The Mess That Greenspan Made - Part 3

Is Trevor Noah Even Better than Jon Stewart?

Trevor Noah has made an impressive debut as Jon Stewart’s Daily Show successor, weighing in on the already-long-running 2016 U.S. election cycle and the contenders for president.

Having been a big fan of this program since 1999 (and then in 2000 when they were counting chads in Florida), it came as something of a surprise to hear that little-known Trevor Noah would replace Stewart but, in just one guest appearance (on Colbert?) it became clear why he was chosen.

Before long, you’re probably going to be reading headlines like the one above.

Wednesday Morning Links

Official: Russia conducts first airstrike in Syria – CNN
Market Liquidity Not in Decline, but Prone to Evaporate – IMF
World set for emerging market mass default, warns IMF – Telegraph
BofA Junk Bond Warning: This “Train Wreck Is Accelerating” -Zero Hedge
Wall Street Carnival Barkers, Cheerleaders, and Fools – Mauldin Economics
Glencore, Commodities Traders, and Systemic Risk – Naked Capitalism
Glencore Shows Up in Kids’ 529 College Plans – Wall St. On Parade
VW Scandal: Time for German Industry to Abandon Its Arrogance – Spiegel
The collapse of Saudi Arabia is inevitable – Middle East Eye
Low Oil Prices – Why Worry? – Our Finite World
Donald Trump Is Not Going Anywhere – NYT Mag
How Trump’s Tax Plan Would Affect You – Fiscal Times

World stocks higher on last day of torrid quarter – AP
China stocks log worst quarter since financial crisis – MarketWatch
Traders Flee Emerging Markets at Fastest Pace Since 2008 – Bloomberg
What India’s Rate Cut Means for Global Stocks – Motley Fool
We’ve Seen This Before – Global Markets Down $13 Trillion – Contra Corner
Stock Gains Trim Quarter’s $11 Trillion Loss as Bonds, Yen Drop – Bloomberg
S&P 500 teeters on major technical support – MarketWatch
Gold heads for biggest quarterly loss in a year – Reuters
Gold and Silver, Good and Bad Choices – GoldSilverWorlds
Gold price: Asian bargain hunters are back –

Ludwig von Mises, Genius? – Mises
Like Ancient Rome: Moral Decay, Rising Wealth Inequality – of two minds
Eurozone back in deflation as prices fall by 0.1 percent – Guardian
German Unemployment Unexpectedly Rises in Sign of Economic Risk – Bloomberg
Razor Wire, Soldiers, and Mud: Hungary Seals off Europe’s Migrant Route – Vice News
China Cuts Minimum Home Down Payment for First-Time Buyers – Bloomberg
North-South House price chasm now ‘widest ever’ at £150,000 – Telegraph
California dominates list of hottest U.S. housing markets – Inman News
A Key Tenet of Yellen’s ‘Lowflation’ Call Might Be Off the Mark – Bloomberg
Why the Fed can’t stop the next market crash – Tao Macro


Carl Icahn is Not Optimistic

Activist billionaire investor (and potential Treasury Secretary under a potential President Trump) Carl Icahn shares some thoughts on the current state of financial markets now seven years into emergency policies by the Federal Reserve.

Favorite prediction:

It’s like a movie theater and somebody yells fire. There is only one little exit door. The exit door is fine when things are OK but when they yell fire, they can’t get through the exit door … and there’s nobody to buy those junk bonds.

Tuesday Morning Links

Stocks plunge on Fed rate hike uncertainties – xinhuanet
NY Fed chief: Rate hike coming this year – CNN/Money
Fed’s Evans: Hold Off on Rate Hike – Fox Business News
Fed’s Williams, citing signs of imbalances, wants 2015 rate hike – Reuters
Rajan Surprises Again With Bigger-Than-Forecast India Rate Cut – Bloomberg
How Congress May Have Saved Goldman Sachs From Itself – Bloomberg
Obama and Putin outline competing visions on Syria – Washington Post
Beware the rise of radical Right as migrants arrive in Europe – Telegraph
Here’s Why a Nobel Prize Economist Was Kicked Off His Flight – Fiscal Times
Thomas Jefferson’s prescient warning on the debt ceiling crisis – Sovereign Man
Rush Limbaugh Says Water on Mars Part Of Climate Change Conspiracy – Media Matters
Trump’s tax plan proves he’s serious about winning the White House – The Week
Trump: On taxes? Not so populist – Politico

Global market steady after rout extended into Asia – AP
Commodity rout hits traders, emerging markets – Reuters
The Perils of Forcing a Sale of Illiquid Assets – NY Times
Asian shares slide; Nikkei gives up gains for the year – MarketWatch
Glencore Gloom Envelops Rivals as Asia Commodity Shares Drop – Bloomberg
The one thing the bull market needs to get back on its feet – MarketWatch
Going down: Goldman cuts forecasts for S&P 500 – CNBC
Platinum extends slide, falls below $900 to 6-1/2 year low – Reuters
Latest SGE gold deliveries suggest enormous 2015 total – Daily Coin
China shocker drops copper price to 6-year low –

Inflation Outlook Slumps to 6-Year Low – Bloomberg
Adjusting China’s Growth Path – Caixin Online
How Sweden’s negative interest rates turned economics on its head – Telegraph
What’s next for Spanish region that wants to be Europe’s next nation – Washington Post
Brazil’s Record Overseas Borrowing Comes Back to Bite Companies – Bloomberg
Two tweets from space highlight the miserable lives of North Koreans – MarketWatch
This awkward photo of Obama and Putin locking eyes at the UN speaks volumes – Vox
Los Angeles Housing Market Isn’t Getting Bubbly, Says Study – Curbed
Did the Fed Cause the Commodity Bubble? – PragCap


Inflation and the Fed

They’ll probably be writing about this in the next update to the Federal Reserve policy manual as it has become increasingly clear that current Fed policies that have strengthened the dollar (i.e., talking about raising interest rates) have caused the government’s measure of inflation to move lower as shown below via this story at Bloomberg, all of which makes the case for actually raising rates (in the minds of economists) much more difficult.

Recall that there is a strong inverse correlation between the trade weighted dollar and both import prices and oil prices, so, the more the Fed talks about higher rates, the stronger the dollar gets, and the more difficult it becomes for the central bank to hit its inflation target of 2 percent, a target for which there is virtually no justification.

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