Economy | timiacono.com - Part 4

Gundlach on the Fed

From this story at Barron’s detailing the views of DoubleLine Capital bond fund king Jeffrey Gundlach at a recent conference come these gems about the central bank’s group therapy session now underway in snow covered Washington D.C.

“Frozen in their thinking”

“The Fed really needs to dial down the rhetoric or the markets will humiliate them with further declines”

The Fed’s models are based on “GDP forecast that has been wrong for years — it’s like the triumph of hope over experience, like a second marriage.”

“What the heck are these people doing?”

“Whistling past the graveyard.”

Of course, it’s all about that little squiggle to the right in the chart below (via this item at Quartz) and, more importantly, the possibility that more squiggles appear.

Boy, that 2004-2006 Greenspan “baby-steps” campaign is a thing of beauty. No?

Everybody Just Relax…

While cavorting with the world’s rich and powerful in Davos, Joe Stiglitz, Professor of Economics at Columbia University and Nobel Laureate in economics, talks about such things as the fragile global economy, income inequality, and the political mood in the U.S.

Somehow, the word “discontent” was omitted from the embedded video above (i.e., “Joseph Stiglitz: Political climate is reflecting a discontent”) – perhaps this was part of some sort of conspiracy to keep voters from getting even more riled up…

Ray Dalio on Downside Risks

Ray Dalio, head of Bridgewater Associates and their $155+ billion in assets under management, shares a few thoughts in Davos about the state of the global financial system and the Federal Reserve’s next move.

To wit:

…the risks are asymmetric on the downside, because asset prices are comparatively high at the same time there’s not an ability to ease. That asymmetric risk exists all around the world. So every country in the world needs an easier monetary policy … I think the next major move in Fed policy will be toward quantitative easing, not toward a tightening.

Why China Matters

After the worst start to a new year on record for stocks, news this morning that China’s exports were not nearly as bad as many feared sent stock markets surging higher for reasons that should be clear in the Voronoi diagram below from HowMuch.net.

Mission Accomplished

Fed whisperer Jon Hilsenrath of the Wall Street Journal gives central bank chief Janet Yellen a big pat on the back for yesterday’s first interest rate hike in nearly a decade, a move that, by nearly all accounts, was just what the world needed.

Of course, history shows that asset bubble don’t really get their groove on until the Fed starts raising rates, so, we’ve got that to look forward to now…

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