“While traders are certainly cautious there is NO PANIC. The primary difference from 16 months ago is of course the FED having moved to the ZERO BOUND so yields are just too low at this juncture to attract those in search of a haven at any price. The critical question remains: IF THE ONSET OF THE DELTA VARIANT INCREASES GEOMETRICALLY, WHAT WILL BE THE RESPONSE OF THE MONETARY AND FISCAL AUTHORITIES? WHAT TOOLS REMAIN IN THE BOX? THESE ARE THE CRITICAL ISSUES CONFRONTING ALL INVESTORS WITH U.S. RATES AT ZERO.”
07/20/2021 - Yra Harris: Are You Ready When Delta Is?
07/13/2021 - Alejandro Tagliavini – Grains and food, the inflation paradox
” ironically, as bulk food prices fall, many experts, such as Michael Snyder, recommend hoarding food from supermarkets: “For decades, Americans have not had to worry about food prices… Our supermarkets have always been full, and prices would always be roughly the same. Unfortunately, things are changing…”.”
07/06/2021 - Yra Harris: A Question to Ponder
“Do China and Russia have state authorities investing in the markets?
If the answer is yes then global investors have many issues to consider. The use of massive amounts of leverage (perfectly legal) utilized by Sovereign Wealth Funds and national pension funds have the power to distort prices as much as the involvement by the FED, ECB and BOJ to cause major distortions in the credit markets .. THE FED MAY NOT BE THE ONLY GAME IN TOWN.”
07/02/2021 - Inflation Alert: Bank of Canada fully monetizing Canada’s deficit spending?
06/28/2021 - Alejandro Tagliavini – The Argentinian Economy in an Exceedingly Difficult Situation
“El repunte de la inflación a nivel global sin dudas afectará a la Argentina, aunque mucho más graves son sus problemas internos. Sucede que, los astronómicos programas fiscales proporcionados por las economías más potentes están inflando los precios globales de manera importante. La suba del IPC (consecuencia de la inflación) en EE.UU. durante mayo alcanzó el 5% interanual, mucho para un país desarrollado y, sin dudas, esto recién comienza. Aunque, por otro lado, la ralentización en el crecimiento económico provocará cierta baja en los precios (el IPC) a pesar del aumento de la inflación (devaluación intrínseca de la moneda por exceso de emisión).”
06/22/2021 - Yra Harris – Plus ça Change, Plus C’est La Même Chose (An Ode to Jerome)
“Powell cherry-picked his transitory inflation indicators by specifically mentioning LUMBER and USED CAR PRICES. As Simon and Garfunkel sang 50 years ago, a man hears what they want to hear and disregards the rest. The FED has been, is and will be GUILTY of bias fitting in an effort to control the narrative they desire to foist upon the investing public.”
06/21/2021 - Alejandro Tagliavini – Humans, the natural market, and knowledge
“Human beings have a natural social vocation that, from the point of view of the production of material goods and services, gives birth to what we call the natural market, which, then, is made up of people who cooperate voluntarily and peacefully to improve themselves and serve society. Now this interaction leads us to find new knowledge, to discover previously unknown truths to improve our products and services in a process that has its origin in that “natural faith” that man has in the good and in the future. Knowledge that is born healthful when our emotions are accurate. Finally, knowing is loving. And in this process of knowing the Infinite is always present, reminding us of Perfection, of God.”
06/21/2021 - Yra Harris: From Tweets to Tweaks
“The “drastic” change in the DOT PLOTS also gave MONETARY HAWKS sustenance for an FOMC REVERSAL. The DOLLAR rallied as GOLD, SILVER and all the metals declined in response to the narrative to the end of the flexible adjusted inflation target (FAIT). The thinking goes that the FED will not allow inflation to run hotter for longer as has been the disposition of the market for the previous 10 months.
My sense is that this will not prove out. The massive selloff over Thursday and Friday was the result of the reflation trade being way overleveraged and margin clerks ruled the post-FOMC markets. Let the markets continue to correct for that is all part of being a successful trader.”
06/18/2021 - Adam Rozencwajg Podcast on the Fundamentals of Copper
Managing partner Adam Rozencwajg was recently featured on Financial Sense Wealth Management’s popular podcast to discuss the supply and demand backdrop for copper, and why we’ll likely see higher prices in the years ahead.
06/13/2021 - Alejandro Tagliavini – Stock markets in an unprecedented situation
” By the way, so far, the injection of money by central banks has been phenomenal, reaching USD 100 Trillions two weeks ago.”
06/07/2021 - Yra Harris: Schauble Pivots, Brainard Postulates
“The U.S. Treasury also wants to keep its borrowing costs as low as possible. One potential fundamental lifting bonds is if Congress does not agree on the massive stimulus package proposed by the Biden administration. But any failure of increased stimulus would see the stock market also correct as anticipation of stimulus gave way to disappointment. The S&P/BOND simple relationship, which has served us well over the last 25 years, should continue to be an important chart. DO YOUR WORK for the chart has been a key barometer of critical turns in the market — specifically October 2017 and October 2018.”
05/31/2021 - Alejandro Tagliavini – What the stock markets look like
“Most analysts estimate that Wall Street is oversold in the short term, even so, the rallies on Thursday and Friday were to be expected given that it was coming from several negative days in a row. But upside potential remains limited, as Lance Roberts estimates, although we can still see a relative rally for the S&P 500 and the Nasdaq over the next week. But a more extensive correction is expected this summer as markets are in an exceptionally long stretch without an expected 5% correction, so the odds are increasing.”
05/29/2021 - Tad Rivelle: Inflation is Already All Around Us
“The US system of finance was tested in 2020, the economy was tested and it survived the test which means that for now the reserve currency status of the Dollar is unquestioned – and that’s used for justification to continue the same policies. But there will be a point where people no longer can trust you to the same degree which runs the risk of a more generalized inflation and maybe a more generalized rebalancing away from the Dollar.”
05/28/2021 - Yra Harris: Precious Metal-backed Chinese CBDC?
“The idea of a STABLECOIN has been thrown around but she is the first one to define it: “A stablecoin is a type of digital asset whose value is tied in some way to traditional stores of value, such as government-issued, or fiat, currencies or gold. Stablecoins vary widely in the assets they are linked to, the ability of users to redeem the stablecoin claims for the reference assets, whether they allow unhosted wallets, and the extent, and the extent to which a central issueris liable for making good on redemptions rights. Unlike central bank fiat currencies, stablecoins do not have legal tender status.”
This is earth-moving comments from a FED governor. The mention of a GOLD-BACKED CBDC is what we at NOTES have been discussing as a Chinese move to disrupt the international order. Here we have Brainard raising the issue of a possibility of precious metals ensuring the value of the FED‘s stablecoin with an underlining value anchor. If the Chinese were to fulfill the role of Revisionist Power rather than status quo power what better way then to be first mover to a SILVER- or GOLD-backed CBDC. This is a very serious issue raised by a powerful voice on the Federal Reserve. Failure to be attentive will not serve the global investment world well. The DYNAMISM of GLOBAL FINANCE lies far beyond the walls of WALL STREET.
05/24/2021 - Yra Harris: To Russia With Love (Or Blinken Blinked)
“It seems like yesterday that Secretary of State Antony Blinken was asserting the U.S. to place even more sanctions on Russia as his boss was calling Vladimir Putin a thug and a murderer. The Russians took advantage of the “good news” and issued a long delayed bond offering and sold close to $2 billion of five- and 10-year debt. Also, if the removal of sanctions is indicative of more positive things to come, watch the ROUBLE, which has closed above the 200-day moving average for the last few days. I have remained long of RSX, the Russian fund for the past few years as it provides a solid yield but is far too heavy with energy/fossil fuel. Plus, the Russian central bank is helmed by one of the best bankers, Elvira Nabiullina.
The Biden administration is courting Russia for either an attempt to get greater support for a new Iran deal or, as some of NOTES readers have suggested, trying to move Russia a bit further away fro China. These are good conjectures as is also the idea that the U.S. is trying to repair some of the ill will with Germany created by the Trump administration. Given the way the DAX closed against the SPOOS it may be that repairing relations through removing sanctions on Russia will help generate greater economic activity in Germany. The S&P/DAX closed below the 200-day moving average.”
05/21/2021 - Admitting Bitcoin’s Environmental Flaws
“The carbon emissions of bitcoin are not just Elon Musk’s problem. As much as bitcoin fans hate to admit it, Satoshi’s currency was built on an inefficient mechanism and must give way to alternative protocols. Time for a greencoin to emerge from the dust?”
05/18/2021 - Alejandro Tagliavini – Global inflation rises and, by the time being, falls in Argentina
” If this inflation took time to transfer to prices – and that is why the CPI is now skyrocketing – it is due to the government’s repression on the exchange market and many prices – some subsidized – repression that, ironically, produced a drop in the increase of the production given the lack of profitability, ergo, a decrease in the demand for money, that is, a real inflation boosted.”
05/17/2021 - Yra Harris: Is the Fed In a War?
“Did the Chinese outwit the global actors in a quest to protect their paper assets? The answer may cause a shift in our views about the present rise in commodity prices. There was a Reuters article on Friday titled, “U.S. Tariff Review Considers Commodity Shortage, Inflation–Official.” This discussion is laughable for the U.S. imports almost zero commodities from China so why would that be the area of concern?
The strengthening YUAN would be a far better barometer of Chinese impact on global raw material prices. There’s lots to think about but watch the long-end of the yield curve to discern market action. If the FED chooses like Bartleby the Scrivner not to play then how STEEP can the yield curve go. When Paul Volcker was FED chair he INVERTED the yield curve to more than 600 basis points in an effort to crush inflation. How steep will the FED allow the CURVE to rise in an effort to hit its inflation target?”
05/11/2021 - Yra Harris: SIN or WIN, It’s a Generational Thing
“Put on your S.I.N. buttons and drive the FED to YIELD CURVE CONTROL, the mother of all tools in the YELLEN/POWELL toolbox.”
05/05/2021 - Alejandro Tagliavini – ¿Cómo sigue el dólar?
” La divisa estadounidense ampliaba sus ganancias este martes en los mercados globales, anulando en parte un declive de un mes, ante el menor apetito por el riesgo y mientras los inversores esperaban los próximos datos y discursos políticos. Ante la cautela reinante, los principales índices de acciones bajan y avanzan levemente los retornos de los bonos gubernamentales, con lo que el atractivo del billete verde aumenta, describían desde de Scotiabank.”