Business

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.

After a year of proclamations from mainstream media (and Wall St. economists) that low oil prices mean low gas prices at the pump which means "bonanza" for US consumers, it appears none of that happened. Confidence is fading fast despite what some suggest is $550 average savings this year as 'gains' flooded into soaring rent and healthcare costs. But, more recently, as stock markets celebrate a soaring oil price (off decade lows), wholesale gasoline prices have soared 10% in a little over 48 hours...

One week ago, in the aftermath of the junk bond tremors unleashed by Third Avenue (which are only just starting) we reported that there had been a historic revulsion toward fixed income fund flows, with unprecedented withdrawals in virtually every bond class, from Investment Grade, to Junk to bank loans. We quoted Bank of America as follows: