Sit with me here and I’ll walk you though this nice and slowly: Wikipedia first:
Quantitative easing (QE) is a monetary policy used by central banks to stimulate the economy when standard monetary policy has become ineffective. A central bank implements quantitative easing by buying financial assets from commercial banks and other financial institutions, thus raising the prices of those financial assets and lowering their yield, while simultaneously increasing the money supply. This differs from the more usual policy of buying or selling short-term government bonds to keep interbank interest rates at a specified target value.
Anyone who follows quantitative easing closely knows that it works with decreasing efficiency. If you could spike a 100 point move in the S&P with such a policy, first time around, the second time it’s done, look for only 50-75 points.
Each time you do it, it’s less productive.
So, we zip to today’s headlines which reveals the ECB pays banks to take its money and that is driving hot money by the wheelbarrow into U.S. equities. That’s because the (none) geniuses of the ECB are not quick enough to figure the diminishing impacts of their changes. EUR/USD Analysis: Flirting with long-term rising trend line..
With all this loose money around, though, you get moments of panic and both the German and French markets are going through just that. When the ECB decision came out on Thursday, you can see what the German market did in this chart. Today, it is bounding back, but yesterday was something of a panic. Remember that a 450 point move on the German Market would be about like a 770-point drop on the Dow…so this is quite amusing to watch.
Easy money floats all ships, though. Which means that the major US markets were set to pop up one percent, or so, at the open. The most recent influencer being the…
New Trade Data
This is something the Fed will consider carefully, since they will be meeting on the 15th (Tuesday) and 16th (Wednesday) of next week.
“U.S. import prices fell 0.3 percent in February following a 1.0-percent drop in January, the U.S. Bureau of Labor Statistics reported today.
The February decrease was mostly led by declining fuel prices. The price index for U.S. exports decreased 0.4 percent in February, after falling 0.8 percent the previous month. Imports
All Imports: U.S. import prices fell 0.3 percent in February and have not recorded a monthly advance since the index ticked up 0.1 percent in June 2015.
The February decrease followed declines of 1.0 percent in January and 1.2 percent in December. The price index for overall imports decreased 6.1 percent between February 2015 and February 2016. Despite the downward trend over the past 8 months, the 12-month drop recorded in February was the smallest over-the-year decline since the index fell 5.6 percent for the year ended in December 2014.
Fuel Imports: Prices for import fuel declined 3.9 percent in February, after decreasing 21.9 percent over the previous 2 months. Fuel prices also have not recorded a monthly advance since June 2015 when the index rose 1.5 percent. Both petroleum and natural gas prices contributed to the February drop, falling 4.0 percent and 6.3 percent, respectively. Prices for fuel declined 37.3 percent over the past year. A 38.5-percent decrease in petroleum prices over the period was the largest factor for the overall drop, although natural gas prices also fell for the year ended in February, declining 36.4 percent.
All Imports Excluding Fuel: The price index for nonfuel imports edged down 0.1 percent in February, after recording no change the previous month.
In February, lower prices for foods, feeds, and beverages; automotive vehicles; and nonfuel industrial supplies and materials more than offset rising consumer goods prices. Nonfuel import prices have not recorded a monthly increase since a 0.1-percent advance in July 2014 and declined 2.7 percent over the past 12 months.
Exports All Exports: Overall export prices decreased 0.4 percent in February as declining nonagricultural prices more than offset rising agricultural prices. The February decline followed decreases of 0.8 percent in January and 1.1 percent in December. The price index for overall exports has not recorded a 1-month increase since the index advanced 0.5 percent in May 2015. Export prices fell 6.0 percent over the past year.
All Exports Excluding Agriculture: The price index for nonagricultural exports declined 0.4 percent in February, after decreasing 2.0 percent over the 2 previous months. In February, falling nonagricultural industrial supplies and materials prices drove the overall decline in nonagricultural prices, although lower prices for automotive vehicles and consumer goods also declined. In contrast, capital goods prices increased. Prices for nonagricultural exports decreased 5.6 percent for the year ended in February.
As this was announced, it didn’t take the market long to see through the haze. Our export prices went down (0.4) more than our import prices dropped (0.3) so the Balance of Trade hole isn’t getting filled in from this…it actually builds the case for more money-printing to water down the dollar more to make U.S. exports more reasonable overseas… We here at home will see some price inflation as a result…
The most popular headline about the Fed meeting seems to be “Calmer markets, positive data prime Fed to push ahead with rate rises.”
We can only repeat that if the Fed is trying to really carry the same tune as the pre-collapse Fed did in 1928, they would raise this meeting which would in our work lines up as the pairing with the April 23, 1928 hike in the discount rate. That lineup will feature another rate hike in 3-months (by then Ure’s new all-time highs should be evident) and that would force the Fed to raise again in order to attempt to deflate the (by then) apparent stock bubble.
Of course, by then, the bubble will have gotten out of Fed control and it will roll into 2017 before blowing up in that timeframe.
Wonder what could cause that?
Last of the GOP Debates
Chicago magazine has a dandy in their report “Donald Trump Will Probably Win Illinois—and Demonstrate His Path to the Nomination.”
The feeling that Change – real change for a change – is coming, will be fueling the rising market.
Could be Bye-bye Ted as it seems video is circulating about his dad speaking in tongues. Pentecostal stuff. None of our concern because we are not electing a religion.
BUT this does bring up Dominionism which is very dangerous stuff. The Wiki background:
Dominionism (sometimes used interchangeably with Christian Reconstructionism and theonomy, see below) is a political and religious philosophy that seeks to make the United States government a Christian theocracy. (Most Dominionists try to avoid using this name. Regardless, it is usually applied to any Christian movement with these explicit or implicit goals.)
Dominionists believe that the civil laws laid down by the Old Testament (as distinct from the moral laws such as the Ten Commandments) should be enforced by reforming the U.S. legal system along theocratic lines, which would entail a substantial increase in the use of capital punishment. They also believe that that biblical injunctions regarding slavery should be followed
Turning the US into a theocracy would turn us into the Christian religious brand’s Iran.
Meanwhile, beating the (amazingly still unindicted Hillary) is getting easier by the day.
Just look what’s going on this morning: “’S**t show’: Obama blames UK & other European states for post-Gaddafi Libya ‘mess’ .”
EXCEPT think back on who was the U.S. SecState, right? Methinks the fine rewrite of history is in the works…and the UK press is onto it, even if the lib-media lamestream in the colonies is too knee-deep in media buys for the election to report it.
So what’s really going on is probably that Obama is blaming the Brits and trying to build Hillary some plausible deniability for the events of 2011. She didn’t leave State until 2013. But the U.S. Department of Mind Control is looking for you to fog-out that part by sacrificing a Brit…Cameron, although between them, I’m sure Obama and David Cameron are still buds. Cameron is just “taking a hit for the team” – which are the people who really run the world, anyway. You didn’t go to Davos, did you?
So WhoTF was in charge on the US side of things who got things wrong…well, you tell me. It doesn’t take 13-Hours to figure it out. (Oddly I could not find it on Amazon streaming…hmmm)
Here’s a hint: “Infuriated Benghazi Mom Responds to Clinton: ‘There’s a Special Place in Hell for People Like Her’”
Of course, Obama will blame the Brits to attempt to save Hil! It is NOT working with me, or I expect you, either.
The informed observer will also be paying attention as the Hillary campaign is playing a fine game of “shoot the inspectors general” as some of the Hil pals on the Hill have sent nastygrams on Hil’s behalf to the folks looking into the email scandal.
Obfuscation reigns supreme in this crowd.
Hillary is doing what we would expect from (yet another no good) Clinton: Working the circus, getting the “narrative changed” so that she won’t be hung out to dry on Libya or the email scandal. It’s educational programming if you grok it.
With Obama now re-directing traffic away from the State Department screw-ups and blunders, it has become something of a class project to see how she will knit the alternate reality into a big enough piece of wool to pull over voter’s eyes this fall.
Not that Trump wouldn’t be problematic, either: He might try to change too much, too quickly, and be sent Kennedy by the insiders. And that would leave a perhaps smart, but not confidence-inspiring number 2 to take up in his wake…and that would give us the perfect fit to the personality of Herbert Hoover to ride out the End of Financial Days.
In the meantime, it’s like the clowns from the circus have gotten together and are fighting to take the wheel of the Titanic.
So much so, it almost fits into…
Our Useless News Department
While our only headline (if forced to write it) would be something like “Nancy Reagan is still Dead” there are still plenty of stories around like this one “How the 1981 assassination attempt changed Nancy Reagan.” Fortunately, we don’t have a newspaper to fill up for the ad sales department.
Obama Welcomes Trudeau With Focus on Climate, Trade. Which sounds to us rather more like a meeting of the Untrustworthy Club.
UN Decries ‘Horrendous Human Rights Violations’ in South Sudan is only 15-20 years behind the on-the-ground problems there.
Our Venture Capital Challenge Question
The bonus round for Friday is: Can ANYONE figure out what to do with Yahoo?
What Matters This Weekend:
Go read Why daylight saving time can be bad for your health and remember to set your clocks before it’s time to head back to the bowels of the Worker’s Paradise Monday.
Spring ahead, fall back.
Unless you’re in politics. In which case it’s “Spring ahead, lie.”