Nero may have fiddled while Rome burned, but US Treasury Secretary Paulson and Fed
Chairman Bernanke might as well be on their way to Disneyland in some phantasmagorical celebration of having successfully stabilized the
financial system. That is what both said to Congress in testimony earlier
this week and what Paulson asserted in his farewell address at the Reagan
What planet are they living
on? Even earlier in the week when testifying in Congress bank shares were
sliding, CMBX and ABX were exploding and agency debt was imploding. Yet
all that seemed to matter to our top economic policy generals was the retreat
of LIBOR rates which in their current form reflect rates at which banks wonâ€™t
lend to each other. One could imagine a banner behind Bernanke and
Paulson in House Financial Services Committee reading Mission Accomplished.
Sorry to break the news to
Hank and Ben but the financial system is not stable and much more needs to be
done to stabilize it. And who cares if the lame duck is quacking and
waddlingâ€¦this is no time to close up shop and await the next
administration. Okay this message is more aimed at Paulson than
Bernanke. And if the Treasury Secretary and the White House is more concerned
about packing boxes then we need to see the inauguration moved up to December01
But Bernanke is culpable
too. He prematurely indicated that monetary policy was largely used up
and the next phase of fixes had to come from government. Well that is
partly trueâ€¦the Fed should not have rested â€“ when was the last new policy step
announced from the Fed? Bernanke has been as quiet as a church
mouse. Indeed the silent void he has left has been filled by half-cocked
remarks from a host of other Fed officials including Stern, Kohn, Bullard and
Fisher. And we still donâ€™t know if the Fed has definitively embarked on a
new approach to monetary policy â€“ quantitative easing. Some officials
have said it is in operation and others have indicated it is possible but not
yet in place. And what does Bernanke think? Last time he addressed
monetary policy in a zero bound environment (Fed funds at or near zero) in any
detail was in November 2002, when the Fed was worried about the remote risk of
deflation and building a firewall around itâ€¦that firewall was never built and
deflation indeed proved to be so remote a risk that the near ZIRP (zero
interest rate policy â€“ 1.00% FF target) in part gave birth to an inflation run
and asset bubble (and 425bps in tightening).
While there is no fixed
rules for the road for what constitutes quantitative easing it is most often
associated with a central bank that cuts its official targeted rate to zero and
more monetary stimulus is needed. QE does not make deflation a necessary
condition before a central bank will engage in this policy approach.
Indeed disinflation in a deepening recession could get an official rate to zero
and prompt the start of QE before the broad price level turns negative
(year-over-year). What makes QE QE? A new target, like a market
rate (government bill or note yield), excess reserves held at the Fed (what BOJ
targeted in its QE period from 2003-2005 â€“ BOJâ€™s â€ścurrent accountâ€ť target) or a
broad monetary aggregate and no longer targets an interest rate. So using
my definition QE has yet to start. But what has started is an element of
a policy response normally associated with ZIRP â€“ a rapid and significant
expansion of the balance sheet (now around $2.2trln up from $880bln in August).
The expansion in the Fedâ€™s balance sheet would normally begin with the
implementation of QE â€“ a stated new target for open market operations. So
at most we have begun a QE tactic without a formal start of QE target
I would also note that the
Fed has two options for expanding the balance sheet â€“ lending against
collateral and buying assets outright from the market and this could include
foreign assets which would leave dollars sold for foreign currency
unsterilized. The latter operation is monetization or a permanent
increase in the money supply and would be a more aggressive attempt to achieve
a QE target. Buying assets outright would also be a more deliberate
attempt to create inflation and inflation expectations. Inflation would
penalize banks, firms and households for holding cash or near cash (bills) as
inflation erodes purchasing power and forces these financial actors out of cash
to reach for yield and consumers and firms to spend before things cost even
We are not at the
monetization stage, but increasingly closer to a formal announcement of QE and
this may well be behind the Fedâ€™s announcement Thursday it was making the
December16 FOMC meeting a two-day meeting starting December15. I think
everyone believes the Fed will cut rates 50bps December16 leaving the funds
target at 0.50% and if this is the bottom for funds it will state that rates
will remain low for an indeterminate period which would imply that additional
policy stimulus will be in the form of QE. Alternatively, in the spirit
of greater transparency, the Fed could announce a new target â€“ perhaps a bill
yield and drop Fed funds rate as the policy anchor which would be a far more
explicit start to QE. Since the Fed funds target is already meaningless
as the effective funds rate is close to zero, why not just announce a zero Fed
funds rate (100bps cut) and go straight mast GO and get on with QE? How
about a press conference to go along with QE announcement and 100bps cut to
explain what QE is and why the Fed is using it?
As far as US Treasury and
White House response to the crises goes, there is no time for packing boxes or
planning the next iteration of work and or leisure. The
collapse in asset prices in the last week have largely wiped out the capital infusion
from the US government and so we are back to square one on banks needing
capital (Citigroup obviously most, but who is to say it wonâ€™t be another
institution next week?). Paulson said he will not ask Congress to
authorize more TARP funds for banks and leave this to an Obama Treasury
Secretary (looking like Summers or Volcker with Geithner staying at NY
Fed). Much as Washington canâ€™t and wonâ€™t wait for a GM bankruptcy filing
Treasury canâ€™t wait for January20 inauguration to put more capital into the
major banks under the to big and too connected to fail principle. That is
what I found so infuriating this week â€“ Paulson has the audacity to give a
farewell address when the financial system is burning like a California wild
fire on Santa Ana winds. Hubris of the highest order.
Officials also need to
address disorderly markets â€“ every market is disorderly and this is reducing
liquidity by the day â€“ look at cable, euro/dollarâ€¦supposedly deep and liquid
currencies. Look at the 30-year bond. Look at stocks. Willem
Buiter of the LSE and formerly with BOE MPC and EBRD argued back in August that
central banks should switch from lender of last resort to market maker of last
resort http://maverecon.blogspot.com/2007/08/central-bank-as-market-maker-of-last.htmland at the very least
Buiter makes the case for central banks making markets in illiquid assets that
are the cornerstone of the financial systemâ€¦buy (or sell) stock index futures,
currencies, commodities and government bonds from the market. Officials
caught up with the financial problem in October but the problem has morphed
into a sprint and US officials are waltzing out of office or walking at a
leisurely pace at the problem. Policy is again looking reactive and to
conquer this one we need the Fed and Treasury to take down the gone fishing
sign and become proactive.
Obama will have
a $700bln to $1trln fiscal stimulus in hand for January21â€¦and there will be
more. But the financial system and real economy canâ€™t wait that
Forex Trading News
Daily Forex Market News Forex news reports can be found on the forex research
headlines page below. Here you will find real-time forex market news reports
provided by respected contributors of currency trading information. Daily forex
market news, weekly forex research and monthly forex news features can be found
Forex News Real-time forex market news reports and features providing
other currency trading information can be accessed by clicking on any of the
headlines below. At the top of the forex blog page you will find the latest
forex trading information. Scroll down the page if you are looking for less
recent currency trading information. Scroll to the bottom of fx blog headlines
and click on the link for past reports on forex. Currency world news reports
from previous years can be found on the left sidebar under "FX Archives."
Actionable trading levels delivered to YOUR charts in real-time.
Mon 19 Mar 2018 Tue 20 Mar 2018 AA 9:30 GB- CPI A 10:00 DE- ZEW Survey Wed 21 Mar 2018 AA 03:00 AU- Employment AA 9:30 GB- Employment A 12:30 US- Current Account AA 14:00 US- Existing Homes Sales A 14:30 US- EIA Crude A A18:00 US- Fed Rate Decision A 21:00 NZ- RBNZ Rate Decision Thu 22 Mar 2018 AA All Day flash PMIs AA 9:30 GB- Retail Sales AA 12:00 GB- Bank Of England Decision A 13:30 US- Weekly Jobless Fri 23 Mar 2018 AA 12:30 CA- CPI/Retail Sales A 12:30 US- Durable Goods A 14:00 US- New Homes Sales
John M. Bland, MBA co-founding Partner, Global-View.com
Veteran FX Trader, Max McKegg, forecasts all the Major currencies and the Australasians; providing Daily and Medium Term Trading forecasts to subscribers, who include large Banks the world over, as well as individual traders in more than 30 different countries.
looking for your first broker or do you need of a new one? There are
more critical things to consider than you might have thought.
We were trading long before there were online brokers. Global-View
has been directly involved with the industry since its infancy. We've
seen everything and are up-to-data with recent regulatory changes.
The Global-View Forex Forum is the hub for currency trading on the web. Founded in 1996, it was the original forex forum and is still the place where forex traders around the globe come 24/7 looking for currency trading ideas, breaking forex news, fx trading rumors, fx flows and more. This is where you can find a full suite of forex trading tools, including a complete fx database, forex chart points, live currency rates, and live fx charts. In addition, there is a forex brokers directory where you can compare forex brokers. There is also a forex brokers hotline where you can ask for help choosing a forex broker that meets your individual fx trading needs. Interact on the same venue to discuss forex trading.
The forex forum is where traders come to discuss the forex market. It is one of the few places where forex traders of all levels of experience, from novice to professionals, interact on the same venue to discuss forex trading. There is also the GVI Forex, which is a private subscription service where professional and experienced currency traders meet in a private forex forum. it is like a virtual forex trading room. This is open to forex traders of all levels of experience to view but only experienced currency tradingprofessionals can post.
Currency trading charts are updated daily using the forex trading ranges posted in the Global-View forex database. You will also find technical indicators on the fx trading charts, e.g. moving averages for currencies such as the EURUSD. This is another forex trading tool provided by Global-View.com.
The forex database can be used to access high, low, close daily forex ranges for key currency pairs, such as the EURUSD, USDJPY, USDCHF, GBPUSD, USDCAD, AUD, NZD and major crosses, including EURJPY, EURGBP, EURCHF, GBPJPY, GBPCHF and CHFJPY. Data for these currency trading pairs dating back to January 1, 1999 can be downloaded to an Excel spreadsheet.
Forex chart points are in a currency trading table that includes; latest fx tradinghigh-low-close range, Bollinger Bands, Fibonacci retracement levels, daily forex pivot points support and resistance levels, average daily forex range, MACD for the different currency trading pairs. You can look on the forex forum for updates when one of the fx trading tools is updated.
Global-View also offers a full fx trading chart gallery that includes fx pairs, such as the EURUSD, commodities, stocks and bonds. In a fx trading world where markets are integrated, the chart gallery is a valuable trading tool. Look for updates on the Forex Forum when the chart gallery is updated.
Global-View.com also offers a forex blog, where articles of interest for currency trading are posted throughout the day. The forex blog articles come from outside sources, including forex brokers research as well as from the professionals at Global-View.com. This forex blog includes the Daily Forex View, Market Chatter and technical forex blog updates. In additional to its real time forex forum, there are also Member Forums available for more in depth forex trading discussions.
WARNING: FOREIGN EXCHANGE TRADING AND INVESTMENT IN DERIVATIVES
CAN BE VERY SPECULATIVE AND MAY RESULT IN LOSSES AS WELL AS PROFITS. FOREIGN
EXCHANGE AND DERIVATIVES TRADING IS NOT SUITABLE FOR MANY MEMBERS OF THE
PUBLIC AND ONLY RISK CAPITAL SHOULD BE APPLIED. THE WEBSITE DOES NOT TAKE
INTO ACCOUNT SPECIAL INVESTMENT GOALS, THE FINANCIAL SITUATION OR SPECIFIC
REQUIREMENTS OF INDIVIDUAL USERS. YOU SHOULD CAREFULLY CONSIDER YOUR FINANCIAL
SITUATION AND CONSULT YOUR FINANCIAL ADVISORS AS TO THE SUITABILITY TO YOUR
SITUATION PRIOR TO MAKING ANY INVESTMENT OR ENTERING INTO ANY TRANSACTIONS.