Faber News Flow

The monetary policy guide has fundamentally changed and so to has the business cycle.  Changes in monetary policies and practices nowadays stimulate finance over spending. The power and risks of equity markets should not be overlooked as important metrics show equity valuations to be 2X times their historical norm. Monetary policy can stimulate too much finance (equities) as it did with spending (inflation). As such, the risks of business cycles have shifted toward finance and away from inflation. Here are 5 examples of how monetary policies, new tools and practices stimulate finance over spending. 1. Policy Rates : The primary tool of monetary policy is the target on the federal funds rate.  Policymakers have often struggled to find a good balance, or find a rate that was equally good for the economy and finance. Policymaker's promise to keep official rates exceptionally low in recent years, and now for the foreseeable future, clearly favor finance over spending. To be sure, inter...

Today we gasp, stagger, reel. The enormity of it all has finally overmatched our capacities. Consider… Total global debt presently piles up to 322% of GDP — a record. Total "developed world" debt piles higher yet — 383% of GDP — another record. The world's stock markets combine to $88 trillion, or 100% of global GDP. That is another record yet. Record upon record upon record has come down… as debt has gone relentlessly up. And what does the world have to show for the deluge? Little Bang for the Buck Real United States GDP growth gutters along under 2%. Fair estimates place European and Japanese 2020 growth under 1%. Interest rates, meantime, are coming down. And so the supply of "dry powder" available to the central banks is coming down. They will require heaps of it come the next crisis. Project Syndicate, in summary: The major developed economies are not only flirting with overvalued financial markets and still relying on a failed monetary-policy strategy, but...

This week's pick of energy and commodity market trends kicks off with EU biofuels demand prospects and a window of opportunity for Australian crude oil grades. US and European gas market dynamics and Brazilian corn prices are also in the sights of S&P Global Platts news editors this week. 1. Renewables goals boost global biofuels demand Goldman's Currie Is Watching Three Commodities Themes in 2020 What's happening?  In 2020, each EU member country will need to meet specific  national renewable energy targets  set by the European Commission. One route is to blend more biofuels into road fuels, with more countries adopting E10 gasoline, which contains up to 10% ethanol, twice as much as the current E5 standard. In 2019, the Netherlands became the latest European country to introduce E10 gasoline, following Finland, Belgium, France and Germany. What's next?  In France, E10 sales have now overtaken E5 deliveries. Growth of the E10 ethanol blend have been hindered in Ger...

The Baltic Exchange's main sea freight index hit a nine-month low on Monday, dragged down by falling rates of capesize and panamax segments as world trade continues to slump.  The Baltic Dry Index, which tracks rates for capesize, panamax and supramax vessels that ferry dry bulk commodities across the world, dropped 25 points, or 3.3%, to 729 (according to  Refinitiv data ), the lowest level since April 2019: The capesize index .BACI dropped 119 points, or 16.7%, to 593 - its lowest since April 23.The index registered its 27th straight session of losses, and also its largest daily percentage loss since early April. Average daily earnings for capesizes, which typically transport 170,000-180,000 tonne cargoes including iron ore and coal, fell $592 to $7,760. The panamax index .BPNI lost 4 points, or 0.5%, to 866. Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 tonnes to 70,000 tonnes, declined $39 to $7,791. ...