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Yellen Wolfers Warn Again, But Algos Don’t Surf

I promise not to become another Fed watcher as there are far too many already. But the spectacle of late is too bizarre and terminal not comment. The Fed minutes once again brought out the Yellen (yellin’) wolfers. The ploy utilized is a routine whereby “several participants” comment on stretching for yield, overvalued credit and equity levels.

Fed meetings minutes revealed that a “couple” members backed a July rate hike. One, Esther George, called herself out as a hiker. George has not been on the hawkish rubber-chicken circuit, where actually more than “several” others have been warning of complacency. “Several” are concerned about financial risks from low rates. “Some” anticipated that economic conditions would soon warrant taking another step in removing policy accommodation. The members “generally” paid special attention to inflation data, which has run over the Fed’s target for nine straight months. Members in July were “split” on whether a hike is needed “soon.”

Yes, tapering a Ponzi scheme has its challenges. No wonder the multi-billionaire cabalists are heading for the hills. Trump’s friend, adviser and stated choice for Treasury Secretary Carl Icahn yesterday stated, “A day of reckoning is coming.” Icahn is actively short the market. But paper algos don’t surf, they play word games with Yellen wolfers. The complacent odds of a FOMC September rate hike stayed unchanged at 15%. Bonds and stocks advanced.

I speak American English, but I still double checked the dictionary for the meaning of the word “several.” It means more than two but not very many. So, to a computer algo without human intelligence, this means three or maybe four. The algo factors nine votes total and apparently concludes the Yellen wolfers can’t carry the day? Thus, the algo remains complacent and chooses to ignore the fact that “several” Fed mucky mucks are “concerned about market complacency.”

Elsewhere in the real world of supply and demand and based on TIC data, foreign investors — both official and private — were sellers of $32.9 billion worth of Treasury notes and bonds in June. China reduced $28.0 billion, Japan  $13.2 billion and Hong Kong $10.8 billion. The largest buyer in June by far was the Cayman Islands (aka algos, slingers, drug traffickers and hedge funds-see Treasury’s quid pro quo arrangements with criminals) with purchases totaling $28.3 billion. Treasuries custodial holdings of foreign central banks has fallen about $150 billion year to date.

custody holdings 2
Looking dicey
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  • Torchy Blane

  • Brabantian

    Alt-perspective on China etc ‘FX reserves’ & Treasury holdings, per the brilliant Jeffrey Snider of Alhambra – tho not to deny cabal scams, Cayman beards buying Treasuries etc

    Re China et al. the ‘FX reserves’ & even ‘selling Treasuries’ are not what they seem. FX reserves are really a sign of a 10x ‘problem’ … they are by-products of international trade using ‘eurodollar’ credit, i.e., the little-understood system of international trade credit pyramided upon ‘reserve’ currencies, primarily US dollar but also euro yen pound etc … an un-logged, un-catalogued system of shadow wholesale int’l banking … unstoppably shrinking since 2007 peak … the trillions printed by central banks do not fill that black hole, they only redistribute wealth to the cabal & bit-patch the system to prolong it, those patches working ever more poorly

    China’s 3.4trn ‘reserves’ are little more than a fire extinguisher for 30-40 trillion of eurodollar Chinese ‘credit’ that has been collapsing alongside global eurodollar credit, China’s full reserves will vapourise overnight in a big crisis, China already lost 15% quickly … ‘selling Treasuries’ is really just temp-plugging eurodollar black holes … and in reality the whole world Russia China too is bound up in the eurodollar mess via their credit lines … there is no ‘substitute’, no ‘rival alternative’ until a new currency arrangement for int’l trade, with a ‘debt jubilee’ on much old debt in global trade plumbing … just substituting yuan or IMF SDRs or yen-euros-pounds won’t do it … answer is possibly debt jubilee along with a new trade system in gold settlement like Jim Willie describes