Business

Happy Holidays...

This is the best 'week before Christmas' since 2011... Did we pull forward all that hope-strewn Santa Rally meme?

For all the talk that the BOJ would unleash more stimulus, buy REITs, more ETFs (both existent or non-existent), or outright stocks, today the USDJPY did something it has not done in 7 weeks: the world's preferred carry trade currency just slumped to the lowest level since early November. If it wasn't for  the recent bounce in crude, and if the traditional USDJPY-ES correlation pair had not broken down as a result, the S&P would be well below 2000 at this moment.

Stephen Roach is worried that the Fed has set the world up for another financial market meltdown. 

Lower for longer rates and the proliferation of unconventional monetary policy have created “a breeding ground for asset bubbles, credit bubbles, and all-too frequent crises, so the Fed is really a part of the problem of financial instability rather than trying to provide a sense of calm in an otherwise unstable world,” Roach told Bloomberg TV in an interview conducted a little over a week ago. 

Everyobody knows that the Santa Claus rally which traditionally caps every calendar year, has a twofold role: one is to window dress the portfolios of underperforming (which these days means almost all) asset managers who get a 4-5% pick up in "value" not due to their asset selection skills, but because everyone rushes in at the end of the year in a mass buying orgy, thereby making returns seems higher than they normally would be; the second - and more important - is to boost consumer confidence and to encourage that all important American instinct - spending money one does not have to purc

Submitted by Alasdair Macleod via GoldMoney.com,

The Fed will never succeed in its attempt to manage inflation and unemployment by varying interest rates.