tag:blogger.com,1999:blog-6616959642391988608.post1880215515298246703..comments2024-03-28T00:18:25.641-07:00Comments on Calafia Beach Pundit: Risk aversion is still the order of the dayScott Grannishttp://www.blogger.com/profile/14028519647946868684noreply@blogger.comBlogger31125tag:blogger.com,1999:blog-6616959642391988608.post-29196911649203218732016-05-31T18:50:11.589-07:002016-05-31T18:50:11.589-07:00Benjamin, re central banks' ability to stimula...Benjamin, re central banks' ability to stimulate economies and put people to work: I suggest you read Howard Marks' recent memo that explains in pretty simple terms why monetary policy cannot create growth (among other very good points he makes about why most politicians' promises are absurd):<br /><br />https://www.oaktreecapital.com/insights/howard-marks-memosScott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-76090249132834378172016-05-31T17:13:59.550-07:002016-05-31T17:13:59.550-07:00PCE April just in at 1.6% YoY.
The Fed is under...PCE April just in at 1.6% YoY. <br /><br />The Fed is under-shooting its stated inflation target, which is not supposed to be a ceiling but an average. The target is 2% on the PCE.<br /><br />So...let's raise rates.<br /><br />Side note: Japan today has virtually no unemployment and no inflation, and this situation has persisted for years. Why is the Fed so afraid of putting Americans to Benjamin Colehttps://www.blogger.com/profile/14001038338873263877noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-25586356219647786652016-05-31T12:15:24.196-07:002016-05-31T12:15:24.196-07:00Hans, re business loans "reaching new highs:&...Hans, re business loans "reaching new highs:" This is misleading. To begin with, the chart you link to shows the nominal level of delinquencies on C&I Loans; over time, nominal values are very likely to rise and to hit new highs repeatedly. A better analysis would look at the ratio of delinquencies to total loans: <br /><br />Over the past 30 years, C&I Loan delinquency rates Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-56010024522695712072016-05-31T10:21:55.237-07:002016-05-31T10:21:55.237-07:00philadiaries: Ever since early 2009 I've been ...philadiaries: Ever since early 2009 I've been calling for a sub-par recovery, and that's what we've seen. I've called it a miserably weak recovery, I've noted how personal income is trillions less than it could have been had this been a normal recovery, and I've noted how upset people are and why:<br /><br />http://scottgrannis.blogspot.com/2014/04/Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-33142058674227070722016-05-31T10:00:38.877-07:002016-05-31T10:00:38.877-07:00While the news at the "too big to fail" ...While the news at the "too big to fail" level of our economy may look bright, the news along Main Street USA is gloomy as evidenced by long-term declines in real working wages, real home values, and the employment to population ratio (none of which have yet recovered to pre-2008 levels). As a result, the "too big to fail" establishment folks have created an emerging conflict McKibbinUSAhttps://www.blogger.com/profile/10545798495680527622noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-35581780471381279922016-05-31T06:31:06.345-07:002016-05-31T06:31:06.345-07:00scott- I've been following your research going...scott- I've been following your research going back to your days at wamco, thanks for all of the good intel over the years. I hear your argument that the consumer is in good shape and being careful with their balance sheet, which is good. What if those numbers are skewed by the amount of cash and lack of debt by the wealthy individuals in this country(top 10% of the population controls are philadiarieshttps://www.blogger.com/profile/06869789136215318166noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-31315603372298447222016-05-30T11:04:48.841-07:002016-05-30T11:04:48.841-07:00Why did the moron(s) at the FRS choose $400.00 for...Why did the moron(s) at the FRS choose $400.00 for a minimum<br />in savings for emergencies? That would not even pay for <br />dinner for four at New Yorky finest eatery!!!<br /><br />Anyways, this link is utterly shocking at the financial affairs<br />of too many Americans!<br /><br />The more households join this unwanted club, the greater potential <br />for another American Revolution!! The Hanshttps://www.blogger.com/profile/05183141792723754273noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-55593711310203895602016-05-30T06:02:02.813-07:002016-05-30T06:02:02.813-07:00Business loans defaults are reaching new highs.
h...Business loans defaults are reaching new highs.<br /><br />http://www.econmatters.com/2016/05/business-loan-delinquencies-spike-to.html<br /><br />Hanshttps://www.blogger.com/profile/05183141792723754273noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-65566304202126150172016-05-29T18:02:59.732-07:002016-05-29T18:02:59.732-07:00Hear is the FRS ending the chart report of excess ...Hear is the FRS ending the chart report of excess reserves<br />and replacing it with (H.3) which is less than transparent. <br /><br />https://research.stlouisfed.org/fred2/series/EXCRESNS?cid=123 Last year<br />it report this chart was 2013.<br /><br />http://www.economicpolicyjournal.com/2013/07/how-federal-reserve-just-hid-important.html<br /><br />Yes, years of data now lost, especially for Hanshttps://www.blogger.com/profile/05183141792723754273noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-39012471233110220292016-05-29T06:13:58.771-07:002016-05-29T06:13:58.771-07:00Why the FRS is obsolete and no longer needed.
htt...Why the FRS is obsolete and no longer needed.<br /><br />http://www.realclearmarkets.com/articles/2016/05/28/end_the_fed_a_new_book_says_the_fed_is_irrelevant_102190.htmlHanshttps://www.blogger.com/profile/05183141792723754273noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-65231071615473608452016-05-29T05:43:40.712-07:002016-05-29T05:43:40.712-07:00NOW HEAR THIS!!
"The Fed is poised to take h...NOW HEAR THIS!!<br /><br />"The Fed is poised to take huge capital losses<br /><br />But it gets worse. The Fed is taking capital losses on its $4.3 trillion bond portfolio, and those losses will eventually accelerate. When the bonds that the Fed holds mature, it realizes losses because it paid above-market prices for most of them to begin with.<br /><br />The Fed is currently keeping its Hanshttps://www.blogger.com/profile/05183141792723754273noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-32147950322051809802016-05-28T08:54:58.502-07:002016-05-28T08:54:58.502-07:00"Also, how did the Fed issue reserves to the ..."Also, how did the Fed issue reserves to the primary dealers? Where did these reserves come from? The description of "printing" to the general population may very well differ from the description in high level economic circles. "<br /><br />Thinking, yes indeed where did all the money go to non-bank institutions? Did the<br />FRS create new reserves for them in some special Hanshttps://www.blogger.com/profile/05183141792723754273noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-30714338409253122392016-05-27T20:52:28.177-07:002016-05-27T20:52:28.177-07:00This comment has been removed by the author.McKibbinUSAhttps://www.blogger.com/profile/10545798495680527622noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-79795352020633276622016-05-27T20:46:07.412-07:002016-05-27T20:46:07.412-07:00consider the negative effect of millions of ordina...consider the negative effect of millions of ordinary people not having sufficient interest income to buy stuff, can that be quantified? can zero or negative rates be a negative reinforcing loop for both low inflation AND a massive consumer block which has no interest income to spend?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-60724503803195567272016-05-27T17:15:54.485-07:002016-05-27T17:15:54.485-07:00A rate hike now strikes me as injudicious and risk...A rate hike now strikes me as injudicious and risky. The last time the Fed preemptively moved to fight inflation was...2008.<br /><br />Why raise rates? Name one industry straining to meet demand. Actually, are there industries that are not glutted? <br /><br />Where?Benjamin Colehttps://www.blogger.com/profile/14001038338873263877noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-43400274129328132072016-05-27T16:39:01.479-07:002016-05-27T16:39:01.479-07:00Look at an intraday chart of the USD today. That ...Look at an intraday chart of the USD today. That abrupt surge up to highest levels since March was the moment Janey Yellen pretty much said there would be a rate hike in the next couple of months.<br /><br />What's gonna happen to gold and oil? Will there be similar headwinds to multinationals like last year, or will this move be muted??Johnny Bee Dawghttps://www.blogger.com/profile/06836875640973245734noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-19674072508148339162016-05-27T16:28:05.954-07:002016-05-27T16:28:05.954-07:00Cant agree with this post more!
Paragraphs 2, 3 a...Cant agree with this post more!<br /><br />Paragraphs 2, 3 and 4 should just stay on the Home Page forever....or at least be posted on every refrigerator in the country so America has to see it every time a beer is fetched. And include the paragraph explaining that the Fed didn't artificially depress interest rates with QE purchases. And the part about the Fed NOT being able to control Johnny Bee Dawghttps://www.blogger.com/profile/06836875640973245734noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-56302372110662922752016-05-27T05:31:48.149-07:002016-05-27T05:31:48.149-07:00https://research.stlouisfed.org/fred2/graph/fredgr...https://research.stlouisfed.org/fred2/graph/fredgraph.png?g=4zvT<br /><br />I prefer to view QE (as a policy) as a method of capping a rise in yield in the face of increased debt levels. The U.S. government increased deficit spending and overall federal debt levels with falling yields on U.S. treasuries. How? A major buyer since 2008 has been the Fed.<br /><br />Also, how did the Fed issue Thinking Hardhttps://www.blogger.com/profile/11528747799967719972noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-61497841284786233272016-05-26T17:29:53.740-07:002016-05-26T17:29:53.740-07:00Re pension funding. The 10-yr Treasury yield plus ...Re pension funding. The 10-yr Treasury yield plus some spread such as a single-A corporate spread (e.g., 50-100 bps), is commonly used to calculate a pension's funded status. The average of the 10-yr over the past two years is 2.11%, whereas the average over the past 25 years is 4.56%. As you note, that is a significant difference. Your plan is now assuming bond returns of at least 4.56% per Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-25415040062216357442016-05-26T16:07:07.246-07:002016-05-26T16:07:07.246-07:00Regarding funding of pension plans, I recently rec...Regarding funding of pension plans, I recently received an interesting notice from my pension plan. Basically, because of the Highway and Transportation Funding Act of 2014 and the Bipartisan Budget Act of 2015, the plan can now use a 25-year average of interest rates when determining funding target attainment. In the recent past, they were required to use the most recent 2 year average.<br /><Andrewhttps://www.blogger.com/profile/01390035459036380103noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-50086630539892100382016-05-26T09:23:38.958-07:002016-05-26T09:23:38.958-07:00Dodd-Frank has made life miserable for the banking...Dodd-Frank has made life miserable for the banking industry in general.Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-51040275229584654522016-05-26T09:01:33.767-07:002016-05-26T09:01:33.767-07:00Scott
Nor sure the FDIC and others are forcing t...Scott<br /><br />Nor sure the FDIC and others are forcing tighter lending standards don't forget that the banks got scared shitless in 2008 when they realized that no one was paying attention to credit standards. Also, capital markets buyers have become more difficult because of 2008 -- where you could argue there were no lending standards (and if there were, they were not applied). <br /Frozen in the Northhttps://www.blogger.com/profile/04901959687094626879noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-85122641230607160602016-05-26T08:36:14.650-07:002016-05-26T08:36:14.650-07:00steve, re low rates: I would guess that most insur...steve, re low rates: I would guess that most insurers have adopted to low rates of return, because it's a matter of survival. However, we are now learning that an increasing number of public pension funds have experienced a decline in their funded status because of overly optimistic return assumptions. Why? Because they can always turn to the taxpayer to pay for their mistakes. Whether Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-63674579806042659832016-05-26T08:26:00.029-07:002016-05-26T08:26:00.029-07:00Frozen: I would argue that "tightened lending...Frozen: I would argue that "tightened lending standards" falls into the category of increased regulatory burdens, which I've been noting for years is one of the reasons we've had sub-par economic growth. It's also symptomatic of risk aversion of course, on the part of politicians and the general electorate.<br /><br />I think you're right to argue that fear of new Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-28230721317375824072016-05-26T08:20:36.370-07:002016-05-26T08:20:36.370-07:00Dan, re debt: I highly recommend you read this pos...Dan, re debt: I highly recommend you read this post of mine on the subject:<br /><br />http://scottgrannis.blogspot.com/2015/07/more-on-why-greece-is-not-big-problem.html<br /><br />"In short, much of the disruption that can be expected from debt problems has already happened."Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.com