Things are falling apart across the Atlantic, and the implications for U.S. investors are now loud and clear.
As an American who grew up on baseball, yet was educated and employed (partly) in Germany with a residence today in France, I suppose it's fair to say I have a global perspective as to both the realities and stereotypes of certain cultural and financial nuances.
As for Germany, well, it conjures up a great deal of stereotypes and ideas, both fair and unfair. I won't defend or address those here.
However, what most of us on both sides of the Atlantic (including the French...) can agree upon is that Germany has a uniquely strong passion for disciplined spending, thrifty saving, and currency risk sensitivity.
This land of Max Weber, along with blunt speak economists like Ludwig von Mises or Walter Eucken, is all too aware (remember Weimar) of what happens when wheel barrels of worthless money are rolled out to solve chronic debt problems.
Welcome back to What's Happening Now, following a grim week for investors, especially those hanging on for that last evasive yet entirely possible "melt-up" in stocks to come should the Fed print more dollars out of thin air.
Beyond (and more important than) the impeachment proceedings launched in the U.S. last week, China trade negotiations fell off track again as new U.S. threats to contain even passive investing in China, along with Chinese company listings on U.S. Exchanges, were floated.
A resolution of the trade war would send markets temporarily much higher; as of today, however, such a resolution remains elusive.
In the meantime, U.S. manufacturing data continued to plummet... to below breakeven.
And on the Central Bank front, necessary Fed repo rescues alarmed the U.S. as chaos at the European Central Bank mounted.
In short, a lot is going on and not much of it is objectively good, though further Fed "stimulus" could easily buy us more time and highs.
In the wake of last week's repo market panic, I realized that there is much more to be said about its implications - and what it all means for you and your money.
First, let's be clear that the repo market is not the bond market, but rather a clever little corner of the market casino designed to allow major banks and a few other non-bank and quasi-government entities to make short-term (often overnight) loans on an as-needed basis.
With this in mind, many readers have naturally asked why the big banks, so flush with post-2008 reserves, would ever need such "loans."
Additionally, other readers, those admittedly new to the variant and rigged mechanizations between D.C. and Wall Street, have been pondering what all of this sudden (and narrow) repo noise has to do with their own money and the broader risks facing the markets.
Well, the answers will likely tick you off.
As to the first question, you are correct to ponder why the big banks, so flush with reserves, need a repo market's overnight loans at all.
In fact, the blunt truth of the matter is they don't.
Welcome back to What’s Happening Now, your weekly guide to what’s going on right now and why it matters to you – and your money. Today, we’re going to look at one of the main recession indicators we track, namely... Read more »
Last Friday, we dove into the U.S. Pension Fund Disaster, where we set up the backdrop for how pension funds can trigger a massive sell-off. Wall Street and pension fund trustees are asking more folks to double down rather than... Read more »
Welcome back to What's Happening Now, your weekly guide to what's going on right now and why it matters to you - and your money.
In this topsy-turvy world of Fed markets rather than stock markets, bad news (as in the economy is worsening) can often translate to good news to investors, because it means more Fed "support" - i.e. the "faking it" policies of a now openly rigged to fail market.
Coming off a week with no less than seven Fed officials, including Fed Chair Jerome Powell, opining on interest rates and the state of the economy, markets closed last week confused for good reason.
We're going to dive into why what the Fed says doesn't matter; rather, it's what it does and how the markets react to it...
There’s no way to beat around the bush with this: Pension funds across the country are massively underfunded, massively allocated to risky stocks, and massive in size. This trio of facts represents a ticking time bomb of demographic and market... Read more »
Markets have seen a rugged stretch lately with the Fed disappointing and tariff wars escalating. Thursday offered some hope as markets rallied on news that the Chinese had acceptably pegged the Yuan, but late morning Friday morning as I pen... Read more »