In today’s financial landscape, mediocre economic data has become the highlight for Wall Street. The reasoning behind this peculiar trend is puzzling, yet it is widely accepted.
The prevailing belief suggests that strong economic news can negatively impact stocks, as it often leads to the Federal Reserve increasing interest rates sooner rather than later. Higher rates translate into elevated borrowing costs, which can deter investment in the stock market.
Conversely, disappointing economic indicators are not inherently positive for stocks either. Such data can indicate a looming recession, raising concerns about declining corporate profits and overall economic growth, which typically translate to lower stock prices.
The ideal scenario, it appears, lies somewhere in the middle. Moderate economic growth can stabilize corporate earnings, which in turn, may persuade the Fed to hold off on raising rates — a situation that excites Wall Street.
This logic may seem absurd, yet it’s important to acknowledge that this is the reality we’re dealing with. While we may struggle to understand or even agree with this reasoning, it continues to unfold in front of us. Who are we to resist the prevailing narrative? Continue reading
Do you sense that something is amiss? If so, it would be best to heed that instinct. The financial system seems to be careening towards a significant collapse, potentially leading to extended economic hardship.
This perspective is merely our observation, accumulated through years of personal study. However, we could be mistaken — yet again.
We had previously suspected that the DOW had peaked around 13,000 and viewed the declining labor participation rate as a sign of economic weakness rather than strength. So far, these beliefs have not materialized as we expected. Perhaps we have overlooked key factors.
The disconnect between a stagnant economy and soaring stock prices troubles us. We also find it challenging to comprehend the myriad fiscal and monetary strategies implemented to achieve this disparity, such as TARP, CPFF, MMIFF, TALF, QE, and others.
These unconventional monetary policies have inflated asset prices and left the financial sphere in disarray. Continue reading
Prove You’re Not a Terrorist
By Jeff Thomas, International Man
Recently, France implemented strict regulations targeting individuals making cash transactions or holding small bank accounts. The government’s reasoning, predictably, is to “combat terrorism,” the convenient justification for imposing new restrictions on citizens. French Finance Minister Michel Sapin stated, “Terrorism feeds on fraud, money laundering, and petty trafficking.”
As a result, cash payments in France will now be limited to €1,000, reduced from the previous €3,000 limit. Any cash deposits or withdrawals exceeding €10,000 per month will be monitored by Tracfin, an anti-fraud and money laundering agency.
Additionally, currency exchange regulations will become more stringent. Individuals converting more than €1,000 to another currency (down from €8,000) will now need to present identification.
Need to put down a deposit for a car? That could raise suspicion. Did you just make a deposit from a dividend you received? Continue reading
One of the critical dilemmas stemming from the extreme monetary policies of recent years revolves around consumer price inflation. Although increasing the money supply inherently implies inflation, how do we reconcile this with the fact that consumer prices remain relatively stable?
The last available data indicated the Consumer Price Index (CPI) stood at just 0.2 percent in March, a figure that hardly suggests a major currency devaluation is occurring. In fact, the dollar index has appreciated by 20 percent over the past year.
There has undoubtedly been significant asset price inflation. Since the market bottom on March 9, 2009, the S&P 500 has soared more than 217 percent. In straightforward terms, the primary index is now more than three times as costly as it was just six years prior.
Simultaneously, Treasury yields languish near historic lows, with the 10-year note yielding approximately 2 percent. The risk premium on dollar-denominated government debt is almost negligible.
From an anecdotal perspective, certain prices have skyrocketed. For instance, college tuition has reached outrageous levels, and hotel rates in San Francisco are exorbitant. Continue reading
