Media

01/12/2021 - Daniel Lacalle: Commodities Signal Stagflation Risk

“What is the problem of stagflation? Prices rise, economic growth is stagnant, which means that the cost of living for most citizens worsens dramatically. The central bank may continue with its misguided and wrongly-called “expansionary policy” because growth is poor, but the situation of millions of citizens rapidly deteriorates. In that scenario, governments resort to hiking taxes, which puts another burden on growth and jobs. The only way to avoid stagflation is to curb massive inflationary policies before they create a larger mess. It may cause a short-term bump in sovereign yields but the demand from fixed-income investors should be ample enough to avoid a debt crisis. After all, if central banks and mainstream economists believe there is such a savings glut and such a massive search for yield, a slowdown in asset purchases should have no consequence. What can really cause a debt crisis is to ignore the risks and continue expanding the central banks’ balance sheets as if nothing is happening.”

LINK HERE to the Article

Disclaimer: The views or opinions expressed in this blog post may or may not be representative of the views or opinions of the Financial Repression Authority.


01/04/2021 - Yra Harris: Where Do We Go From Here?

“Despite the Fed’s success, the financial markets are now wondering how the central bank and its global counterparts — ECB, BOE, BOJ, SNB, RBA, RBNZ, BOC — plan to EXIT this flood of liquidity without causing asset prices to collapse …

So, WHERE DO WE GO FROM HERE? We’re going to deal with the increase in INFLATION to above the 2% targets of all the central banks …

How long will the FED allow economic growth to accelerate before RAISING RATES and will this prompt the necessity of YIELD CURVE CONTROL to prevent any market action to RAISE THE LONG END OF THE CURVE, thus subverting the intentions of a TREASURY/FED dedicated to social justice rather than traditional economic outcomes?”

LINK HERE to the Blog Post

Disclaimer: The views or opinions expressed in this blog post may or may not be representative of the views or opinions of the Financial Repression Authority.


01/03/2021 - Alejandro Tagliavini – Mas combustible para el Bitcoin que sigue rompiendo récords

“El Bitcoin (BTC) llegó a subir hasta arriba de los USD 34.000 solo unas semanas después de superar otro hito importante ya que avanzó casi un 50% en diciembre, cuando superó los USD 20.000 por primera vez. Y “estará en camino a los USD 50.000 probablemente en el primer trimestre de 2021″, según Antoni Trenchev, socio gerente y cofundador de Nexo en Londres, el mayor prestamista de criptomonedas del mundo. Tone Vays, un popular analista cripto, sugirió que el precio podría alcanzar los USD 300.000 para fines de 2021. Y más todavía, esta “criptomoneda” debería eventualmente subir hasta alrededor de USD 400.000, según Scott Minerd, director de inversiones de Guggenheim Investments.”

LINK HERE to the Article

Disclaimer: The views or opinions expressed in this blog post may or may not be representative of the views or opinions of the Financial Repression Authority.


12/31/2020 - Charles Gave: Inflation will come back with a Vengeance

“Buy value stocks, buy the commodities sector, and buy emerging markets. And for the antifragile part of your portfolio, buy RMB bonds and gold. ..

I’m a big bull on Japan, it’s not a crowded trade, so I feel comfortable in it. In a world that is reflating, Japan typically does well. And in this unfolding new Cold War between the U.S. and China, Japanese industrial companies are well positioned. ..

The market value of the global semiconductor industry has moved above the market value of the global energy sector. The market is telling us that semiconductors are more important than energy; they are the commodity of the future. We should think of Taiwan the way we used to think of Saudi Arabia .. The leadership in the semiconductor industry now belongs to Taiwan.”

LINK HERE to the Article

Disclaimer: The views or opinions expressed in this blog post may or may not be representative of the views or opinions of the Financial Repression Authority.


12/30/2020 - Daniel Lacalle: This Time Is Not Different. More Debt, Less Growth

‘Two factors tell us that the recovery in 2021 will likely be disappointing. Massive liquidity injections, with $26 trillion injected by central banks, have been used mostly to perpetuate elevated government spending, fundamentally current spending, and fund public debt. The second is that corporate balance sheets have been damaged to a level that will make it difficult to see a significant growth in investment above depreciation. SP Global expects global capital expenditure to remain weak in 2021.”

LINK HERE to the Article

Disclaimer: The views or opinions expressed in this blog post may or may not be representative of the views or opinions of the Financial Repression Authority.


12/30/2020 - Jim Bianco Intensifies his Inflation Warning

Disclaimer: The views or opinions expressed in this blog post may or may not be representative of the views or opinions of the Financial Repression Authority.


12/22/2020 - Yra Harris: Never Have Been and Never Will Be

“The U.S. Treasury named the Swiss a MANIPULATOR on December 16. And it just so happened that the SNB happened to have a meeting the following morning. The Swiss response was terse: “The SNB is keeping the SNB policy rate and interest on sight deposits at the SNB at -0.75%. In light of the highly valued Swiss franc, the SNB remains willing to intervene more strongly in the foreign exchange market.”

The SNB is concerned about an overly desirable Swissie having a continued deflationary effect on the Swiss economy. This is the same RATIONALE used by all central banks as they keep interest rates lower for longer. The FED is “guilty” of using the same rationale to embark on a continued its ZIRP in an effort to meet its inflation target. Could the Treasury be more DISINGENUOUS? The only concern for markets is that this use of the LABEL will keep continued downward pressure on the DOLLAR as there are some central banks that fear being so labelled with all the negative effects, possible financial repercussions.

This sums up the negative aspects that fiat currencies find themselves. Bitcoin and precious metals, anyone?”

LINK HERE to the Blog Post

Disclaimer: The views or opinions expressed in this blog post may or may not be representative of the views or opinions of the Financial Repression Authority.


12/18/2020 - Yra Harris: Was Powell’s Press Conference Loaded for Bears?

“Powell went out of his way to note the FED wasn’t worried about TRANSIENT INFLATION in some prices because this is not like the 1970s where a 6% annual increase led to a 6% increase in all prices the following year, promoting a cycle of ever higher prices. What Powell didn’t explain was to WHY. Private sector unions have been decimated by the flow of money around the globe seeking cheap labor, which has DESTROYED private sector negotiating power.
The collapse of the Soviet Union and rise of China freed hundreds of millions of workers to join the world economy and compete for jobs. It seems that the FED is aware that the rise of India will bring even more workers thus giving credence to my view of NEHRU not NAIRU. The FED is bent of lower for longer.
The Fed also released an addendum statement about extending the DOLLAR SWAP LINES to the central banks in need of DOLLARS last March when the U.S. DOLLAR SOARED IN RESPONSE TO FEARS OF A GLOBAL DEPRESSION brought on by COVID. The DOLLAR is currently making multi-year lows so what is the need to extend this special program except to allow the world to know THE WINDOW IS OPEN. That’s truly a statement of LOWER FOR LONGER.
In the 24 hours post-meeting, the markets have responded with an equity market rally, a large appreciation of the precious metals commodity prices — now at the highest level since mid-February — and most importantly, a sizable selloff in the U.S. DOLLAR. Now, if the FED were to actually announce any ostensible YCC look for these outcomes to continue in a major momentum move. LOWER FOR LONGER to combat incipient global deflation doesn’t appear except in the bowels of the FOMC. Do you see what I see?”

LINK HERE to the Blog Post

Disclaimer: The views or opinions expressed in this blog post may or may not be representative of the views or opinions of the Financial Repression Authority.


12/17/2020 - Dr. Marc Faber on Commodities and other Investment Opportunities

Disclaimer: The views or opinions expressed in this blog post may or may not be representative of the views or opinions of the Financial Repression Authority.


12/16/2020 - Mohamed El-Erian on the 2021 Expectations for the Global Economy

Disclaimer: The views or opinions expressed in this blog post may or may not be representative of the views or opinions of the Financial Repression Authority.


12/15/2020 - Alejandro Tagliavini – Cuando el relato ortodoxo se desmiente

“La brecha cambiaria cae por una baja en la emisión monetaria total, que a su vez, se achica porque baja el gasto en términos reales. No obstante, el gasto no podrá ser reducido mucho más y la economía, promete seguir cayendo.”

LINK HERE to the Article

Disclaimer: The views or opinions expressed in this blog post may or may not be representative of the views or opinions of the Financial Repression Authority.


12/14/2020 - Yra Harris: Going Around and Around

“Watch the yield curves as a barometer for investor sentiment on any outlook for a COVID stimulus pact ..

The ECB and the FED would do well to disappoint markets in an effort reinject some pain for investors. Capitalism demands it. In addition, central bank inaction would force governments to rely more on fiscal stimulus to generate activity, something all the central banks are promoting…

Listen for this type of policy action from the FOMC at this week’s meeting. By ensuring the FED will be there to BUY the longer duration assets “it could potentially avoid some of the tantrum dynamics that have led to premature steepening  at the end of the yield curve in several jurisdictions.” This would be the final arrow in the quiver of financial repression. Brainard has been silent about YCC lately but this meeting may bring her work back to the fore as the FED is stuck at the zero lower bound while encumbered with an intransigent Congress.

The impact from active YCC would be a negative for the DOLLAR, positive for equities and many commodities. The FED will not be alone in YCC for the Aussies, Canadians, Brits Japanese — and to some extent the ECB — are already there. But the U.S. role as the world’s reserve currency is a variable unknown to the other central banks. These are global financial policies spinning like a dreidel.”

Yra Harris Blog Post – LINK HERE

Disclaimer: The views or opinions expressed in this blog post may or may not be representative of the views or opinions of the Financial Repression Authority.


12/10/2020 - William White: Will the Next Decade See the Return of Inflation?

“Should inflationary expectations suddenly rise, as they suddenly fell in the early 1980s, inflation might hit much higher levels. A vigorous central bank response might be impeded by a growing focus on resisting slower growth, as well as by lobbying from governments and others exposed to high debt levels.”

LINK HERE to the Article

Disclaimer: The views or opinions expressed in this blog post may or may not be representative of the views or opinions of the Financial Repression Authority.


12/09/2020 - Reflections over the Past Year to Today – Yra Harris, David Rosenberg, Peter Boockvar, Chris Whalen

The post Covid era and associated responses by governments and central banks have presented challenges, stimulus and policy changes which have affected the financial markets:

December 2020:

December 2019:

October 2019:

Disclaimer: The views or opinions expressed in this blog post may or may not be representative of the views or opinions of the Financial Repression Authority.


12/08/2020 - Alejandro Tagliavini – Hasta dónde subirá Wall Street (Argentina sin piso)

“El Gobierno habló de salir adelante con “empresarios que inviertan y den trabajo”, pero sin ninguna solución en el horizonte. Las inversiones en argentina ya no rinden y se da en un contexto de incertidumbre por la pandemia. Los detalles del mercado financiero y sus movimientos.

LINK HERE to the Article

Disclaimer: The views or opinions expressed in this blog post may or may not be representative of the views or opinions of the Financial Repression Authority.


12/07/2020 - Two Ways the Indebted Western World may Employ to Address Unsustainable Debt

  1. Inflation – over time this will reduce the burden of debt
  2. Perpetual Bonds – either issuing new bonds as perpetual bonds – the principal is never repaid, you only get the interest yield distribution .. or restructuring existing debt towards a change to perpetual bonds

In this article George Soros suggests using perpetual bonds in Europe:

LINK HERE to the Article

Disclaimer: The views or opinions expressed in this blog post may or may not be representative of the views or opinions of the Financial Repression Authority.


12/07/2020 - Yra Harris: Return of the Bond Vigilantes?

“If the U.S. central bank remains RETICENT to move its QE further out in duration — targeting the LONG END of the curve — the BOND VIGILANTES will ride again by continuing to SELL THE LONGEST DURATION BECAUSE IT IS THERE THEY WON’T HAVE TO FIGHT THE FED. The LONG END WILL BE the area of least resistance. How high will the yield on the 30-YEAR BOND have to rise until the FED’S SOMA DESK BECOMES THE IMMOVABLE OBJECT? Mike Temple believes Yield Curve Control will be necessary in the first quarter of 2021. I see no reason to argue.”

LINK HERE to the Blog Post

Disclaimer: The views or opinions expressed in this blog post may or may not be representative of the views or opinions of the Financial Repression Authority.


12/06/2020 - Louis-Vincent Gave: “The Renminbi Will Gain Wider Use Globally”

“The Covid response in the U.S. has been a $12,800 increase in debt per capita; in the United Kingdom, it’s $7,000, and in Germany and France, $5,300. In China, it’s $1,200. The Western world responded with massive increases in budget deficits, which could constrain future policy options, while Asia, especially China, hasn’t.”

“I look at currencies like computer operating systems. Most Gavekal clients use Microsoft because everyone else uses it. The dollar is Microsoft. Go back to 2005-06, when Apple was trading at nine times earnings and viewed as making a niche product. In 2007, Apple said it would create a parallel system and went straight to the consumer, who took [Apple] not because it was cheaper but because it was easier. So the renminbi is Apple.”

LINK HERE to the Article

Disclaimer: The views or opinions expressed in this blog post may or may not be representative of the views or opinions of the Financial Repression Authority.


12/04/2020 - Yra Harris: Closing In On Critical Levels

“In January 2015 the SWISS NATIONAL BANK pulled the PLUG on the EUR/CHF PEG, sending the Swiss franc soaring. This was predicted in several posts here at Notes From Underground weeks before the event resulting in major profits for those currency traders who followed our musings. The week of the SNB action resulted in a trading range of 1.0241 to 0.7360.

The following week saw the markets calm as the range was 0.8840-0.8502 with the weekly close at 0.8803. This week we have seen a dollar/Swiss low of 0.8891 so getting close to a major market action critical low. This has resulted in a huge move in the FRANC even as the SNB is printing large amounts of its currency in an effort to STEM its appreciation.

We refer to the SWISS as the greatest ALCHEMISTS of all time as it prints currency and uses it to buy baskets of global equities. Over the last five years, the SNB has become one of the major shareholders in stocks such as APPLE. The Swiss central bank is a hedge fund with its own printing press. Look for the SNB to get aggressive in an effort to halt the rise in the FRANC. Again, interesting times and the value of the Swiss franc is certainly a reflection of the madness.”

LINK HERE to the Article

Disclaimer: The views or opinions expressed in this blog post may or may not be representative of the views or opinions of the Financial Repression Authority.


12/03/2020 - Marillac Saint Vincent Family Services – see note from Yra Harris

from Yra Harris: “I ask my readers to contribute to a fund affiliated with the 50-year work of my friend Mike Sturch, which feeds the hungry and clothes the naked and every penny goes where intended, to the following address:

Marillac Saint Vincent Family Services
c/o Peter Beale-DelVecchio
6340 N. Magnolia Ave #1 S
Chicago, IL 60660

I hope that those who have benefited from NOTES FROM UNDERGROUND will be generous as the needs of the community increase everyday.”

Disclaimer: The views or opinions expressed in this blog post may or may not be representative of the views or opinions of the Financial Repression Authority.