Brian Kelly Feed

The Three Step Test For The IMF

Mon, 06 Apr 2009 19:06:00 GMT

This past week the G20 took the first step toward both restoring and reforming the global financial system and gave substantial power to the IMF. The key agreements that came out of the G20 meeting were the expansion of the IMF resources and the establishment of the financial stability board. With... (( This is a content summary only. Visit my website for full links, other content, and more! )) [More...]

The New Deal 2.0: Unconventional Fiscal Stimulus

Wed, 25 Mar 2009 20:02:00 GMT

As the Fed embarks on quantitative easing we have entered a Brave New World of economic policy and investing. The purchase of Treasury securities is a needed step in repairing the economy, but just because the supply of loans may increase does not mean the demand for loans will follow. Now that... (( This is a content summary only. Visit my website for full links, other content, and more! )) [More...]

Why Not Give The PPIP Loans To The Banks?

Mon, 23 Mar 2009 19:41:00 GMT

With the announcement of the Public-Private Investment Program (PPIP) we now have another BIG announcement from the Treasury and another plan that allows banks to deny the reality of poor lending decisions. There are three key elements that will determine the success or failure of the... (( This is a content summary only. Visit my website for full links, other content, and more! )) [More...]

Despite The Fed’s Efforts Money Supply Has Been Decreasing

Mon, 23 Mar 2009 05:34:00 GMT

The Federal Reserve has officially embarked upon quantitative easing and inflation hawks are concerned this increase in the money supply will lead to hyper-inflation. The financial world has changed since the Friedman and Schwartz analyzed the mis-steps of the Great Depression and the definition of... (( This is a content summary only. Visit my website for full links, other content, and more! )) [More...]

Capacity Utilization Shows Inventory Reduction Goosed Retail Sales

Tue, 17 Mar 2009 21:05:00 GMT

Retail sales in February jumped more than expected last week. The sectors that contributed to that increase were electronics, furniture and clothing. Since each of these sectors is attributed to discretionary spending it was encouraging that consumers had begun to spend again. The following charts... (( This is a content summary only. Visit my website for full links, other content, and more! )) [More...]

M1 Multiplier Indicates The Fed’s Gas Pedal Is Broken

Wed, 11 Mar 2009 19:11:00 GMT

The Federal Reserve has attempted to combat the recession with the traditional monetary remedy of increasing money supply. The Federal Reserve controls the monetary base through policy and either steps on the monetary gas or brake. The theory behind this remedy is that increasing the monetary... (( This is a content summary only. Visit my website for full links, other content, and more! )) [More...]

Did A TPS Report Cause The Shift To Tangible Common Equity?

Mon, 02 Mar 2009 21:14:00 GMT

The Treasury’s focus on tangible common equity (TCE) is not a coincidence, it is a necessity. One of my favorite movies is Office Space, my wife usually goes to another room when I watch it, but there is something about the quirky truth of office life that simply cracks me up. That is why... (( This is a content summary only. Visit my website for full links, other content, and more! )) [More...]

The 'Fed Model' Implies S&P 500 EPS Are $48.43

Sat, 28 Feb 2009 16:08:00 GMT

Raise your hand if you remember the so-called “Fed Model” that was so popular in the 1990’s. Now put your hand down, because you are reading this over the internet and probably look pretty silly. For those of you who did not raise your hand, here is a little refresher course... (( This is a content summary only. Visit my website for full links, other content, and more! )) [More...]

Increasing Foreign Appetite for Corporate Bonds

Wed, 25 Feb 2009 21:59:00 GMT

The recent Treasury TIC data indicate that the investment du jour for foreign buyers are corporate bonds. This means foreigners are still willing to fund our shopping sprees, but you better make sure your credit cards are securitized long term. Foreign investors appetite for long term securities... (( This is a content summary only. Visit my website for full links, other content, and more! )) [More...]

Waiting For Inflation? Grab A Good Book

Wed, 25 Feb 2009 06:20:00 GMT

Talk of inevitable oncoming inflationary spike has increased as gold broke through $1000 an ounce, Chairman Bernanke discussed the Fed retracting liquidity and money supply surged. Of course this chatter has spilled over to the bond market and is one of the legs of the “short the bond... (( This is a content summary only. Visit my website for full links, other content, and more! )) [More...]

S&P 500 Operating Earnings Are in Danger of Continued Deterioration

Tue, 17 Feb 2009 18:12:00 GMT

The most recent release of the Empire State Manufacturing Survey (ESMS) (February 17, 2009) by the New York Federal Reserve contains data that implies earnings per share in the S&P 500 will continue to fall. Even though the equity markets were focused elsewhere, the survey has a remarkable... (( This is a content summary only. Visit my website for full links, other content, and more! )) [More...]

Nonstore Retail Sales are Good News for Paula Abdul

Thu, 12 Feb 2009 23:06:00 GMT

Since one data point does not make a trend, the financial markets largely ignored the retail sales figures, however, the markets have overlooked the fact that watching Paula Abdul hawk jewelery on TV is becoming a bigger part of our economy. Nonstore retail sales increased and continued its trend... (( This is a content summary only. Visit my website for full links, other content, and more! )) [More...]

Did Obama and the Federal Reserve Force Citibank to Rethink TARP?

Tue, 03 Feb 2009 20:19:00 GMT

As pressure mounts from Barack Obama and his cabinet to solve the economic crisis, Citibank announced that they will use $36b of TARP money to make loans which hopefully reduce excess reserves at the Federal Reserve and increase money supply (M1). Recently the M1 multiplier has fallen below 1.00; a... (( This is a content summary only. Visit my website for full links, other content, and more! ))[More...]

Is The Fed About to Peg Long Term Interest Rates?

Tue, 27 Jan 2009 16:43:00 GMT

Now that Geitner is officially king-o-the money, the last piece is in place for a major policy shift. In his now infamous speech, “Deflation: Making Sure ‘It’ Does Not Happen Here” Ben Bernanke listed all the things the Fed should do to combat deflation. First and foremost was to prevent deflation. This is like telling a doctor that your arm hurts when you move it and she tells you not to move it! Second he suggested that a central bank can prevent deflation by ensuring the stability of the financial system. To quote the Chairman,(emphasis mine) The Fed should and does use its regulatory and supervisory powers to ensure that the financial system will remain resilient if financial conditions change rapidly. Strike two. Ask the employees[More...]

Pound Got You Down? Try Hot Cocoa!

Thu, 22 Jan 2009 17:10:00 GMT

It seems counter intuitive that in a global economic slowdown a commodity could rise, but cocoa has done just that. Despite weakening demand, cocoa has two bullish factors in its favor: supply shortages and the British Pound. Supply Shortages A survey conducted by the International Cocoa Organization (ICCO) found that in December cocoa bean physical stocks located in European warehouses declined by 19%, while stocks in the US declined by 36% (yoy). Furthermore, Cote d’ Ivoire, the largest cocoa producing country and global benchmark, reported a 40% decline in the amount of beans reaching the port. The ICCO concludes that even if the supply situation improves it is unlikely to fill the hole. In March, the ICCO forecast ending stocks for 2008 would 1.6 million tons, however, in December 2008 those stocks were only at 1.056 million tons. So while economic conditions may result in reduced demand, supply is falling faster[More...]