Having read the news…
I’d love to turn…you…off?
The morning
news does not make a ‘good read.’ The FOMC minutes released yesterday show a
seriously conflicted Fed that seems to have lost its way. The more that the Fed
protests that is not on a pre-set course, the more it looks like it is, based
on reports it releases to the public.
With the
Fed lacking a serious backbone, the OECD has injected a sense of urgency into
the mix. It is not clear that this is aimed at the Fed or at the US but other
countries are acting or preparing to act. The U.S. (i.e. FED) alone has dug its
heels in and refused to even give a clear signal that will leave its tightening
path- and has more clearly declined to step up any stimulus- However let me ass
that the use of fiscal policy is dead almost everywhere outside of China
(genuflect, I said ‘China’).
The Fed’s
die has been cast even as the Fed argues that it remains open minded. And this
is a Fed that wants to pride itself on transparency. no No NO. This is the same
old Fed. It is shrouded by the use of obscure language and wedded to issuing a
new policy statement each month, but one that reads more or less like the one
issued before it. And it wants to have its wiggle room on language but also to
speak clearly and directly...it wants to have its cake and eat it too, while
extolling the metis of a high protein diet.
The Fed’s
choice in the ‘minutes’ to rely more on labor market data because GDP is often
revised sets up a straw man that ignores other reports perhaps best summarized
by the weak MFG ISM and the weakening Non-MFG ISM. Whatever the reality behind the Fed’s bizarre
choices, there seems to be a few voices of reason at the Fed but we have heard
few of them in public recently. As for Janet Yellen we seem to have progressed
from having strong Fed chairman like Volcker and Greenspan to a consensus
builder in Bernanke to one who is afraid to speak anything other than what the
committee already has decided. Janet Yellen may be our first Japanese Chair as
she acts as though she has no power and has been coopted by the opinions of the
committee. Her statements about negative rate prospects were classic Yellen:
one day saying that the committee had considered and rejected that course at
one point and the next day saying that she was not taking anything off the
table. Now that’s leadership! At least it is what passes for it from Ms.
Yellen. Policy by committee is one of the worst possible. Committees need strong leadership. I,
increasingly, get the sense that this one does not have it.
The News
OECD…Governments in the U.S., Europe
and elsewhere should take “urgent” and “collective” steps to raise their
investment spending and deliver a fresh boost to flagging economic growth, said
the OECD.
ECB view- The euro zone's modest
economic recovery was progressing but risks are on the rise and there were also
signs that low energy prices could feed into the price of other goods and
services, the European Central Bank said on Thursday.
Wal-Mart- Wal-Mart cut its sales
forecast for the current year because of the stronger dollar and store
closures, as it reported core sales growth in its U.S. business that was softer
than expected for the holiday quarter.
Nestle… Shares in Nestlé dropped more
than 4% after the Swiss food giant reported its slowest sales increase in six
years and held back from buying more of its shareholders’ stock.
Like to watch?... Swiss watch exports
continued to decline at the beginning of the year, figures from the Federation
of the Swiss Watch Industry showed Thursday. Watch exports fell notably by 7.9
percent year-over-year in value terms in January to CHF 1.5 billion. All main
price segments recorded significant decreases.
Bridgewater’s founder offers this… Ray
Dalio, founder of the world's largest hedge fund Bridgewater Associates, says
the next big monetary and fiscal move should include an airdrop of money from
helicopters to stimulate the U.S. economy.
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