Recent comments by Rajesh

If the markets were pricing in the path of interest rates predicted by the FOMC, the resulting drag on the economy would make the higher interest rates unnecessary.

Therefore the FOMC is anticipating that the markets will ignore its forecasts, requiring the Fed to overreact by raising interest rates at a faster pace. The markets clearly don't believe the Fed's forecast of the market's forecast of the Fed's interest rate policy.

adornosghost wrote:

illegal coups.

Are there legal coups?

adornosghost wrote:

Everyone who has tried it has lost.

Peter was Great until he died.

T minus eight months and counting...

Belmont wrote:

Still waiting for that deflation in my cost of living Rajesh!

Gas Price Drop Deflates Consumer Price Index | The Economic Populist

CPI has now decreased -0.1% from a year ago. Yearly CPI hasn't declined since October 2009. CPI is in deflation has it's own set of major problems as evidenced by 2009, also caused in a large part by a pop in the oil price balloon.

Outsider wrote:

Well Rajesh? Are you delaying your take off?

Still at T minus nine months and counting...
There's a possible hold at T minus six months but we'll have to see how the telemetry looks like at that point.

Outsider wrote:

What is this going to look like?

Remember when California paid its employees in IOUs?

Dudley-Do-Right sez:
Fed's Dudley: Risk of raising rates too soon higher than waiting longer
| Reuters

New York Federal Reserve Bank President William Dudley, a permanent voter on the Fed's policy setting committee, urged caution on the issue of when the central bank should lift rates, which it is expected to do later this year.

"I believe that the risks of lifting the federal funds rate off of the zero lower bound a bit early are higher than the risks of lifting off a bit late," he said in prepared remarks at a University of Chicago Booth School of Business event in New York. "This argues for a more inertial approach to policy."

Greece runs out of funding options despite euro zone reprieve
| Reuters

Shut out of debt markets and faced with a steep fall in tax revenues, Athens is expected to run out of cash by the middle or end of March. Its finance minister has warned that Greece will struggle to repay creditors starting with a 1.5 billion euro IMF loan repayment due in March.

Athens has been looking for quick fixes to tide it through the coming weeks but has not found one yet.

Said an unnamed ECB official, "If we don't destroy the Greek economy now, we won't have any credibility when it come time to destroy the French economy."

Yoringe wrote:

Isnt that Chrysler over the Pond?

Chryslers are made in the U.S. and Canada. Fiats are made in Mexico.

Oh, the weather outside is frightful,
but the liars are so delightful,
as long as we've no place to go,
let it Blame it on the snow , let it Blame it on the snow,, let it Blame it on the snow

Blackhalo wrote:

Doesn't he have to say that, even if there were concessions, or else the Irish would want them too?

Just because he has to say it doesn't mean it's not true. Of course, this isn't an agreement. The Greeks still have to put together as death list a list of austerity measures that they will continue. If the Germans are satisfied that enough people will die the plan is financially viable, then an agreement will be signed. The presumption is that an agreement will be sufficient to end the run on the Greek banks when they reopen on Tuesday.

Tsipras declares victory as Greece dodges financial collapse
| Reuters

Ireland, which had to make deep budget cuts under its own EU/IMF bailout program, spelt out the uncomfortable truth that the euro zone had yielded nothing to the Greeks, for all the brave talk from Tsipras.

"Their political problem is that this a reversal of their election position. There is absolutely nothing on the table that could be considered a concession," Irish finance minister Michael Noonan said.

"They're now compromising and compromising quite significantly," he told national broadcaster RTE, but made clear Athens had had little choice. "The biggest threat to Greece was that their banking system would go belly up next Wednesday."

Tsipras has won wide support at home for what Greeks see as their leaders finally getting tough instead of going to Brussels cap in hand and taking orders from Berlin. But he was also under intense pressure at home, with emergency funding controlled by the ECB for the banks due to hit a ceiling mid-week.

If the West Coast Ports can reach a deal, so can Greek Debt holders.

Hypo Real Estate - Wikipedia, the free encyclopedia 

It employs about 2,000 people and was one of the 30 members of the DAX stock index of the largest German companies between December 2005 and December 2008, before the shares were demoted to the MDAX. Its shares were further demoted to the SDAX in September 2009. In 2007 it acquired public finance company Depfa Bank.[2] The company remains a legal entity as a wholly owned subsidiary of the Hypo Real Estate Group.

The firm was bailed out by the Bundesbank and other German banks in October 2008 in the midst of the global financial crisis, before approving a complete nationalisation a year later.

T minus nine months and counting...

Tesla CEO Musk says market cap could match Apple's $700 billion by 2025
| Reuters

Tesla Motors Inc Chief Executive Officer Elon Musk said on Wednesday the electric car company's growth trajectory could take its market capitalization to $700 billion by 2025, matching that of Apple Inc.

Musk told analysts that Tesla's revenue this year could grow to $6 billion, from $3.2 billion in 2014. His 2025 market-cap prediction assumes 50 percent annual revenue growth and a price-to-equity ratio for the stock of 20.

The FOMC is ready to raise interest rates based on the acceleration of the economy as shown on the linked graph.
Real and Nominal GDP growth

Second half recovery!

Second half of the decade.

I think there's room for an agreement between Germany and Russia. Just give Russia Greece in exchange for Ukraine.

Mary wrote:

You are not alone.

You're convinced as well?

The E.U. solution is to get rid of Democracy.

Hu Knows
China’s Record Trade Surplus Highlights Weak Domestic Demand - Bloomberg Business

Imports fell by the most in more than five years, declining 19.9 percent from a year earlier, the customs administration in Beijing said Sunday. That compared with estimates for a 3.2 percent drop in a Bloomberg survey of analysts. Exports slid 3.3 percent, leaving a trade surplus of $60 billion.

A property downturn and a stall in manufacturing are signals the government may need to step up measures to stimulate the economy, as domestic demand for commodities including crude oil and iron ore declines. The record trade surplus, combined with declines in exports and imports, complicates the government’s management of exchange rates after January’s currency depreciation.

dilbert dogbert wrote:

We are Greece I tell you!

We can't be Greece. We're Japan. Or worse, we're China!

Comrade Kristina wrote:

They just scalded a man alive in a Florida prison not long ago

Does the prison system scald corpses routinely?

The FOMC is set to raise interest rates because while SIX years of encouraging people to recklessly borrow to prop up asset prices is safe, SEVEN years could lead to catastrophic problems.

Is the FOMC suffering from ZIRP fatigue?

ZIRP fatigue: the irresistible urge to raise interest rates despite inflation between far below the stated target.

Hu Knows
China January HSBC factory PMI contracts for second month
| Reuters

Activity in China's factory sector shrank for the second straight month in January, a private business survey showed on Monday, as the new year got off to a rocky start for the world's second-largest economy.

The slack performance, including a 15th month of shrinking factory employment, will add to the debate over how and whether Beijing will accelerate policy easing, with most bank economists calling for a combination of rate cuts and increased liquidity to spur productive investment.

The final HSBC/Markit Purchasing Managers' Index (PMI) for January came in at 49.7 on a seasonally adjusted basis, just below the 50.0 level that separates growth from contraction. The number was slightly lower than a preliminary "flash" reading of 49.8 but higher than the final 49.6 in December.

adornosghost wrote:

Resource problems?

The Pentagon has more resources than they know what to do with?

Can monetary policy turn Argentina into Japan? | Michael Pettis' CHINA FINANCIAL MARKETS

Instead, the historically unprecedented fact of our unlimited ability to issue a credible fiat currency allows us to postpone a quick and painful resolution of the debt burdens we have built up. It is too early to say whether this is a good thing or a bad thing. On the one hand, it may be that postponing a rapid resolution protects us from the most damaging consequences of a crisis, when slower growth and a rising debt burden reinforce each other, while giving us time to rebalance less painfully — the Great depression in the US showed us how damaging the process can be. On the other hand the failure to write down the debt quickly and forcefully may lock the world into decades of excess debt and “Japanification”. We may have traded, in other words, short, brutal adjustments for long periods of economic stagnation.

Only the passage of time will tell us whether or not this is indeed the trade-off we have made or want to make. Argentina used to be the archetype of financial crisis, when a collapse in the supply of money caused massive debt write-downs. “This time” may indeed be different in the sense that there is a very real possibility, as the authors of the Bain study propose, of many years of “superabundant” capital, instead of the scarce capital that has historically characterized the post-crisis period.

Yoringe wrote:

the T-50 flies and can do things the F-22 cant.

The F-22 has better lobbyists!

T minus nine months and counting...

Zero profit growth expected for U.S. companies in first quarter
| Reuters

Falling oil prices, a soaring dollar and concern about weaker global demand have increasingly pessimistic analysts predicting Standard & Poor's 500 companies will see no earnings growth at all in the first quarter of 2015.

That would be the worst quarter for Standard & Poor's 500 earnings since the third quarter of 2009, not long after the United States emerged from its recession. Revenue for the first quarter is expected to be worse, forecast to decline 2.0 percent from a year ago, according to Thomson Reuters data.

The biggest drag is expected to be energy companies suffering from the oil price collapse, but analysts have dropped projections in almost every sector as the earnings reporting season has unfolded.

On Jan. 1, S&P 500 first-quarter earnings were forecast to rise 5.3 percent, including energy companies, and 10.5 percent excluding energy companies. On Thursday, that consensus forecast was flat from a year ago including the energy sector, and cut to 7.9 percent growth excluding energy.

Flat earnings should be good for a 20% percent gain in stock prices in the first quarter. Snark

How are home prices supposed to rise 3% a year when wages are rising 1.5% a year?

Yoringe wrote:

China 5000 Years vs US 250 Years

Egypt 12000 years vs China 5000 years.

Perhaps they should rename BRICS as 'China and its four bitches'

Yoringe wrote:

BRICS Rating Agency

So Brazil can borrow money from India who borrows the money from Russia who borrows the money from South Africa who borrows the money from China who borrows the money from Brazil.

'Falling angels' could hit $260 billion of emerging market debt
| Reuters

Russia may have company. Almost $260 billion worth of sovereign and corporate bonds - nearly a tenth of outstanding emerging market (EM) debt - is in danger of being relegated to junk, according to David Spegel, head of emerging debt at BNP Paribas, who calls such credits "falling angels".

What's more, almost $1 trillion of debt is rated BBB or BBB minus - the two lowest investment grade ranks after which junk or "high yield" status awaits.

"After a year of political upheaval and collapsing commodity prices, the sky is alight with EM falling angels," Spegel said.

In 2010, for the first time, a majority of bonds in the EMBI Global index of emerging market debt became investment grade 11EML. But now a fifth of emerging market governments rated by S&P carry negative outlooks; the agency calls emerging markets the "weak link" in the global ratings picture.

Can't keep up this morning.

'Falling angels' could hit $260 billion of emerging market debt
| Reuters

After a golden decade of improvement, credit ratings for a swathe of developing economies risk falling back to "junk", with huge potential costs for up to a tenth of outstanding emerging market bonds.

Many mainstream investment and pension funds have rules preventing them from holding debt unless it is classified as investment grade by at least two of the big ratings agencies, and a number of countries are at risk due to problems ranging from tumbling commodity export prices to political instability.

Russia this week became the first of the major economies to lose its investment grade status from Standard & Poor's, falling out off the top ratings category for credits deemed to have a low risk of default for the first time in a decade.

Fed remains 'patient', expects to reach inflation target some time this century.

Beware the Ides of March!

Doc Holiday wrote:

Now that QE is an official failure globally, what's next??

More failure.

T minus ten months and counting...

Mortgage interest rates are too high!

Beware the Ides of March!