Sat, 27th May 2017

Anirudh Sethi Report


Archives of “wsj” Tag

Walking while texting? Special Lane for Cellphone Addicts in China

This Looks Like A Pretty Big Hint That Yellen Is Going To Get The Fed Job

  • The White House has apparently been calling around Democratic senators urging them to speak up in favor of Janet Yellen should there be any criticism of her that might arise as Federal Reserve chair nominee.
  • Commentators are also saying the the cancellation of a speech from her which was scheduled at the Economic Club of New York for October 1 is another indication the White House will nominate her for the position.

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.

Hilsenrath’s take on the Fed

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.

Central Banks Gone Wild

Central bankers claim that they aren’t starting a currency war. They deny that their policies are aimed at the competitive devaluation of their currencies. Let’s call it competitive ultra-easing. Consider the following:

(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.

(2) China loans are still going strong. On Saturday, Bloomberg reported: “China’s new local-currency loans exceeded estimates last month while money supply expanded at a faster pace, a sign policy makers are maintaining credit support for the economy after first-quarter growth unexpectedly slowed.” Lending was 792.9 billion yuan ($129 billion), and M2 rose 16.1% y/y in April. 

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 

Fed Considering Ways To End QE- WSJ

ALERTFutures 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.

He writes:

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 

Dzhokar Tsarnaev In Custody, Alive

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 

More on Weidmann’s comments

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