The official federal government debt now stands just a tad over $19.5 trillion. Yet few talk about it, and even fewer are concerned. Off-balance sheet liabilities (commitments that have been made but funds not set aside for) are some where north of $100 trillion dollars. Rarely talked about.
From Dow Theory Letters, September 21, 2016: “Good news today from both the Fed and the Bank of Japan (BOJ). The Fed announced no rate increases for now, though hinted (or teased, to be honest) that one would come later in the year. In Japan, the BOJ said it would continue an easy monetary policy
Despite gold’s stellar performance so far this year, The Financial Times (August 24, 2016) chose to headline a front page article “Gold loses shine as Fed decision looms.” In the Commodities Section, a second piece was titled “Gold heads for monthly drop after investors turn anxious over rate rise and weaker demand.” Regardless gold’s performance,
Central bank actions and expectations of central bank actions are driving investment markets: the bond markets, the equity markets and the metals markets. Economic news does not move the markets, except that markets move on how investors think that central banks will react to economic news.
Metals prices surged Wednesday–as they should have–after the Fed announced no rate hike. Gold jumped 1.6%, silver a whopping 3.7%. The Fed decision was a reaffirmation of a continued loose monetary policy. Gold and silver investors need to keep in mind that the world’s monetary and fiscal policy makers have fully embraced loose money and
In “Cries for more money creation grow louder,” (Feb. 29, 2016) I noted that Financial Times chief economic commentator Martin Wolf called for central banks to deposit money directly into the accounts of all adults in an effort to stimulate economic activity. Now, John Mauldin, noted publisher of numerous advisory services, recently wrote that former
The dollar is a favorite refuge for money seeking safety as the European banking crisis again dominates financial news. Consequently, 10-year US treasury bills are now yielding a record low of 1.39% as money pours into them. (As bond prices are bid higher, yields drop.)
Not surprisingly, Mark Carney, head of the Bank of England, recently said that the central bank would take “whatever action is needed to support growth” in the aftermath of the Brexit vote. Carney’s statements seemed to have been crafted from Mario Draghi’s repeated promises that the European Central Bank would do “whatever it takes” to
For years, China watchers have warned that banks there are vulnerable to failure because of bad debt that the banks refuse to recognize. Now the IMF says that China’s corporate debt, which stands at 145 percent of Gross Domestic Product, “is a potential risk to the global economy.”
Is the US economy slowing down, which will prompt more Fed stimulus, or is it “dramatically better” as NY Fed President William C. Dudley said in a recent New York Times interview, which will allow the Fed to raise the discount rate later this year? In the first quarter, US Gross Domestic Product rose only
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