Our philosophy has not changed at all.
What was interesting was to hear Axel, who has very direct connections to current and past Fed officials, clearly admit that Powell is now seen as being no different from his predecessors.
Jerome Powell is just as much of a market-fixated junkie as Yellen or Bernanke.
No real surprise, I guess.
Our approach has been encapsulated in the “until and unless” phrase meaning until and unless the central banks start printing again The Everything Bubble will begin to deflate.
Which happened…for a little while…and now they have caved and thrown in the towel apparently.
The entire leadership structure of the politicians and central banks is/are scared to death of how this all ends, so they freak out at every little wiggle down.
When we add in what China has been doing we see this where the slope of the green line indicates the pace of central bank balance sheet expansion:
!&^&!@^!% Man, this annoys me.
Note that there has only been one period of faster central bank balance sheet expansion in the entire record, and that was the panicked vertical launch in Jan 2016.
The pace of expansion since mid December is otherwise the second fastest on record and soon will be the fastest for longest.
So much for the idea of QT. QE is back on the table.
Now you have you answer to the question “how much of a downdraft is enough to scare the numbskulls at the central banks?”
The answer is “not much” which is scary in itself, no?
Meanwhile, the Yellow Vests are gaining traction as an idea and it’s pretty comical that the only thing that the central banks can think to do to help blunt that cause is to rapidly expand their balance sheets and thereby rapidly expand the wealth gap and thereby add fuel to the fire.
Meanwhile, the ecological headlines grow ever more severe with record breaking heatwaves and drought in Australia, insects now 98% gone from the ground of nature preserves in Puerto Rico, and dozens of other serious declines all of them directly traced back to human’s overdoing it.
Should we all be mollified that the prices of financial assets can be horsewhipped a bit higher for a bit longer?
To what end? And when these efforts run into trouble a bit later on, then what? More? Okay, and then what?
The efforts are becoming more extreme and more closely spaced and meanwhile the real world is busy unraveling. So I would strongly advise remembering that human systems are subservient to the real world, the natural world, and that the path we are on cannot be sustained indefinitely.
History, and an understanding of complex systems, suggests that when the wheels come off they tend to do so rather quickly and without much warning.
We’re just going to have to watch the CB balance sheet thing a few more weeks before I am ready to concede that they gave up. But they might have, and that would go a long way towards explaining the sudden fascination with keeping a very tight lid on gold and selling it almost every single COMEX “”market”” open session somewhere between 8:00 and 8:30 a.m.