Faber News Flow

Income sags from eerie stimulus-spike. But consumers hadn't spent all their  stimulus & unemployment money, instead paid down credit cards  & padded bank accounts. Now they're drawing on them. This is how Americans "in aggregate " – all mixed together, with all class and wealth inequalities mercifully blurred out of the picture – are navigating this twisted economy that has been powered by stimulus payments, extra unemployment payments, and support payments for companies so that they don't lay off their people. Personal income from all sources – stimulus payments, unemployment payments, wages and salaries, Social Security payments, rental income, dividend income, etc., but not stock market gains – spiked to an eerie record in April and has been dropping ever since. But those stimulus payments have been drying up as only a few million stragglers hadn't received them by the end of July. While the extra $600 a week in unemployment benefits expired at the ...

A lump-sum payment in digital dollars for all Americans during a recession or to raise inflation, as an alternative to QE and negative interest rates, which have failed. There is a lot of discussion suddenly about a Federal Reserve project to make direct payments to households during an economic crisis. In March, legislation was proposed in the House and in the Senate to authorize the Fed to do this. At the beginning of August, two former Fed officials floated a trial balloon of this type of operation with some specifics as to how it would work and how it would be accounted for on the Fed's balance sheet. And now, the president of the Federal Reserve Bank of Cleveland, Loretta Mester, gave a speech on the modernization of the decades-old, slow, and cumbersome payment systems we have in the United States. The Fed has been working on this modernization since long before the Pandemic. And near the end of that speech, she said that the Fed was looking into ways in which it could make d...

One day after Morgan Stanley's chief global strategist Andrew Sheets surprised traders by calling the  2020 market cycle "normal ", on Monday morning his colleague Michael Wilson, head of global equity strategy at Morgan Stanley reminds bank clients that late in August he called for " a   Growth Scare to be followed by a Rates Scare " a narrative supported by both recent market action, and his view that Congress appeared to be entering a period of gridlock with respect to the next round of stimulus and the inevitable second wave of COVID-19. So fast forward to today when the first leg of that narrative seems to have played out as Wilson expected, with the S&P 500 falling close to 11% from it's high on September 2nd, led by the Nasdaq's 14% "plunge." Addressing the "growth scare" first, Wilson notes that in addition to the congressional gridlock and fear of a second wave/lock downs, "the nation has also experienced a heightene...

The key reports this week are August New and Existing Home sales. For manufacturing, the Richmond and Kansas City Fed manufacturing surveys will be released this week. Fed Chair Powell testifies three times this week. ----- Monday, September 21st ----- 8:30 AM ET:  Chicago Fed National Activity Index  for August. This is a composite index of other data. 12:00 PM:  Q2 Flow of Funds Accounts of the United States  from the Federal Reserve. ----- Tuesday, September 22nd ----- 10:00 AM:  Existing Home Sales  for August from the National Association of Realtors (NAR). The consensus is for 6.00 million SAAR, up from 5.86 million in July. The graph shows existing home sales from 1994 through the report last month. Housing economist  Tom Lawler expects  the NAR to report 5.92 million SAAR. 10:00 AM:  Richmond Fed Survey of Manufacturing Activity  for September. 10:30 AM:  Testimony, Fed Chair Jerome Powell , Coronavirus Aid, Relief, and Economic Security Act, Before the Committee on Financial S...

  Today's Jackson Hole is the perfect turning point event as it satisfies mainatream narrative and the necessary Interest rate cycle end. 

  I t was explained, recently, why  Bank of America, a contrarian voice among Wall Street banks, believes that hopes for an explicit announcement of Average Inflation Targeting (AIT) by Jerome Powell in his highly-anticipated speech titled  "Monetary Policy Framework Review"  to be delivered at 910am on Thursday which wraps up an examination of inflation which started in early 2019 among both among central bank officials and the public, will be a disappointment. The first reason that an explicit policy would entail picking a specific time period over which PCE inflation is required to average 2% before beginning a policy normalization (hiking) process. This is a problem, because in simulations conducted by the BofA rates team, it  found this could in require the Fed to remain on hold for 42 years! Furthermore, explicit AIT could also cripple the Fed's already waning credibility, not least of all because "it would also bring up difficult issues around the appropr...

While 'hope' had rebounded, headline consumer confidence data from The Conference Board was expected to slide back lower in July, and it did with a notable disappointment. Headline consumer confidence fell from 98.3 to 92.6 (well below the 95.0 expectations) Present situation confidence rose to 94.2 vs. 86.7 last month. Consumer confidence expectations fell to 91.5 vs. 106.1 last month. Not a "V"... Source: Bloomberg Buying expectations fell for Autos and Appliances but rose modestly for Homes as  only 31% of Americans surveyed see business getting better within six months. If only record high stocks sparked confidence in the future.

In his morning critique of goldbugs' resurgent optimism about the future of gold, which has exploded alongside the price of precious metals, which in turn have been tracking the real 10Y rate tick for tick... ... Rabobank's Michael Every argued from the familiar position of one who views the modern monetary system as immutable, and bounded by the confines of the dollar as a reserve currency and financial assets as a bedrock of modern household wealth, of which as Paul Tudor Jones recently calculated there is over $300 trillion worth, compared to just $10 trillion in total gold value. Indeed, according to Every, the surge in gold is meaningless because "if you buy gold, technically that is going to make you money. And yet that money is still going to be priced in US DOLLARS – and that gives the whole game away." Like fans of the England football team, gold fans can dream of the distant past when gold was the centre of the global monetary system; but they...