Federal Reserve | timiacono.com - Part 4

Peter Thiel on “the Government Bubble”

Billionaire Silicon Valley venture capitalist and hedge fund manager Peter Thiel talks with the folks at CNBC about central bank money printing and asset valuations.

Thiel notes:

We’ve been in this world where people have been printing money at the Fed for six years and it is a very strange question of what happens when it ends … I think the thing that is most distorted is the bond market and fixed income, and perhaps less on the equity side, but we certainly are back in a government bubble of massive size.

Art Cashin on the Selloff

Art Cashin, Director of floor operations at the NYSE for UBS, talks about yesterday’s huge stock sell-off following Wednesday’s fresh record highs. As is the case for most pundits, Cashin offers no clear reason for the change in market sentiment.

Cashin notes: “Rumor-mongers are out and about so viewers should be careful … it’s clearly rather heavy selling … there’s nothing narrow about this selloff.”

It’s worth pointing out that one phrase that was noticeably absent from the discussion of yesterday’s market action was “buy the dip”, though that appears to be happening today.

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Income Inequality Chart of the Year

Via this item from Pavlina Tcherneva comes the graphic below that goes a long way in explaining why there’s been so much fuss about growing income inequality.

Anyone with a good sense for statistics surely realizes the reason this data is so compelling is because it represents incremental change rather income data in absolute terms. It’d be interesting to see this same data broken down by the 1 percent versus the 99 percent.

While both fiscal policy and monetary policy are key drivers behind the trends shown above, one need look no further than this chart to understand just about everything there is to understand about the role of the Federal Reserve in all of this.

Faber: “A Bubble In Everything, Everywhere”

Marc Faber, the purveyor of the Gloom, Boom, and Doom report, talks about the current course of asset prices and how things might end badly someday as the Federal Reserve contemplates raising interest rates and the U.S. dollar continues to strengthen.

As detailed in Dr. Marc Faber’s three bold predictions for 2014, his crystal ball gazing early in the year doesn’t look particularly prescient at the moment:

1. The market will continue to decline from its November high of 1,813
2. Best shorts for 2014: Facebook, Tesla, Twitter, Netflix, and Veeva Systems
3. Best longs for 2014: Gold, gold shares, and Vietnamese stocks

It is, however, worth pointing out that 2014 is a long way from being over.

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