The Mess That Greenspan Made - Part 21

Amid all the hubbub about the implications of the Greek election and snowpmageddon on the East Coast we are reminded that there is a Federal Reserve meeting this week, during which central bank policy makers are sure to talk about the location of the dots and the shape of the curves in the graphic below from this story at the Financial Times.

Notwithstanding the fact that Fed funds futures are notoriously unreliable for saying much of anything relevant about the future of the Fed funds rate (though they’re  not nearly as bad as the Fed’s own projections in recent years), the point of this story is a good one, namely, that the brain trust at the central bank will be giving due consideration to a major re-think of the whole idea of a June “lift off” for short-term interest rates, though they’re not likely to share much about that discussion with the rest of us.

Given the global economic headwinds (everywhere but in the U.S., or so it seems), the bond market certainly isn’t expecting a rate hike anytime soon as yields have plunged anew and the Fed is surely not anxious for a repeat of Greenspan’s mid-2000’s “conundrum” that led to the events of 2008-2009. Things are getting interesting for Ms. Yellen.

Monday Morning Links

Europe’s Austerity Moment Is Ending – The Atlantic
Tsipras Forges Anti-Austerity Coalition in EU Challenge – Bloomberg
Syriza victory: ‘Worse than expected’, ‘Spells trouble’ – MarketWatch
Greeks See Light at the End of the Austerity Tunnel – Fiscal Times
Greek vote could be only the beginning for debtor states seeking a euro-exit – Telegraph
The new Greek PM’s first tweet after winning was to the lead actor in “House” – Quartz
PEGIDA Holds First Protest in Germany Since Leader’s Hitler Selfie Went Viral – Vice News
This is what stores in the Northeast look like when a snowstorm is on the way – Vox
Fat and broke? Why overweight people may be (financially) miserable – MarketWatch
Oil & Gas Default Wave, “Outright Liquidations” Next – Wolf Street
Is Q-ECB a Favorable Development? – Hussman Funds
The Deflation Threat – Alhambra Partners

Stock Futures Fall After Syriza Wins Greek Election – Bloomberg
Did Goldman Call The Top Of The “Strong Dollar” Trade – Zero Hedge
What’s been driving the price of oil down? – Econbrowser
America’s Losing the Currency War – Bloomberg
Treasury Yield Gap at Lowest Since 2008 – Bloomberg
Gold slips as equities recover after Greek vote – Reuters
Euro Gold Surges To EUR 1,168 After Greek Election Landslide – GoldCore
Precious metals coveted once more as Draghi acts – Mineweb
Booming SGE Withdrawals In Week 2, 2015: 70 Tonnes – BullionStar
Despite higher gold price Chinese demand still surging – Mineweb

GDP: Annual and Q4-over-Q4 – Calculated Risk
How Economists Came to Dominate the Conversation – NY Times
Oil-soaked nations are biggest losers in this price war – MarketWatch
Can China Avoid Deflation? – Project Syndicate
Is QE a defeat for Germany, or a strategic retreat? – Telegraph
Nothing Is Going to Save the Housing Market – Bloomberg View
11 Home Trends for 2015: From small homes to basements – Fiscal Times
Foreclosure Echo: Former homeowners face huge insurance claims – NECIR
The Fed Has Declared a Winner in the Generational Financial War – of two minds
Behind Sen. Elizabeth Warren’s Treasury takedown – Politico


In Davos, former Treasury Secretary and would-be Federal Reserve Chairman Larry Summers warns the U.S. central bank to put off any increases to short term interest rates, citing deflation and secular stagnation as the two major threats of the current era of central bank omnipotence (that, lately, is evolving into something of a currency war).

Summers also doesn’t think the European Central Bank’s money printing extravaganza, announced to much fanfare yesterday (and sharply higher stock prices around the world) is going to do the eurozone much good, that is, save for another round of asset inflation.

Friday Morning Links

Oil jumps on Saudi king’s death – Reuters
King Abdullah’s Death Unlikely to Upset Saudi Oil Goals – NY Times
Draghi Dodges QE Disappointment With Plan That Might Work – Bloomberg
Europe finds little joy in Mario Draghi’s QE plan – MarketWatch
ECB’s QE is Much Too Responsible – Krugman, NY Times
Draghi’s QE blitz may save southern Europe, but lose Germany – Telegraph
SocGen on Why ECB’s QE Will Fail and Will Be Increased To €3 Trillion – Zero Hedge
Evaporating inflation and growth put pressure on central banks – Reuters
Seven Central Banks Take Anti-Deflationary Actions in Past Week – Wall St. on Parade
This Is What Gold Does In A Currency Crisis, Euro Edition – Dollar Collapse
How the Bank of Canada’s rate cut may spur faster growth – FP
Why Davos feels even more out of touch this year – Fortune
Billionaire says rest of us are living too large – MarketWatch

Asian stock markets boosted by ECB stimulus plan – AP
US Dollar Strength and US Stocks – Cumberland Advisors
Oil Drillers ‘Going to Die’ in 2Q on Crude Price Swoon – Bloomberg
90% of fund managers beat the market, but shareholders don’t – MarketWatch
Bond Markets Jump Worldwide After ECB Surprises on Stimulus Size – Bloomberg
Gold slips from 5-month high as dollar, shares climb on ECB move – Reuters
Elliott Wave analyst sees much higher gold and silver prices ahead – Mineweb
Will Gold Be Part Of A New International Monetary System? – BullionStar
Gold price vs bond buys shows limits of QE –
Silver poised for bull market – Mineweb

Target ex-CEO package matches that for all 18K Canadian workers – CBC
China Joins Afghanistan’s Great Game – Bloomberg
Gov’t to Give Employees 60 Pct Pay Hike in Pension Reform – Caixin Online
Chinese manufacturing weak for second consecutive month – BBC
Putin Said to Shrink Inner Circle as Hawks Beat Billionaires – Bloomberg
Which UK city is winning the house price race? – Telegraph
Is the flipper-fueled Eastside housing market cooling down? – EastSider LA
Fed’s solo act gets tougher with ECB, others in stimulus mode – Reuters
Recent Moves by Central Banks, at a Glance – AP

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