When wall street analyst start talking about deflation, they are talking about financial asset prices NOT consumer inflation. Sorry wall street, but bubbles have to deflate.
Bailing out the Wall Street megabanks that are serially fined and hit with felony counts appears to be catching on as a major career advancement strategy at the New York Fed.
After overwhelming evidence was obtained of wrong doing, nothing was done, no body wants to talk about it, minimal changes were made.
The Super Credit Bubble is at the brink.
I fear the next phase of financial asset repricing will be both disorienting and destabilizing.
This dynamic has become all too familiar: when instability turns sufficiently serious, markets instinctively anticipate dovish central bank policy responses.
And if the recent loosening of financial conditions has been spectacular, just wait until the next de-risking/deleveraging-induced tightening. Let’s call it what it is: Epic Monetary Disorder.
Reliance on some “neutral rate” to calibrate monetary policy is deeply flawed doctrine. The Fed’s assumptive 2.5% neutral rate may have seemed reasonable during the recent “Risk Off” backdrop. In the current squeeze rally environment, however, it is Indefensible – or, in the words of Mohamed El-Erian, “comical.”
The billionaires own the media on the Left and Right. Don’t expect to read much about their real agenda in the news until it is too late.