do-when-bombs-st...

 

If you are like many Americans and most or all of your liquid wealth is kept in the possession of your bank, then a little exit planning is surely in order, considering the prevalence of this sort of thing:

Systems down all Thursday afternoon for multiple banks in Texas

 

For example, some banks and credit unions in Texas were giving hand-written receipts for deposits, and limiting cash withdrawals to $300!  Other banks were not making wire transfers for Friday payrolls of corporate customers.

 

http://www.zerohedge.com/news/2017-03-02/systems-down-all-thursday-after...

 

Unlike enjoying dinner in a nice restaurant, some positions may take a long time to Assess, Design, Develop, Implement, and Evaluate good exit strategies.  One of my friends tells a story of working in Nigeria, and the very complicated exit plan he and his associates had to get the fuck out of out of Lagos, involving ropes, swimming, sailing, and satellites.  Along those lines...

hedgeless_horseman's annual Twelve Days of Christmas shopping list for the ZeroHedge readers in your life

 

2) Nigel Calder's Cruising Handbook: A Compendium for Coastal and Offshore Sailors $39

 

If ever someone's world turns to complete shit, and you want them to know which sailboat to beg, barter, or steal from the marina, and how to sail it, then this book is the ticket.

 

http://www.zerohedge.com/news/2017-11-14/hedgelesshorsemans-annual-twelv...

 

What positions in your life could use a little exit planning?

Peace, prosperity, liberty, and love,

-h_h

The post What is your exit plan, and how long will it take to execute? appeared first on crude-oil.news.

The post What is your exit plan, and how long will it take to execute? appeared first on Forex news forex trade.

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North Korea Fires Ballistic Missile

Well, US experts did warn that North Korea could conduct another missile test "within days", and for once, US experts were right, because moments ago Yonhap reported citing South Korea's Joint Chiefs of Staff, that after a two and a half month hiatus, North Korea has fired a ballistic missile, the first such launch since September 15.

According to the report, the missile flew eastward and the South Korean military is analyzing details with the U.S., it said. Japan's coast guard confirmed in an email that North Korea fired a missile, which fell in the sea near Japan.

In response, USDJPY has tumbled and gold surged, while stocks, as usual, completely ignore all geopolitical, and any othem, news.

Developing

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T-Bill Anxiety Builds As Trump Tells ‘Chuck And Nancy’: “No Deal” On Government Shutdown

Anxiety appears to be building in the Treasury Bill market once again as the yield spread between 12/7 and 12/21 widens to 12bps after President Trump cast doubt on whether he and congressional leaders can agree to keep the government funded.

As AP reports, Trump is meeting with Democratic and Republican congressional leaders at the White House on Tuesday to discuss budget and immigration issues.

But, in a tweet, Trump cast doubt on whether they can agree to fund the government beyond a Dec. 8 deadline.

Says Trump: "I don't see a deal!"

Trump says Democrats "want illegal immigrants flooding into our Country unchecked, are weak on Crime and want to substantially RAISE Taxes."

Better add this potential event risk to the reasons to sell vol...

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Watch Live: Senate Banking Committee ‘Grills’ Trump’s Fed Chair Nominee Jerome Powell

Just two weeks after President Donald Trump announced that Fed Governor Jerome “Jay” Powell would be his pick to succeed Janet Yellen as chairman of the Federal Reserve, he is appearing today before the Senate Banking committee in a confirmation hearing that’s viewed as a virtual certainty.

The hearing begins at 10 am ET. Watch it live below:

However, while Powell’s chances of approval are high – given that he’s been twice confirmed as a Fed governor - Business Insider’s Pedro Da Costa points out that Powell – a former private equity executive - has commented fairly sparsely on monetary policy and regulatory matters despite serving as a Fed governor since 2012, so there are lots of unanswered questions about his views. As Reuters points out, Powell - once one of the FOMC's more hawkish members, has recently moderated his position to more closely resemble Yellen's dovish approach.

Also, Powell's record isn't without blemish: In the past, however, Powell has been more cautious about the risks posed by such an expansive approach. In his first months at the Fed, Powell was among those who pressured then chair Ben Bernanke for more clarity on when the central bank would start scaling back its bond buying. When Bernanke made those plans public it triggered a “taper tantrum” spike in market interest rates in the summer of 2013, forcing Bernanke, Powell and others to do damage control.

This could precipitate a lively Q&A session as senators try to get to the heart of exactly what they can expect from the reticent central banker.

According to media reports and analysts’ assessments, Trump’s logic in choosing Powell (over both Kevin Warsh, John Taylor and Powell’s current boss, Janet Yellen) is that, being a lifelong Republican, Powell has a slightly more permissive stance on regulation than Yellen. However, he also shares Yellen’s dovish tendencies, and it’s widely believed that interest rates and the Fed’s balance-sheet unwind will proceed cautiously under his leadership.

During the hearing, da Costa posits that Powell faces two principal tasks: Flesh out his views on monetary policy, regulation and how they differ from those of his predecessor.

Here are a couple hypothetical questions that, if da Costa were a senator, he would ask:

1. Do you intend to continue raising interest rates in December and next year despite below-target inflation, and what factors are you considering in making that decision?

Part of Powell’s early mission on this front will be establishing himself as a leader and developing his own way of communicating on major policy issues, many of which he has touched upon only sparsely as a Fed governor.

 

Powell should be pressed on his lack of economics training - he’s the first Fed chair in decades to lack a doctorate in the field - and how he will use his staff and the expertise of his colleagues to help guide decision making.

 

Powell is expected to maintain the more committee-centered approach that began under Ben Bernanke, who wanted to move away from Alan Greenspan’s cult of personality, and continued under Yellen.

 

The Fed has raised interest rates four times since December 2015, to the current 1% to 1.25% range. The central bank has also started to gradually shrink a $4.5 trillion balance sheet that expanded sharply in response to the Great Recession of 2007-2009.

2. What is your view of the post-crisis financial rules and how willing would you be to roll them back, in particular capital requirements for big banks and consumer protections now under challenge?
 

Many investors and public advocates worry that weaker rules could lead banks to again take wild risks and put consumers and workers at undue risk. Powell, a former Carlyle Group executive, has plenty of financial market experience, but some might worry he is ideologically too close to the sector to supervise it closely.

 

Both Yellen and the recently-retired vice chair, Stanley Fischer, have spoken in unusually blunt terms about the dangers of rolling back financial rules.  

 

Powell has been friendly to the idea of letting financial institutions roam more freely, albeit within limits, according to The New York Times. Indeed, Powell's industry-friendly stance probably didn't hurt his chances of landing the job.

 

A political squabble that started last week over the leadership of the Consumer Financial Protection Bureau is just a small taste of all the political blowback that is likely to ensue from Republican efforts to undo post-crisis financial regulations. These include much higher capital requirements for the largest Wall Street institutions, because these are the ones that brought the financial system to the brink of failure in 2008.

 

Another big regulatory issue facing the Fed is how to regulate so-called “shadow banks,” which range from hedge funds to private equity to the money market industry — essentially firms without a banking charter that perform banking-like functions.

 

Before the financial crisis, investment banks were part of the shadow banking world, and the lack of regulatory scrutiny on their activities was a major culprit of the crisis.

 

Given the massive and lingering costs of that debacle in the form of lost jobs, wealth and productivity, Americans should hope Powell places the burden of proof on the need for any rule rollbacks on the industry, and even then, assesses their assertions with a giant grain of salt.

In his prepared remarks – released last night - Powell said he expected the central bank to continue raising its benchmark interest rate and trimming its balance sheet under his leadership, but had some pointed comments over deregulation, economic stability, and the plunge protection team...

Chairman Crapo, Ranking Member Brown, and other members of the Committee, thank you for expeditiously scheduling this hearing and providing me the opportunity to appear before you today. I would also like to express my gratitude to President Trump for the confidence he has shown by nominating me to serve as Chairman of the Board of Governors of the Federal Reserve System. The Federal Reserve has had a productive relationship with this Committee over the years, and, if you and your colleagues see fit to confirm me, I look forward to working closely with you in the years ahead.

 

Before I continue, I would like to introduce my wife, Elissa, who is sitting behind me. I would not be here today without her unstinting love, support, and wise counsel.

 

As you know, I have served as a member of the Board of Governors and the Federal Open Market Committee (FOMC) for more than five years, contributing in a variety of capacities, including most recently as chairman of the Board's Committee on Supervision and Regulation. My views on a wide range of monetary policy and regulatory issues are on the public record in speeches and testimonies during my service at the Fed. The Congress established the Federal Reserve more than a century ago to provide a safer and more flexible monetary and financial system. And, almost exactly 40 years ago, it assigned us monetary policy goals: maximum employment, meaning people who want to work either have a job or are likely to find one fairly quickly; and price stability, meaning inflation is low and stable enough that it need not figure into households' and businesses' economic decisions.

 

I have had the great privilege of serving under Chairman Bernanke and Chair Yellen, and, like them, I will do everything in my power to achieve those goals while preserving the Federal Reserve's independent and nonpartisan status that is so vital to their pursuit. In our democracy, transparency and accountability must accompany that independence. We are transparent and accountable in many ways. Among them, we affirm our numerical inflation objective annually and publish our economic and interest rate projections quarterly. And, since 2011, the Chairman has conducted regular news conferences to explain the FOMC's thinking. Additionally, we are accountable to the people's representatives through twice-a-year reports, testimony, oversight, and audited financial statements. I am strongly committed to that framework of transparency and accountability and to continuing to look for ways to enhance it. In our federated system, members of the Washington-based Board of Governors participate in FOMC deliberations with the presidents of the 12 regional Federal Reserve Banks, which are deeply rooted in their local communities. I am a strong supporter of this institutional structure, which helps ensure a diversity of perspectives on monetary policy and helps sustain the public's support for the Federal Reserve as an institution.

 

If confirmed, I would strive, along with my colleagues, to support the economy's continued progress toward full recovery. Our aim is to sustain a strong jobs market with inflation moving gradually up toward our target. We expect interest rates to rise somewhat further and the size of our balance sheet to gradually shrink. However, while we endeavor to make the path of policy as predictable as possible, the future cannot be known with certainty.

 

So we must retain the flexibility to adjust our policies in response to economic developments. Above all, even as we draw on the lessons of the past, we must be prepared to respond decisively and with appropriate force to new and unexpected threats to our nation's financial stability and economic prosperity--the original motivation for the Federal Reserve's founding.

 

As a regulator and supervisor of banking institutions, in collaboration with other federal and state agencies, we must help ensure that our financial system remains both stable and efficient. Our financial system is without doubt far stronger and more resilient than it was a decade ago. Our banks have much higher levels of capital and liquid assets, are more aware of the risks they run, and are better able to manage those risks. Even as we have worked to implement improvements, we also have sought to tailor regulation and supervision to the size and risk profile of banks, particularly community institutions. We will continue to consider appropriate ways to ease regulatory burdens while preserving core reforms - strong levels of capital and liquidity, stress testing, and resolution planning - so that banks can provide the credit to families and businesses necessary to sustain a prosperous economy. In doing so, we must be clear and transparent about the principles that are driving our decisions and about the expectations we have for the institutions we regulate.

 

To conclude, inside the Federal Reserve, we understand that our decisions in all these areas matter for American families and communities. I am committed to making decisions objectively and based on the best available evidence. In doing so, I would be guided solely by our mandate from the Congress and the long-run interests of the American public.

 

Thank you. I would be happy to respond to your questions.

The hearing is expected to last until noon ET.
 

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It’s 930amET, Do You Know Where Your Gold Slammer Is?

Right on time, a heavy volume seller struck the precious metals complex right as the US equity market opened...

 

 

Of course the real driver of this is the JPY-pair that is pumped higher to juice the equity open...

 

And Silver was slammed back below $17.00...

The post It’s 930amET, Do You Know Where Your Gold Slammer Is? appeared first on crude-oil.news.

The post It’s 930amET, Do You Know Where Your Gold Slammer Is? appeared first on Forex news forex trade.

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