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Month: March 2019

Stocks Slide, Bonds Soars, Dollar Rebounds As Traders Have A Question For Powell

Something is off. Over the past decade, any time the Fed, BOJ or ECB surprised the market dovishly, risk assets surged. And yet, when the ECB did just that on March 9, when Draghi unveiled TLTRO prematurely, the Stoxx slumped. And, more concerningly, after a brief rally yesterday at 2pm in kneejerk response to a Fed that has now fully capitulated on normalizing monetary policy and announced it will end its balance sheet runoff by September, US markets not only faded all gains, but closed sharply lower. When commenting on the Fed’s decision, and the market’s surprising reaction, we said that it was too early to draw conclusions from the S&P’s reaction, where a blast of selling took place at precisely 3:30pm setting the dour mood into the last 30 minutes of trading. However, the overnight session which saw both European stocks struggle and U.S. equity futures slide despite some bullish sentiment in Asia, it appears that investors still have a some questions for Powell, among which the most important one: “What does the Fed know that nobody else does for it to capitulate so abruptly”, and what might be lurking in the shadows. So far that answer is missing, and it explains why US equity futures have continued to sink despite a Fed which is now all in on reflating if not the economy, which by now it...

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Why The Fed Keeps Propping Up The Market

Authored by Jesse Colombo via, The bull market of the past decade since the Great Recession has been an unusual one: despite all of the economic damage that occurred during the global financial crisis and rising risks (including global debt rising by $75 trillion), it has been the longest bull market in history. The explanation for this paradox is simple: it’s not an organic bull marketbecause the Fed and other central banks keep stepping in to prop up the market every time it stumbles. Though the Fed has two official mandates (maintaining stable consumer prices and maximizing employment), it has taken on the unofficial third mandate of supporting and boosting the stock market since the Great Recession. The chart below, which was inspired by market strategist Sven Henrich, shows how the Fed or other central banks have stepped in with more monetary stimulus (quantitative easing, promises to keep interest rates low, etc.) every time the S&P 500 has stumbled over the past decade: As we noted in this past weekend’s newsletter (subscribe for free e-delivery): “An economy that is growing at 2%, inflation near zero, and Central banks globally required to continue dumping trillions of dollars into the financial system just to keep it afloat is not an economy we should be aspiring to. But despite commentary the financial system has been ‘put back together again,’ then why are Central Banks acting? Via Bloomberg: ‘Led by the Fed,...

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New Zealand Bans Guns After Mass Shooting; All “Military-Style” And “Assault Rifles” Outlawed

New Zealand Prime Minister Jacinda Ardern announced the “first tranche” to reforms on gun laws – beginning with the immediate ban on the sale of semi-automatic and ‘assault’ rifles, six days after attacks on two mosques in Christchurch left 50 people dead. Notably, accused gunman Brenton Tarrant – specifically hoped his attack would lead to the restriction of gun rights.  “On 15 March, our history changed forever. Now, our laws will too,” said Ardern. “We are announcing action today on behalf of all New Zealanders to strengthen our gun laws and make our country a safer place.” “The effect of this will mean that no one will be able to buy these weapons without a permit to procure from the police. I can assure people that there is no point in applying for such a permit,” she said, adding “In short, every semi-automatic weapon used in the terrorist attack on Friday will be banned in this country.”   The ban will apply to all firearms currently defined as “Military Style” or “Semi-Automatic” (MSSA), defined as a semi-automatic firearm – including shotguns – capable of being used with a detachable magazine that holds more than five rounds.  National Rifle Association of New Zealand president Malcolm Dodson holding a bolt-action rifle not subject to the new ban. (ROBERT KITCHIN/STUFF) Guns which are not affected by the ban include semi-automatic .22 caliber rimfire firearms with a magazine holding...

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Empire Of Chaos Crumbles As Iran Outflanks US In Iraq & Beyond

Authored by Tom Luongo, Iran has successfully navigated the first phase of its resistance to U.S. sanctions pressure. The U.S. State Department has admitted it’s goal of reducing Iran’s oil exports to zero is not feasible. The goal now is a 25% drop to 800,000 barrel per day. And that is no joke. It’s a big drop from where Iran was looking to produce in the coming years under the auspice of the JCPOA. The U.S. will not stop until all avenues have been exhausted or Trump fires his current cabinet. Iran’s total non-oil exports have suffered as well, since gas condensate exports have also dropped along with the crude oil numbers. But Iran is finding friends in other places. They are currently finalizing a free trade agreement with the Eurasian Economic Union (EAEU) with Belarus leading the talks at the 15th meeting between their Joint Economic Committee. Iran’s non-oil exports, however, are still just one-fifth of their peak exports. Like Russia it is working quickly with regional partners to change that dynamic. It won’t be enough to overcome the U.S.’s economic pressure in the short term. But as I always say if it survives the initial onslaught then market forces open up opportunities for change. Things like INSTEX, the EU special purpose vehicle for getting around U.S. sanctions, is a perfect example. Bilateral trade outside of the U.S. dollar is another....

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After Multiple Reports About New Zealanders Turning In Guns, Guess How Many Actually Did It? 

Following reports that a flood of New Zealand gun owners have been voluntarily surrending their firearms in the wake of last Friday’s Christchurch mosque attack that left 50 dead, the numbers are in on how many Kiwis actually handed over their weapons.  JP LRP-07 Out of an estimated 1.2 million registered guns, New Zealand police report that as of Tuesday night, 37 firearms have been surrendered nationwide, according to BuzzFeed.  No accounting was provided of how many people owned those guns, the types of firearms, or where they were surrendered. The reports of citizens disarming themselves came after a Monday announcement by Prime minister Jacinda Ardern that several “in principle decisions” on gun control have been made by Cabinet ministers, while praising residents who have surrendered their guns to police.  So far, we know of four people who have; Green Party member John Hart and longtime gun owner “@SirWB” – who each turned in a rifle, a grandmother who goes by the Twitter handle “@FeyHag” who said she requested for her family’s guns to be handed in for destruction, and former New Zealand Army soldier Pete Breidahl – who said he warned local police of extremists at a local rifle club where he said he suspected the shooter was a member.  “All I want is to go back to my horses, say goodbye to firearms and the bullshit shooting community and its drama and let the police and government sort this...

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