— Wall Street Journal (@WSJ) April 4, 2014
— Wall Street Journal (@WSJ) April 4, 2014
Janet Yellen, vice chair of the Board of Governors of the U.S. Federal Reserve System
Things are looking good for Janet Yellen.
According to WSJ, the Fed Vice-Chair just canceled a planned October 1 speech at the NY Economic Club.
No reason was given but obviously if she expects to be nominated for Fed Chair between now and then, she’ll be busy with other stuff.
Nothing surprising from Hilsenrath but his take is up at the WSJ:
Fed officials pointed to concerns that financial conditions had tightened in recent months and that those conditions could slow the economy if sustained.
Fed officials were on the fence in the days leading up to the meeting, even though many investors were convinced the central bank would make a small reduction to the bond-buying program at the September meeting.
— IndiaRealTime (@IndiaRealTime) July 26, 2013
— WSJ Markets (@WSJmarkets) July 18, 2013
(1) BOJ is going wild. On April 4, Japan’s central bank announced a plan to double the monetary base over two years from 138 trillion yen at the end of 2012 to 270 trillion yen at the end of 2014. (That would be $2.7 trillion at an exchange rate of 100 yen per dollar.) Reserve balances jumped 13.3 trillion yen during April. The yen has plunged from 79.39 on November 13, 2012 to 101.6 on Friday. The Nikkei is up 68.7% over this same period.
Last Thursday’s WSJ included an interesting article about China’s slowing economy, noting: “A sharp fall in factory prices–the 14th straight monthly decline–signals further trouble for a Chinese economy already facing mounting debt and slowing growth, as old-line industries struggle with growing overcapacity. Producer prices…dropped 2.4% in April, the sharpest decline since October, paced by particularly steep falls in the metals and chemicals sectors. That could add to concerns about China’s slowdown in growth…because falling producer prices make it tougher for makers of industrial goods and commodities to make profits, pay off their debts and pay their suppliers on time.”
Last week, the People’s Bank of China (PBOC) said that it will use various tools to guide “stable and reasonable” growth in money supply and credit. “The negative spillover effects from loose monetary policy in major economies are growing, which has helped pro-cyclical credit expansion at home,” the PBOC said. >> Read More
Futures are down modestly in early Sunday trading, and one possibility for that is the story that came out after the bell on Friday in the Wall Street Journal from Fed whisperer Jon Hilsnerath titled Fed Maps Exit From Stimulus.
The gist: The Fed is seriously thinking about how it might begin the QE winddown process.
Given the widespread belief that Fed stimulus is a major tailwind for the market, talk of QE winddown is invariably something of a negative.
In tonight’s “Closing Print” note, Mike O’Rourke from JonesTrading thinks the article’s existence is pretty significant.
The WSJ’s Jon Hilsenrath published a story Friday evening titled “Fed Maps Exit From Stimulus – Timing of Wind-Down Is Uncertain, but Focus Is on Managing Unpredictable Market Expectations.” We suspect the twitter taper caper on Thursday opened the window for the FOMC to provide some clarity as to where policy stands. Here are some key questions. Is this story important? Can it be taken at face value and should markets move? The answer is yes, yes and yes. The WSJplaced the article prominently on the cover of the Saturday edition, so they believe they have an important story. It is a Hilsenrath story, and in the post-recession QE era the Fed has used him to foreshadow almost every major monetary policy move. Finally, in a tape where QE is the dominant theme, any indication of policy slowing or reversing course is meaningful. >> Read More
Breaking news from the seige: the suspect Dzhokar Tsarnaev is in custody as of ~8:42 pm. As WaPo reports, he is alive but badly injured, as there was a lit fire in boat where was is hiding.
Some more from the WSJ:
Authorities captured a 19-year-old college student suspected in the deadly Boston Marathon bombings after one of the biggest manhunts in U.S. history paralyzed an entire metropolis. >> Read More
The full story on Weidmann is out in the WSJ:
Many analysts expect that with inflation below the ECB’s 2% target, at 1.7%, and expected to fall further, an interest-rate cut is likely in May or June. Mr. Weidmann didn’t rule out the prospect, but cast doubt that it would do much good.
“We might adjust in response to new information,” however, “I don’t think that the monetary policy stance is the key issue,” he said.
It’s more tentative than the initial headline suggested but it certainly leaves the door open. It’s implied (but unclear) that it was in response to a question about a cut specifically in May or June. >> Read More
“In order for central banks to achieve their ultimate economic objective – which is growth and jobs – they have to push investors into taking more risk than is justified,” is the somewhat chilling warning that PIMCO’s Mohamed El-Erian gives in this excellent interview with the WSJ. “Central banks are operating through the wealth effect and animal spirits,” El-Erian says peeling back the truth onion, as they prop up asset prices to “artificial levels, in virtually every market.” Worries over the central bankers of the world withdrawing easy money policies too early are “unwarranted,” he notes, adding that he suspects, “they will most likely stay too long and they will consciously make that mistake.” Critically, though, he sends a message that appears to fit with many of our recent discussions (most recently here) that “if these levels aren’t validated by the fundamentals, then investors will get hurt.”