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Central Bank Musical Chairs

If the last few stock market days are interrupting your sleep, Jim Bianco and CNBC’s Rick Santelli are saying, get used to it.  The total assets of all central banks hit $16.4 trillion plus (an all-time high) and these banks now, collectively, own 33 percent of all the world’s sovereign bonds (someone/something had to buy ‘em).

Santelli’s question to Bianco was, if the aggregate size of the world’s central banks is at an all-time high, and these bank’s have purchased a third of all government paper, will these banks be able to “normalize in size” (shrink) without “going through a lot more stock market anguish?” Bianco’s response was a flat, “no.”

Reversing trillions of dollars worth of securities purchases will create market turmoil.  And now that price inflation has entered the equation, the ride is bound to be bumpy. So, who should 401k investors be worried about and keeping an eye on? Bianco and Santelli agree, that person is ECB head man Mario Draghi. Santelli believes Draghi may be caught without a chair in this game of monetary musical chairs. By the way, it’s not all about the Fed any more. “All central bank stimulus is fungible,” says Bianco, “it doesn’t matter who does it.”

The patron saint of central bankers, John Maynard Keynes, wrote in The General Theory,

For it is, so to speak, a game of Snap, of Old Maid, of Musical Chairs — a  pastime in which he is victor who says Snap neither too soon nor too late, who passed the  Old Maid to his neighbour before the game is over, who secures a chair for himself when  the music stops. These games can be played with zest and enjoyment, though all the players know that it is the Old Maid which is circulating, or that when the music stops  some of the players will find themselves unseated.”

…click on the above link to read the rest of the article…

April Cheers Could Bring May Tears, Have a Look…

April Cheers Could Bring May Tears, Have a Look…

Screen Shot 2016-04-21 at 12.52.14 PM

Raw Price to Monthly Volume:

Screen Shot 2016-04-21 at 11.33.29 AM

And the capital outflows….

Screen Shot 2016-04-21 at 11.58.31 AM

Now I heard Rick Santelli yesterday discuss whether the market can continue its run to new all time highs.  And with the obvious caveat of completely accepting that the fundamentals no longer have any correlation or relevance whatsoever to the market then yes, Santelli believes the market can reach all new highs.  On what, one may reasonably ask?  Well “kinetic energy”, he says, otherwise known as ‘Animal Spirits’ on Wall Street.

But it’s not so much kinetic energy that is levitating this market devoid of any supportive fundamentals, it is the fact that volumes are thin enough and technology has progressed enough that it has become entirely viable for existing policy champions (NY Fed/Citadel algos) to halt even drastic downward momentum runs and then for corporate treasury departments to grind the markets higher through record buybacks.  What we have left is a market of price insensitive participants i.e. corporate treasury departments and the Fed’s cronies (who incidentally make a fortune enacting the manipulation on behalf of the Fed).

Now I know that the last few remaining true believers, because I’ve talked to several, will suggest this explanation is just fancy talk.  But I ask you to look at the above charts and explain to me how else a market runs higher for 7 years in the face of the capital and volume exodus that has taken place?

…click on the above link to read the rest of the article…

Santelli Stunned As Janet Yellen Admits “Cash Is Not A Store Of Value”

Santelli Stunned As Janet Yellen Admits “Cash Is Not A Store Of Value”

Intended warning or unintended slip? After Alan Greenspan’s confessional admission that

Gold is a currency. It is still, by all evidence, a premier currency. No fiat currency, including the dollar, can match it,”

we found it remarkable that during the Q&A after her speech today that Janet Yellen, when asked about negative rates, admitted that

“cash in not a very convenient store of value,”

seemingly hinting at Bernanke’s helicopter and that there will be no deflation in The US ever…  

Rick Santelli then sums it all up perfectly…  

“deflation is clearly the boogeyman… and the only thing that will save the middle class.”

*  *  *

Yellen: “cash is not a convenient store of value”

* * *

So if cash is not a very convenient store of value… what is? Biotechs? As Rick Santelli explains… this is the scariest thing she has ever said…

Santelli: “deflation is the boogeyman… and the only thing that can save the middle class is lower prices”

 

…click on the above link to view videos…

 

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