“In my darkest moments I have begun to wonder if the monetary accommodation we have already engineered might even be working in the wrong places. Far too many of the large corporations I survey that are committing to fixed investment report that the most effective way to deploy cheap money raised in the current bond markets or in the form of loans from banks, beyond buying in stock or expanding dividends, is to invest it abroad where taxes are lower and governments are more eager to please.” Formet Fed governor, Richard fisher on the futility of extreme monetary policy
There was no “penetration of the U.S. electricity grid.” The truth was undramatic and banal. Burlington Electric, after receiving a Homeland Security notice sent to all U.S. utility companies about the malware code found in the DNC system, searched all its computers and found the code in a single laptop that was not connected to the electric grid. ...
Just as The Guardian had to do just two days ago regarding its claim about WikiLeaks and Putin, the Washington Post has now added an editor’s note to its story acknowledging that its key claim was false:
The Dow peaked on December 20 at 19,975, a ridiculously small 25 points away from party-hat time. Everyone knew it would happen. In fact, it would have to happen because it was just a few decent trading moments away. But since then, Dow 20,000 slipped through the fingers like dry sand. It closed the year at 19,719, so 281 points below, after having been for a big part of the month within a hair of nailing it...
The S&P 500, after having ended 2015 down 0.7%, ended 2016 up 9.5%, including a big swoon early in the year. From February 11, when it bottomed out at 1,810, it has surged 23.6%.
And bonds went on a wild ride. The 10-year Treasury yield ended 2016 at 2.445% up from 2.273% at end of 2015. It hit 2.57% at peak Trump Trade, up over a full percentage point from the summer. Over the fourth quarter, the yield jumped 84 basis points, the largest quarterly jump since 1994. And prices, which move inverse to yields, clobbered bondholders. But note the decline in yield since December 20...
And stocks partied. Since the election, financials surged, bringing the gain for the year to 29.1%, the best-performing sector in the S&P 500. Goldman Sachs, whose ex-executives are now heavily represented in the Trump administration, shot up 36% since the election and 51% since the beginning of October when Trump’s victory became more than just a possibility. GS was one of the best Trump Trades out there.
6--Richard Fisher; "Too low for too long causes enormous damage to the financial infrastructure" (video)
The Fed thinks the economy is overheating???
“Apparently, Fed officials think the economy is growing too quickly,” said Ady Barkan, the director of Fed Up, a coalition of liberal groups that has pressed the Fed to continue its stimulus campaign. “I doubt you can find many other Americans who share that opinion. And it’s a strange conclusion to draw in the wake of an election that was so heavily impacted by voters’ economic discontent.”...
The Federal Reserve raised its benchmark interest rate Wednesday for just the second time since the financial crisis of 2008, saying the American economy is expanding at a healthy pace and setting itself up as a counterweight to President-elect Donald J. Trump’s push for considerably faster growth.
The Fed cited the steady growth of employment and other economic measures, and signaled that it expects to raise rates more quickly next year to prevent the economy from growing too quickly.
“My colleagues and I are recognizing the considerable progress the economy has made,” Janet L. Yellen, the Fed’s chairwoman, said at a news conference after the announcement. “We expect the economy will continue to perform well.”...
Already on Wednesday, one Republican member of the House Financial Services Committee, Representative Roger Williams of Texas, criticized the Fed’s move.
“Today’s decision by the Fed to raise the interest rate is entirely premature and will be burdensome to a nation already struggling to pull itself out of this slow-growth Obama economy,” Mr. Williams said in a statement. “By making rates even higher, the Fed is effectively making our hardships even harder.”..
Fed officials predicted that they would raise the Fed’s benchmark rate a little more quickly in the coming years, reaching 2.1 percent by the end of 2018. In September, they had predicted that it would reach 1.9 percent by the end of 2018. The new projections, however, reflect a significantly slower pace of increase than last December, when they expected the rate to reach 3.3 percent by 2018.
10-year goes to 2.50% from 1.36% after Brexit
According Gallup’s latest polling, when asked to rate their trust in mass media, more than 2/3rds of US adults said they had “not very much trust” or “none at all.” In fact, less than 1/10th reported having a “great deal” of trust and, combined with the 24% of folks with “a fair amount,” the grand total of people with some amount of trust in mass media only comes out to 32% — or a bit less than 1/3rd, which is a new all-time low.
Another survey shows a solid 40% report either “none” or “very little” trust in television news, next to a mere 21% with a “great deal” or “quite a lot.” While trust in major media-outlets has eroded in all age groups, polling suggests the charge away from mainstream news has largely been driven by millennials. One of the most interesting numbers, however, has less to do with age and more to do with party identification…
15--Trade looks to be a major negative that will be holding down fourth-quarter GDP. Falling GDP 4Q
16--Consumer confidence shows no sign of slowing. The index is up 12.9 points since the November election in gains driven by older consumers. The level for December is 113.7 which is the highest reading since way back in August 2001.
A troubling question also confronts US companies, which have been on a stunning debt binge in recent years. How will they finance their expansion to capitalise on the stronger economy that Mr Trump’s proposed fiscal splurge will aim to unleash?
“How much fiscal stimulus can you get through with [corporate] debt burdens where they are?” asks Bob Michele, JPMorgan Asset Management’s global head of fixed income. “Companies have been so used to issuing [debt] with the 10-year yield at 2 per cent it’s going to be a bit of a shock.”