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Stan Druckenmiller: The Fed has no end game, and 'the chickens are now coming home to roost'
Legendary hedge fund manager Stanley Druckenmiller, who runs Duquesne Capital, says that “the bull market has exhausted itself” after eight years of a “radical monetary experiment.”com/news/stan-druckenmiller-the-bull-market-has-exhausted-itself-210803739.html
I'm selling my home and buying a RV to live in instead of buying gold.
Same theme not quite the alarm . Macro View Complacency in Uncharted Waters The next challenge for central bankers is changing monetary policy when the economy has come to depend on it. May 03, 2016 Global CIO Commentary by Scott Minerd ...Another market area that is clearly not behaving according to the central banks’ script is foreign exchange. Japan’s current laundry list of woes is topped by the strengthening yen, which is a major headwind for its moribund economy. The Bank of Japan is due to convene later this month, and may decide that the best course of action is to intervene directly to drive down the value of its currency. Such direct intervention basically will entail selling yen and buying U.S. dollars, and typically those dollars go to buy U.S. Treasurys. Europe is probably not far behind: It has tepid growth, a strengthening currency, and more potential downside to their policy rates. This means there is a high likelihood of a fairly good bid on Treasurys in the coming weeks that could be sufficient to push the 10-year U.S. Treasury note lower.
My message to central bankers is the following: Although the waters at the present time might seem calm, they are still uncharted and there are risks beneath the surface. QE and negative interest rates, once thought to be extraordinary measures, have become the new monetary policy orthodoxy in the largest developed economies. The data on the long-run effects are limited, but real-time experience with these policies offers a few lessons. ...we learned from Japan that ever larger doses of unconventional monetary policy may be required in the absence of growth-enhancing structural reforms. Moreover, it is incredibly difficult to reverse these policies from an economy that has come to depend on them. Second, in Europe we are learning that such policies offer limited benefits unless paired with a coordinated fiscal plan. Finally, we have learned here at home that trying to “normalize” policy, even in a gradual manner, can strain financial markets.
Also Markets and life since 2006. 10 Stats About the Last 10 Years May 02, 2016 By Nicholas Colas who is is Chief Market Strategist for Convergex.
Summary: The headline today that Goldman Sachs’ stock has gone nowhere for a decade got us thinking about general market performance over the last 10 years. The key contours are straightforward: subpar price returns (a 4.9% compounded annual growth rate for the S&P 500) with increased volatility (a VIX that is 25% more volatile than average). From there, things get funky.
Think back over the last 10 years - how different was your life in April 2006? While you may think your daily existence is largely the same (maybe the kids are older or you’re married now, but that about it…), consider what was actually different about your life in the spring of 2006:
No iPhone. Steve Jobs unveiled the first iPhone in January 2007, and it didn’t ship until June of that year. No Facebook (unless you were in college at the time). Facebook only opened to the general population in September 2006. No Twitter. The full version of the product launched in July 2006. No Instagram. The picture sharing site only launched in 2010. No Kim Kardashian. “Keeping up With The Kardashians” debuted in October 2007. No Uber. The company received its seed funding in 2009. No iPad. Apple started taking pre-orders on the first-gen product in March 2010. It feels like April 2006 demarcates the last days of some Dark Age, or at least a simpler time without the manifold distractions of today. And while you might opt for a world without the Kardashians, imagine it without your smartphone, Facebook/social media, and an iPad to entertain the kids (or yourself). It’s ok – don’t panic. You have them now.
The journey from April 2006 to April 2016 in financial markets has, of course, been a wild ride. But just as it is hard to remember what daily life was like a decade ago, it is also easy to forget some of the important waypoints that capital markets took from there to here. Here are 10 data points about the last 10 years we hope you will find useful: http://www.convergex.com/the-share/10-stats-about-the-last-10-years
While there's no way (that I know of) to predict what any market will do in the next year or two, over the past decade or so most of those invested in equities should have made money. (John Hussman's an exception.) NASDAQ, of course, is still recovering from a huge bubble where it quadrupled from around 1,000 to 5,000 between '95 and 2000 when it burst. Those who bought the Kool-Aid late in the bubble probably deserved what they got. I don't think the DJI and S&P experienced anything near that kind of bubble. But, who knows? Anything could happen. That's why you get paid to take extra risk in the markets.
Quality of life? We take so much for granted. When I was a kid we had 3 black & white TV stations to choose from. We had to run over to the TV about every 10 minutes to adjust the vertical or horizontal hold so picture would stop rolling or blurring. Few cars had power brakes or power steering. Air bags were unheard of. Flat tires along the road were common. You'd better know how to use a car jack. So ... we have such a higher quality of life today. OK - I'm getting old. But, even over 10 years, the quality of life for most (not all) Americans has increased immensely.
The one painful issue is that we've experienced a market crash and strong deflationary undercurrents within the past decade. This has depressed some prices (like energy). But, perhaps more noticeably, it has led to wage stagnation in many sectors, so the average worker is suffering from stagnated income. Hopefully that will improve as the effects of the '08 crisis wane. FWIW
Comments
Same theme not quite the alarm .
Macro View
Complacency in Uncharted Waters The next challenge for central bankers is changing monetary policy when the economy has come to depend on it.
May 03, 2016 Global CIO Commentary by Scott Minerd
...Another market area that is clearly not behaving according to the central banks’ script is foreign exchange. Japan’s current laundry list of woes is topped by the strengthening yen, which is a major headwind for its moribund economy. The Bank of Japan is due to convene later this month, and may decide that the best course of action is to intervene directly to drive down the value of its currency. Such direct intervention basically will entail selling yen and buying U.S. dollars, and typically those dollars go to buy U.S. Treasurys. Europe is probably not far behind: It has tepid growth, a strengthening currency, and more potential downside to their policy rates. This means there is a high likelihood of a fairly good bid on Treasurys in the coming weeks that could be sufficient to push the 10-year U.S. Treasury note lower.
My message to central bankers is the following: Although the waters at the present time might seem calm, they are still uncharted and there are risks beneath the surface. QE and negative interest rates, once thought to be extraordinary measures, have become the new monetary policy orthodoxy in the largest developed economies. The data on the long-run effects are limited, but real-time experience with these policies offers a few lessons.
...we learned from Japan that ever larger doses of unconventional monetary policy may be required in the absence of growth-enhancing structural reforms. Moreover, it is incredibly difficult to reverse these policies from an economy that has come to depend on them. Second, in Europe we are learning that such policies offer limited benefits unless paired with a coordinated fiscal plan. Finally, we have learned here at home that trying to “normalize” policy, even in a gradual manner, can strain financial markets.
https://guggenheimpartners.com/perspectives/macroview/complacency-in-uncharted-waters
Also
Markets and life since 2006.
10 Stats About the Last 10 Years
May 02, 2016 By Nicholas Colas who is is Chief Market Strategist for Convergex.
Summary: The headline today that Goldman Sachs’ stock has gone nowhere for a decade got us thinking about general market performance over the last 10 years. The key contours are straightforward: subpar price returns (a 4.9% compounded annual growth rate for the S&P 500) with increased volatility (a VIX that is 25% more volatile than average). From there, things get funky.
Think back over the last 10 years - how different was your life in April 2006? While you may think your daily existence is largely the same (maybe the kids are older or you’re married now, but that about it…), consider what was actually different about your life in the spring of 2006:
No iPhone. Steve Jobs unveiled the first iPhone in January 2007, and it didn’t ship until June of that year.
No Facebook (unless you were in college at the time). Facebook only opened to the general population in September 2006.
No Twitter. The full version of the product launched in July 2006.
No Instagram. The picture sharing site only launched in 2010.
No Kim Kardashian. “Keeping up With The Kardashians” debuted in October 2007.
No Uber. The company received its seed funding in 2009.
No iPad. Apple started taking pre-orders on the first-gen product in March 2010.
It feels like April 2006 demarcates the last days of some Dark Age, or at least a simpler time without the manifold distractions of today. And while you might opt for a world without the Kardashians, imagine it without your smartphone, Facebook/social media, and an iPad to entertain the kids (or yourself). It’s ok – don’t panic. You have them now.
The journey from April 2006 to April 2016 in financial markets has, of course, been a wild ride. But just as it is hard to remember what daily life was like a decade ago, it is also easy to forget some of the important waypoints that capital markets took from there to here.
Here are 10 data points about the last 10 years we hope you will find useful:
http://www.convergex.com/the-share/10-stats-about-the-last-10-years
While there's no way (that I know of) to predict what any market will do in the next year or two, over the past decade or so most of those invested in equities should have made money. (John Hussman's an exception.) NASDAQ, of course, is still recovering from a huge bubble where it quadrupled from around 1,000 to 5,000 between '95 and 2000 when it burst. Those who bought the Kool-Aid late in the bubble probably deserved what they got. I don't think the DJI and S&P experienced anything near that kind of bubble. But, who knows? Anything could happen. That's why you get paid to take extra risk in the markets.
Quality of life? We take so much for granted. When I was a kid we had 3 black & white TV stations to choose from. We had to run over to the TV about every 10 minutes to adjust the vertical or horizontal hold so picture would stop rolling or blurring. Few cars had power brakes or power steering. Air bags were unheard of. Flat tires along the road were common. You'd better know how to use a car jack. So ... we have such a higher quality of life today. OK - I'm getting old. But, even over 10 years, the quality of life for most (not all) Americans has increased immensely.
The one painful issue is that we've experienced a market crash and strong deflationary undercurrents within the past decade. This has depressed some prices (like energy). But, perhaps more noticeably, it has led to wage stagnation in many sectors, so the average worker is suffering from stagnated income. Hopefully that will improve as the effects of the '08 crisis wane. FWIW