Federal Reserve Tonight: Neither Federal with No Reserves.
April 27, 2016
The BoE has warned investors may need to accept lower bank profits according to Jon Cunliffe, whose official mandate is to be responsible for financial stability at the BoE. Fortunately for Mr Cunliffe he is not accountable to anyone, not least the public who are asking exactly the opposite question of why the banks have been making such profits under one of the worst economic situations the Bank of England and indeed the world has ever faced. “There is clearly at present a wide gap between banks’ disappointing returns on the one side and investors.” Well perhaps Mr Cunliffe and Mr Carney might consider not feeding those expectations, particularly not out of the UK taxpayers pocket.
According to yesterday’s reports on Greece all was well in the world and a deal was all but complete. The picture today looks a little different with Tsipras franticly scrabbling around for change so he can call Donald Tusk and cancel the Eurogroup meeting instead calling for an extraordinary EU leaders’ summit. Mr Tsipras seems confident Greece have met tax hike and pension cut targets however the lenders are now standing in the way. Still, nothing to see here.
Only in America, Donald Trump sweeps five Northeast primaries with Hilary Clinton only winning three. The pair both pulling further ahead in the presidential nominating race which is pretty much a foregone conclusion now. However it is not all smiles for Trumps camp or Donald himself as his legal team is desperately trying to cover up a portrait, or specifically a certain part of the nude portrait painted by the artist Illma Gore entitled “making America Great Again”. The painting has now gone viral with many prestigious galleries franticly bidding for it. In the accompanying statement to the piece Gore added, “Because no matter what is in your pants, you can still be a big pr**k”.
Jeffrey Gundlach the influential head of Doubleline Capital, seemingly has taken up a new position being the gopher for the Fed. Yesterday stating that investors looking to purchase Treasuries in the wake of the bond markets sell-off are making a prudent move. “I think it is a reasonable strategy to start legging into the Treasury market.” We can only hope he is not talking about Government treasuries but I am rather worried that he is.
Unless you have had in the sand, the Federal Reserve, who are neither Federal nor have any Reserves are on the brink of being exposed by Saudi Arabia. Unfortunately, the major news channels were reluctant to cover President Obama being snubbed when he travelled to Saudi Arabia last week in order to “recalibrate” their special relationship. Airforce One landed to no fanfare, only the presence of a low level dignitary, Obamas PR team tried to spin the obvious snub saying the visit “really cleared the air”.
With Obama threatening to release the 28 pages of the 9/11 Report, as he has promised, that purportedly show Saudi government involvement in the attacks on New York and Washington. The Saudis have in retaliation threatened to dump three-quarters of a trillion dollars in us treasuries if the new bill “Justice against sponsors of terrorism Act” becomes law. Ron Paul explains best here.
On the subject of the Fed we will be treated to another rate decision announcement and open market committee this evening. It is widely expected that nothing will change, which in one sense is a good thing rather than the continual debasement of the global currency but in another is perhaps the most tragic thing.
Lastly this morning will see the release of UK GDP.
Have a great day.