Faber News Flow

  The bond market is calling the Fed’s bluff. The single most important bond in the world is the 10-Year U.S. Treasury. The yield on this bond serves as the “risk free” rate of return for the world: it is the rate against which all risk assets (real estate, stocks, commodities, etc.) are valued. I mention all of this because the yield on the 10-Year U.S. Treasury is exploding higher. As I write this Friday morning, it is closing in on 1.7% and is just a hair below its March 2021 high. Why does this matter? Because this yield moves based on inflation (among other things). And the speed of this move  is suggesting that the inflation situation is getting worse. Remember, the only reason bond yields fell from March until July of this year was because the Fed promised to tighten monetary policy. Put another way, the bond market believed the Fed would take the necessary steps to stop inflation from getting out of control. Not anymore. The bond market is now showing us that the Fed w...

There was fleeting hope that Southern California port congestion had turned the corner. The number of co ntainer ships waiting offshore dipped to the low 60s and high 50s from a record high of 73 on Sept. 19,    trans-Pacific spot rates plateaued , the Biden administration unveiled aspirations for 24/7 port ops, and   electricity shortages curbed Chinese factory output . The reality is that the port congestion crisis in Southern California is not getting any better. Container ships off Los Angeles/Long Beach on Wednesday. Map: MarineTraffic The time ships are stuck waiting offshore continues to lengthen. There are simply too many vessels arriving with too much cargo for terminals, trucks, trains and warehouses to handle.  There were 103 container ships at Los Angeles/Long Beach terminals or waiting offshore on Wednesday, an all-time high. Offshore, the number of ships at anchor or in holding patterns is once again nearing record territory. According to the Marine Exchange of Southern C...

"Everything transitory is but an image…" The biggest risk to markets have always been policy mistakes by central banks and/or governments. The risks are rising as confusions about inflation abound. The reality is Central banks have tripped themselves – by assuring us inflation was transitory, they've pretty much nailed on its permanence! Policy Mistake Risk and Inflation Early doors y'day I was listening to Professor David "Danny" Blanchflower on the radio – ex Bank of England economist and Monetary Policy Committee member. He made a telling comment about the news BoE Governor Andrew Bailey is pushing for a rate hike at the November 4th MPC rate-setting meeting – dismissing every single rate hike since 2007 as a "policy mistake". He's spot on. He also reckons a deep recession is about to hit the US – based on his analysis of consumer anxiety and fears – and if the US catches a cold, then the UK will be thumped! " Is the BoE about to make a...

Over the weekend, a Goldman flow trader explained   why it expected a powerful market meltup to emerge  in coming days, and this time Goldman was right because after trading at 4317 just one week ago, spoos are now almost 200 points higher, rising above 4500 this morning after a powerful ramp pushed US equity futures and global markets as an upbeat profit forecast from Johnson & Johnson which boosted (get it "boosted") its Revenue and EPS guidance, added to the positive momentum in corporate earnings generated by big banks last week and helped counter concerns about elevated inflation. At 715 a.m. ET, Dow e-minis were up 183 points, or 0.52%, S&P 500 e-minis were up 22.75 points, or 0.51%, and Nasdaq 100 e-minis were up 61.75 points, or 0.40%. Treasury yields were unchanged at 1.60% and the dollar slumped to a 4 week low. In premarket trading Johnson & Johnson - whose covid vaccine will soon be "mixed and matched" with mRNA platforms - rose 1.7% after it...

We now live in a world, where bizarro headlines such as the ones below, have become a daily if not hourly occurrence: *TREASURY TO STUDY IMPACT OF CLIMATE ON HOUSEHOLDS, COMMUNITIES *TREASURY LAUNCHES EFFORT ON CLIMATE-RELATED FINANCIAL RISKS *BRAINARD: CLIMATE-SCENARIO ANALYSIS WILL HELP IDENTIFY RISKS *BRAINARD: CLIMATE CHANGE COULD HAVE PROFOUND ECONOMIC EFFECTS *MESTER: FED LOOKS AT CLIMATE CHANGE FROM VIEW OF RISKS TO BANKS *FED IS TAKING THE RIGHT COURSE ON MONITORING CLIMATE CHANGE *FED SHOULD CONSIDER CLIMATE-CHANGE RISK TO FINANCIAL SYSTEM Now, in case someone is still confused, none of these institutions, and not a single of the erudite officials running them, give a rat's ass about the climate, about climate change risks, or about the fate of future generations of Americans (and certainly not about the rising water level sweeping away their massive waterfront mansions): if they did, total US debt and underfunded liabilities wouldn't be  just shy of $160 trillion . So...

Last week, Bank of America sparked a firestorm of reaction amid both the pro and contra climate change camps, when it published one of its massive " Thematic Research " tomes, this time covering the " Transwarming" World , and which serves as a key primer to today's Net Zero reality, if for no other reason than for being    one of the first banks to quantify the cost of the biggest economic, ecologic and social overhaul in modern history. The bottom line:  no less than a stunning $150 trillion in new capital investment would be required to reach a "net zero" world over 30 years - equating to some $5 trillion in annual investments - and amounting to twice current global GDP. Needless to say, the private sector has nowhere near the capital required to complete this investment which is why Bank of America generously estimate that all or parts of the bill would have to be footed by central banks in the form of tens of trillions in QE. And since QE is essen...