Business

One week ago we reported that "Mega-Bears Smell Blood As Mall REITs Tumble" in which we wrote that "just like 10 years ago, when the "big short" was putting on the RMBX trade, and to a smaller extent, its cousin the CMBX, so now too some are starting to short CMBS through the CMBX. They are betting against securities backed by malls in weaker locations where stores could close in quick succession, triggering debt defaults."

The Fed meets this week on Tuesday and Wednesday.

The market believes that there is an 86% chance the Fed will be hiking rates during this meeting. The Fed has been broadcasting this for a month straight. It is possibly THE most expected rate hike in years. The consensus is that we will see a 0.25% rate hike bringing the Federal Funds Target rate to 0.75%-1.00%.

BORING.

No one makes money by trading the most expected thing. With that in mind, what the Fed does or doesn’t do is largely irrelevant as far as I’m concerned.

Authored by Simon Black via SovereignMan.com,

In the year 1517, one of the most important innovations in financial history was invented in Amsterdam: the government bond.

It was a pretty revolutionary concept.

Governments had been borrowing money for thousands of years… quite often at the point of a sword.

Italian city-states like Venice and Florence had been famously demanding “forced loans” from their wealthy citizens for centuries.

But the Dutch figured out how to turn government loans into an “investment”.

The Federal Reserve Bank of Atlanta has selected Raphael Bostic as its new president, replacing Dennis Lockhart after his retirement last month. 

A few weeks ago, Mario Draghi, the president of the ECB, and ECB member Weidmann confirmed the interest rates would continue at a relatively low level as this would be very helpful for the governments of Eurozone countries to get their finances back under control. This indeed seemed to be absolutely necessary to us, and in a previous column we already pointed out the devastating impact on the public finances should the interest rates on government debt increase by 1-2% on average.