Unintended Consequences
Thoughts from the Frontline Weekly Newsletter
Correct me if I'm wrong, but I seem to remember that one of the reasons for QE2 was to lower rates on the longer end of the US yield curve. Clearly, that has not happened? Today we look at come of the unintended consequences of monetary policy, turn our eyes briefly to consumer debt, and wonder about deflating incomes. There are a lot of very interesting things to cover. (This letter will print long, but there are a lot of graphs. Usual amount of copy.)
Good morning. With speculation running rampant about what he might or might not say regarding QE2, the state of the economy, inflation, and most importantly, the sudden spike in bond yields, Ben Bernanke decided to take a page out of his predecessor's book and said very little. Instead of addressing the improvement in the economic data or the defiant behavior of bond yields, Gentle Ben stuck to the script and will likely have the Fed just keep on keepin' on in terms of buying bonds.
We received dozens of responses – 63 pages worth – to our November 11 invitation for ideas on how the bull market in gold will eventually come to an end.
Do higher stocks signal an all clear for the economy? I highly doubt it and will outline some concerns I have, as we end 2010 and head into 2011.
You hear a lot about the states that are facing a financial wall. California, NY and Il are on top of the list. But that is a 2010 story. The 2011 story will shift toward the nations municipalities. There are 36,000 cities, towns, villages and boroughs across the land. They all are facing problems.
Student loans did not used to be classified as consumer credit. That has so distorted historical charts and comparisons they are now useless.
Over the past 2 weeks we have seen the market sentiment change three times from extreme bullish to bearish and back to bullish as of today. Normally we don’t see the herd (average Joe) switch trading directions this quickly. Over the past 10 years I found that the average time for the herd to reach an extreme bullish or bearish bias takes between 4-6 weeks in length. It is this herd mentality which makes for some excellent trend trading opportunities.
Don't Be Fooled: Inflation Has The Upper Hand
It's a murky period for investors, but clarity is emerging
What we care about at the end of the day is whether our future money will buy more, or whether it will buy less -- and, naturally, whether we will even have any coming our way.
This month’s article will give a brief overview of where commodities are and then drill down into a couple of interesting specific cases. The most interesting commodities at this juncture include crude oil, cattle, wheat, and natural gas and the commentary will be pretty heavy on graphs.
This past Sunday on the CBS program "60 Minutes", Americans received a massive dose of mendacity from our Fed Chairman. Mr. Bernanke's shaky delivery, and even shakier logic may cause faith in America's economic leadership to evaporate faster than the value of our dollar. In particular, Bernanke delivered two massive distortions.
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