Everything Explained: CB Intervention Gooses Socks, Crisis Triggers CB Action—-Therefore Chaos Creates Wealth
To clear up any confusion as to how, or why the “markets” can now be at “never before seen in the history of mankind highs” once again after the resounding “NO” vote in Italy, where the entire E.U. experiment is now seriously undermined, and falling apart in real-time (Bexit first, Italy will surely now vote next, etc., etc,) below is the calculation that explains it all.
President-elect Donald Trump said the latest Air Force One order should be canceled, citing the high costs of converting the Boeing Co. jumbo jet for presidential use. “Boeing is building a brand new 747 Air Force One for future presidents, but costs are out of control, more than $4 billion,” Trump said Tuesday on Twitter. “Cancel order!”
More Trouble In Auto Debt Land—–Subprime Volumes Falling, Used Car Prices Weakening, Defaults Rising
Auto lenders are scaling back loans to subprime borrowers but loosening other terms in a bid to keep loan volume going. Loans extended to subprime borrowers with a credit score of 501 to 600 on a scale that tops out at 850 fell 4.5% in the third quarter from a year prior, according to data released Monday by Experian Automotive, a unit of credit-reporting firm Experian PLC. For borrowers with even lower scores, lending fell 2.8% over the same period to reach the lowest level since at least 2011. Credit scores for borrowers receiving loans and leases on average increased.
Donald Trump’s threats to use taxes as “retribution” against U.S. companies that move jobs overseas are legally dubious, tax specialists say — and they’re prompting resistance from some Republican leaders who fear a coming era of economic protectionism or international trade wars.
Some people say that “personnel is policy,” and that much can be predicted about Trump’s foreign policy by the people he has appointed to serve his Administration. That is where we might have reason to be worried. Take Iran, for example. While Trump says he wants the US to stop overthrowing governments, on the issue of Iran both the candidate and his recent appointees have taken a very different view.Trump’s pick for National Security Advisor, Michael Flynn, has said the following about Iran: “I believe that Iran represents a clear and present danger to the region, and eventually to the world…” and, “…regime change in Tehran is the best way to stop the Iranian nuclear weapons program.”
While Italy’s economy is stagnating its political center is disintegrating, making reforms all the more challenging. It has very few other tools at its disposal with no ability to implement monetary stimulus and its already high debt load limiting fiscal stimulus options. If the nation can’t get its economy going, an EU bailout would likely require so much money that it would likely trigger a political revolt in Germany’s parliament. That’s the same German parliament that is facing an election next September…. we could easily see pressure mount for it to leave the Eurozone both from within and outside the country. While Brexit involves messy renegotiations, it doesn’t threaten the single currency An Italexit on the other hand could not only threaten the currency, but unleash a financial crisis in the region.
In other words, the rise in the cross-currency basis is correlated with dollar strength so that when the greenback surged, CIP deviations widened. So look to the dollar and cross-currency basis swaps in the months ahead to observe risk-appetite among global banks…….. Dollar shortages in Asia loom next year, a headwind for trade and financial transactions, according to analysts citing, in part, an uptick in cross-currency basis swap spreads….researchers led by Stefan Avdjiev highlighted how the dollar is a key driver of bank balance sheets, effectively dethroning the CBOE Volatility Index (VIX) as a benchmark for market fears. The stronger the dollar, the wider the deviations from covered interest parity (CIP), slowing down cross-border bank capital flows in dollars, the analysts noted.
The War Party Is Off Its Rocker—–Attempting to Ratify Montenegro’s Accession to NATO During Lame Duck Session
Historically countries made alliances to improve their defense or otherwise advance important security interests. In contrast, the U.S. uses NATO as a form of international welfare, inducting nations with little military capability or even economic strength. The latest recipient of defense charity is expected to be Montenegro, whose membership application influential Senators hope to rush through the lame duck session.
Bank of England head, and former Goldman partner, Mark Carney defended his central bank’s near-zero borrowing costs which have been increasingly criticized by local politicians ever since the Brexit vote, claiming that central bank monetary policies have not been the cause behind wealth transfer….”Has monetary policy robbed savers to pay borrowers? Has the MPC been Robin Hood in reverse? In a word, no.” Which is surprising, because in many more words, some 20 pages worth, in March of this year, the BIS released a research report titled “Wealth inequality and monetary policy“, in which it said that its “simulation suggests that wealth inequality has risen since the Great Financial Crisis.
The Pentagon has buried an internal study that exposed $125 billion in administrative waste in its business operations amid fears Congress would use the findings as an excuse to slash the defense budget, according to interviews and confidential memos obtained by The Washington Post. Pentagon leaders had requested the study to help make their enormous back-office bureaucracy more efficient and reinvest any savings in combat power. But after the project documented far more wasteful spending than expected, senior defense officials moved swiftly to kill it by discrediting and suppressing the results.