Since my last warning of inconvenient reality beginning to happen (March 6th):

  • The Fed has formally backed away from any more rate hikes this year, committed to ending QT by September, and threatened to expand the balance sheet again (more QE!).
  • The ECB has announced a new (3rd) LTRO program and threatened to do more if need be.
  • The PBoC has threatened to do more.
  • The UST yield curve has flattened like a pancake. Yields on the entire U.S. Treasury spectrum from overnight through 30 years are essentially the same. Probably nothing…. (wink)

Previously, the recently taken central bank actions and threats would have had a major impact on Greedometer and mini Greedometer input parameters.  We might have even seen the current sequence truncated –only to then initiate another.  Not now. Methinks monetary policy tools are beginning to become as effective as pushing on a string.

So with all that said, let me once again shine the bat signal. Someone is going to have to threaten to spike the punch bowl again very soon –else inconvenient reality initiates.

Bullard (the biggest bubble blower at the Fed)?  Williams?  Where at thou?

 

FYI  Dr Richard Koo and I both expect monetary policy tools to become ineffective. Here is what Koo has to say. Warning: it will blow your mind. 


 

Anyone want to guess:

  • what the net interest margin at banks looks like right now –via the flat yield curve?
  • what banks are doing to build loan loss reserves because of a visibly slowing economy?

Hmmm.