Wednesday, March 9, 2016

Today's links

1---Former Fed President: "We Injected Cocaine And Heroin Into The System To Create A Wealth Effect"

2--At Secretive Meeting, Tech CEOs And Top Republicans Commiserate, Plot To Stop Trump

3--2008 Revisited?, Roubini

Today, there are seven sources of potential global tail risk, and the global economy is moving from an anemic expansion (positive growth that accelerates) to a slowdown (positive growth that decelerates), which will lead to further reduction in the price of risky assets (equities, commodities, credit) worldwide.

At the same time, the policies that stopped and reversed the doom loop between the real economy and risk assets are running out of steam. The policy mix is suboptimal, owing to excessive reliance on monetary rather than fiscal policy. Indeed, monetary policies are becoming increasingly unconventional, reflected in the move by several central banks to negative real policy rates; and such unconventional policies risk doing more harm than good as they hurt the profitability of banks and other financial firms.

4--Draghi Stimulus Fails in Stock Market as Swings Match 2008

While all economists in a Bloomberg survey expect the central bank to cut interest rates when policy makers meet Thursday, and 73 percent project them to boost the amount of money put into the financial system through bond purchases, fund managers aren’t optimistic about a post-decision equity rally. In the first year of quantitative easing, the Euro Stoxx 50 Index fell 17 percent, and volatility reached levels not seen since 2008. The gauge has dropped in each month but one following an ECB meeting since April.

“It won’t be easy for Draghi to bring back confidence in the recovery,” said Andreas Nigg, head of equity and commodity strategy at Vontobel Asset Management in Zurich. “Growth and inflation in Europe remain stuck at low levels and earnings revisions continue to fall. The market needs better earnings revisions and better economic surprises. ”

Even after the central bank pumped about 720 billion euros ($794 billion) into the region, manufacturing dropped to its lowest level since 2013, the inflation rate turned negative, and consumer confidence worsened. That’s led analysts to slash profit-growth estimates amid the worst earnings letdown since at least 2007. Investors are pulling money out of European equities at the fastest pace since 2014.

5--Bank for International Settlements warns of build-up of global debt

6--Nearly one-third of US food stamp recipients rely on food pantries

7--Western powers prepare military operations in Libya, wsws

8--The arrest of former President Lula and the crisis of rule in Brazil

9--Happy seventh birthday, bull market — now it’s time to write your will

Declining earnings and rising interest rates aren’t a recipe for higher stock prices

10--Star money manager Jeff Gundlach says this stock-market rebound is done

11--El Erian:  Is the perfect storm over for markets?

12--Fasten your seat belts, because there’s turbulence ahead in the stock market

13--Austerity is an ideological smokescreen for class warfare – UK economists

14--Uneasy calm gives way to turbulence, BIS


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