REUTERS: Stop with the "50 Bs." Start with the 60.The U.S. Federal Reserve's quick pivot from shrinking its balance sheet by around US$50 billion per month to now expanding by US$60 billion monthly, has shown both the difficulty the Fed has faced under a shifting political environment, as well as the risks of experimenting with market-sensitive systems in real time.The process of paring the balance sheet from its crisis-era levels of more than US$4 trillion in assets, effectively "unwinding" some of the stimulus put in place to battle the worst financial crisis in a century, was agonized over for years by policymakers who were under sometimes intense pressure from Republicans on Capitol Hill who wanted a smaller central bank not so deeply engrained in private markets.The careful shedding of US$50 billion a month was lauded by those lawmakers as the Fed rolled it out in 2017, and was intended, as former Chair Janet Yellen said, to be so boring and non-disruptive it would be "like … [Read more...] about QE on the QT? Fed says no, economists say maybe so
The u s financial crisis
SAN FRANCISCO: U.S. central bankers are expected to lower borrowing costs this week for the first time since the depths of the financial crisis more than a decade ago. That's the easy part.Whether that inaugurates a series of quarter-percentage-point interest rate cuts that could stretch deep into next year, as financial markets are betting, or something more limited is by far the harder decision facing Federal Reserve policymakers.One reason: No clear consensus from Fed officials about why they need to cut rates in the first place, particularly with the U.S. unemployment rate near a 50-year low and the American economy puttering along as the best-in-class performer among developed nations.Is it a bit of insurance against risks posed by slowing global growth and trade tensions? A step to bolster sluggish inflation? A bid to lift labor markets further? An effort to right kinks in the bond market? Over the last several weeks, Fed policymakers have floated each of these ideas and … [Read more...] about A Fed interest rate cut is in the bag. What then?
WASHINGTON: Spooked by a global economic slowdown, the U.S. Federal Reserve is seen launching on Wednesday its fifth interest rate-cutting campaign since 1995. It will come despite many signs of strength in the U.S. economy.Policymakers at the U.S. central bank have made clear they think the nation's labor market looks pretty solid. Some have said the Fed may cut rates just once this time.A so-called insurance cut might be just enough to reduce the risks of recession, which have grown because of the Trump administration's trade war with China and a slowdown in economies across Europe, Asia and Latin America.How does recent data on the U.S. economy compare to what was happening ahead of the rate-cutting campaigns that started in 1995, 1998, 2000 and 2007?WEAK INFLATIONU.S. consumer prices rose 1.5per cent in the 12 months through May, the same rate it has averaged since the Great Recession ended in June 2009. The Fed wants inflation at 2per cent, and weak price gains have become a … [Read more...] about That bad? How the US economy stacks up to past rate cut cycles
By Mary Clare Jalonick And Lisa Mascaro The Associated Press Wed., May 8, 2019 WASHINGTON - The White House invoked executive privilege Wednesday, claiming the right to block lawmakers from the full report from special counsel Robert Mueller on his Trump-Russia probe and escalating the battle between President Donald Trump and Congress. The administration’s decision was announced just as the House Judiciary Committee was gaveling in to consider holding Attorney General William Barr in contempt of Congress over failure to release the full report. Committee Chairman Jerrold Nadler of New York declared the action by Trump’s Justice Department was a clear new sign of the president’s “blanket defiance” of Congress’ constitutional rights. “Every day we learn of new efforts by this administration to stonewall Congress,” Nadler said. “This is unprecedented.” White House Press Secretary Sarah Sanders said the … [Read more...] about Trump invokes ‘privilege’ over the full Mueller report
By Jack Ewing The New York Times Milan Schreuer Mon., May 6, 2019 On a breezy day in September, an ominous text message appeared on Fredrik Ekstrom’s phone: Go immediately to the war room. Ekstrom is chairman of Nasdaq Clearing, an outpost of the U.S. stock exchange company in Stockholm, which processes futures trading and acts, in part, as a shield against contagious losses in the global financial system. He headed toward an ordinary conference room outfitted with extra phones, video hookups, data terminals and policy manuals, designed to be a command center in case of a financial crisis. Until then, the war room had been used only for drills. Other senior executives were waiting when he arrived. They described an unfolding disaster. A trader named Einar Aas was having a spectacularly bad day. Ekstrom knew the name. Aas worked from his seaside home in a remote Norwegian fishing village, trading futures contracts tied to the price of Scandinavian … [Read more...] about How a lone Norwegian trader shook the world’s financial system