Faber News Flow

  The following article by David Haggith: This past week we got to observe Fed Chair Jerome Powell and the US stock market  and  the US bond market do everything I said they would do in their complicated shuffle of ships-and-icebergs: I’m sure many helium-headed stock investors believe the lilly-livered Fed will turn tail and run from its goal of letting inflation rise as soon as bonds begin to clobber stocks more seriously…. I believe the Fed is more committed than ever to raising inflation as it has been saying it wanted to do for years. “Stocks in Bondage but Fed Not Fazed“ While bond yields had already begun to rise and compete against stocks, the Fed stayed the course, iceberg dead ahead. As a result, longterm bond interest rose even more because the Fed did nothing to jawbone the idea of increasing its bond-buying QE to take interest rates back down (which it accomplishes by purchasing US government bonds from banks to take them off the market,...

  On Friday, Bank of America's also controversial CIO Michael Hartnett prompted the usual firestorm of confused reactions across Wall Street when he concluded that  the "uber-dovish" Fed had backfired and that vigilantes were now bullying Powell into Yield Curve Control  (which he predicted would kick in once the 5Y yield surpassed 1.25%), and also shared three strategies on how to trade this. It turns out Hartnett is not alone in assessing that the Fed has been bullied by the bond vigilantes: in a note from Deutsche Bank's Alan Ruskin titled "10 reasons for Fed not to fight the bond market", the macro strategist reveals "ten important reasons" why assets markets and FX should expect continued Fed aversion to fighting market forces for higher bond yields. In other words, the Fed may well accept higher (and much higher) yields before it all comes crashing down and whether he wants to or not, Powell will be forced into YCC at which point it's pre...

  "Right here, boys!  Right here!  Get your cake, pie, dill pickles, and ice cream!  Eat all you can!  Be a glutton!  Stuff yourselves!  It’s all free, boys!  It’s all free!  Hurry, hurry, hurry, hurry!” – Pleasure Island voiceover, Walt Disney’s  Pinocchio  (1940) Welcome To Pleasure Island! Did you get your stimmy check, yet?  If so, what are you going to do with it? Are you going to park it in your savings account, pay down debt, and pay off a few bills?  Are you going to buy Chinese ‘stonks’, cryptocurrencies, and digital NFT art? What about a new iPhone, fancy dinners, or a plane ticket to Cabo?  How about a new living room rug, a wood pellet grill, or a 75-inch flat screen TV with a sound bar? The collective answer to these questions is the difference between deflation, asset price inflation, and consumer price inflation. Billionaire folk hero Warren Buffett says you sh...