US Federal Reserve

Janus Portfolio Manager and purported “bond king” Bill Gross appeared on “Bloomberg Markets” to discuss his latest investor letter, in which he criticized loose-money policies of the world’s central banks, comparing them to gluttons who’ve feasted on bonds.

The unprecedented stimulus measures adopted by the Federal Reserve, the European Central Bank, the Bank of Japan and others have created distortions in markets, rendering widely followed historical models like the Philips Curve and Taylor rule useless, Gross said.

Authored by Raul Ilargi Meijer via The Automatic Earth blog,

If there’s one myth - and there are many - that we should invalidate in the cross-over world of politics and economics, it‘s that central banks have saved us from a financial crisis. It’s a carefully construed myth, but it’s as false as can be. Our central banks have caused our financial crises, not saved us from them.

With no expectations of a rate-hike this week, and traders rapidly giving up on The Fed's dream of a steadily higher rate trajectory, a funny thing happened in the markets...

In the eyes of The Fed, their monetary policy has not been this 'tight' since October 2008.

However, in the eyes of the market, financial conditions just hit their easiest level in history (easier than the September 2005 previous record easiness level).

In a continuation of the same WSJ interview, in which president Trump once again slammed Jeff Sessions, Trump laid out his current thoughts on who, if anyone, will replace Janet Yellen when her terms runs out next February. That said, Trump did not reveal much, saying that he is considering renominating Yellen as Fed chair but also said his econ adviser Gary Cohn (who was present in the interview) is a top candidate for the position.

Some Sunday thoughts from the CIO of One River Asset Management, whose latest Weekend Notes starts off in traditional Eric Peters style, namely a mockery of the Fed...

“Wait, that’s not even part of your model?” asked the private sector, imagining itself in the presence of the Fed.

 

“You seriously don’t even consider the crushing weight of the pension avalanche that is bearing down on us?” And the governors shrugged.