Let’s cut to the chase. According to the BLS household survey (CPS), there were 1,446,000 fewer people working full time in August than in August 2008. That’s after an…
Lee Adler tells CNBC Africa that the Fed may be tapering, but the key to the US market will now be in the actions of the BoJ and ECB. Subscribe to the Professional Edition for my proprietary research.
That surge in the economy that has been falsely promised for five years in a row and that was supposed to solve all problems and rationalize the sky-high stock prices? The Fed has wiped it from its vision of the future.
Softer than expected economic growth in China (see discussion) has finally spurred the PBoC into action. However, rather than undertaking asset purchases that would inject reserves into the overall banking system, the PBoC forced liquidity directly into state-owned banks.
NY Times: – With industrial production growing at the slowest pace since the worst of the global financial crisis and foreign direct investment in a tailspin, China appears to have taken the unusual step of using monetary stimulus in an attempt to forestall further economic weakness.
China’s central bank has lent 100 billion renminbi, or $16.2 billion, to each of the country’s five main, state-controlled banks, bankers and economists said Wednesday, although the central bank and the five banks involved stayed silent. The seemingly stealthy decision to inject a total of $81 billion into the banking system this week came as the Chinese economy, like many economies in Europe, has slowed over the summer, although still expanding at a pace that would be the envy of most countries around the world.
This is probably the least effective QE-style action, as state-owned lenders are unlikely to efficiently deliver capital into the private sector. But the fact that the PBoC has taken this action tells us this could be the start of a longer monetary stimulus effort. The markets are not expecting a near-term economic improvement and instead pricing in a prolonged battle to accelerate growth. China’s SHIBOR rate swap curve has become more inverted than a month ago with expectations of further rate declines.
Some form of stimulus was already being priced in, which is in part what generated the recent stock market rally.
Now the PBoC joins other major central banks in expanding “unconventional” monetary policy efforts. The impact of such actions on economic growth however remains highly uncertain.
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A tincture of green for the early openers: Kiwis +0.4%, Aussies +0.1%, Nikkei +0.7% and Sth Korea -0.2%.
In Aussie sectors, Gold -2.3% is the big loser with REITS/Energy doing a bounce, +0.7%.
A good deal of attention has already been paid to the growing divergence between small cap and large cap stocks so far this year. The former have seen a small decline while the latter have risen about 8%. But I’ve seen very little commentary regarding WHY this might be happening. Of the many divergences the […]
The U.S. Federal Reserve’s Federal Open Market Committee (FOMC) meeting today went according to plan, as the Fed will continue to taper bond purchases and is maintaining hushed tones on interest rate increases after the third round of quantitative easing (QE3) ends.
As far as monetary policy is concerned, nothing changed.
While many economists and market watchers have failed to notice, we have entered a new chapter in the short and checkered history of central banking. This paradigm shift, as yet unaddressed in the textbooks, changes the basic policy tools that have traditionally defined the sphere of macroeconomic decision-making.