Two weeks ago, in order to preserve Goldman's happy narrative that US growth is still strong (which is ironic because while on one hand Goldman tells its clients to buy the dollar, at the same time it tells Trump to short it), Goldman tried to justify the apparent collapse in loan growth, which as we showed earlier this week, is growing at the slowest pace in 6 years, and will soon contract outright.
Authored by Kevin Muir via The Macro Tourist blog,
The market was sent for a spin yesterday afternoon after President Trump told the Wall Street Journal the U.S. dollar “is getting too strong” and he would prefer the Federal Reserve keep interest rates low. From the WSJ:
Mr. Trump also said his administration won’t label China a currency manipulator in a report due this week.
Over the weekend, New River CIO Eric Peters had a simple and concise summary for events over the past year: "Pretty much everything that happened in 2016 can be explained by two things; China and oil prices,” he said. “Literally, that’s it."
Today, thanks to a research report from UBS titled "Where is the epicentre of the reflation trade?", we have confirmation that Peters was spot on.
Janet Yellen is playing with matches next to a $20 Trillion Debt Bomb.
During her speech at the Gerald R. Ford School of Public Policy in Michigan, Yellen stated that the biggest risk to monetary policy is for the Fed to “get behind the curve” regarding inflation.
To that end, the Yellen Fed has already raised interest rates twice in the last six months. And it is pushing for yet another rate hike in June.
However, Yellen as usual is missing the bigger issue: the risk of DEBT deflation triggered by the Fed’s rate hikes.
If President Trump continues down his current path of protectionism and anti-globalization, to try and put “America First”; then retaliatory measures by other world powers, huge domestic deficits, massive job losses and spiralling inflation could in fact put America last!
Those are words coming from Mark T. Williams, Boston University finance professor, former Fed official and author of the acclaimed book on the Lehman Brothers debacle “Uncontrolled Risk”.
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