Les dépêches mardi 24 Avril, le dollar poursuit son raffermissement

Les étoiles s’alignent de façon défavorable pour la communauté spéculative, le dollar semble vouloir accrocher une tendance haussière. Ceci prendra la communauté à contrepied. Si en plus les taux montent, il y aura des dégats et un mouvement de deleveraging.  Ce mouvement a déja nettement commencé sur les segments les plus fragiles du marché global  comme les bonds des émergents et leur devises associées. La Communauté est en outre vendeur, short, de volatilité afin de bonifier ses rendements, c’est imprudent !

Erdogan se plaint que les USA livrent des quantités colossales d’armes aux terroristes , gratuitement!

“We cannot buy weapons from the US with our money, but unfortunately, the US and coalition forces give these weapons, this ammunition, to terrorist organizations for free,” Erdoğan stated in an interview on Turkish NTV news channel.

Foreign Minister Sergei Lavrov said on Monday that Russia had not yet decided whether it would deliver advanced S-300 missile systems to Syria, but would not make a secret of the matter if it took such a decision, the TASS news agency reported

Lavrov sur le dépeçage de la Syrie 

FM Lavrov: several Western countries are openly aiming to dismember Syria as a sovereign state. Anti-terrorist operations just a smokescreen.

Les institutions internationales, le FMI, la BRI font semblant de s’inquiéter de la progression des endettements globaux alors qu’elles ont été les premières à inciter à la dette! Elles déclarent que les gouvernements devraient mettre à profit l’embellie économique pour réduire les déficits et résorber les dettes.

C’est un moyen de discréditer les gouvernements et de se préparer des positions de repli de donneur de  leçon, car tout le monde sait que si on retire le bol de punch, c’est à dire le dopages, les économies vont rechuter. il n’y a aucun choix, c’est marche ou crève.

L’activité économique et les marchés qui la soutiennent sont directement liés à la croissance des dettes et du crédit.


François Villeroy de Galhau:

France : economic developments and  reforms, where are we heading?
Speech by Mr François Villeroy de Galhau, Governor of the Bank of France, at The Economic  Club of New York, New York City, 18 April 2018.


La gouverneur Brainard fait le point , pas original mais intéressant. A priori tout va bien la Fed a bien la situation en mains tant sur l’inflation que sur les risques pour la stabilité financière. Elle répète que les prix des actifs sont « stretched » c’est dire que les prix sont un peu étirés, mais sans en faire tout un plat. Pour l’instant pas de nuages à l’horizon. .



Les Etats Unis risquent ils une crise de la dette? La réponse de l’establishment est non par conséquent la dérive va continuer .

FT: Gavyn Davies

A familiar dispute has erupted between Republican and Democrat macro-economists in the US about the causes of the permanently high budget deficits and public debt ratios shown in new CBO projections for the medium term.

The Republican economists blame excessive entitlement programmes, while the Democrats blame abnormally low taxation following the Trump budget.  No surprises there: the non-partisan truth is that both spending and taxation have to be adjusted in hugely unpopular directions if the debt ratio is to be stabilised. The political discipline to do this has been absent since the Clinton era. In the absence of early policy changes, economists on both sides believe that America is facing a looming debt “crisis”.

The Republicans say this could hit “like an earthquake as short-term bondholders attempt to escape fiscal carnage”. The Democrats agree that “a debt crisis is coming; none of that is in dispute”.   Alarmist language, to be sure, but what kind of crisis should we be worried about?

The federal budget deficit of 5 per cent of GDP this year is almost unprecedented at a time of full employment, and the Congressional Budget Office recently forecast that similar deficits will, on unchanged policies, remain in place for the whole of the next decade.  There might be some grounds for hoping that a better outcome could occur if the supply side effects of the cuts in marginal tax rates are greater than generally expected, or if interest rates remain lower than normal. But these reasons for optimism could easily be completely swamped by the effects of another recession.

The CBO reckons that the level of federal debt held by the public will rise from 78 per cent of GDP this year to 96 per cent in 2028. As a reasonable guide to the future, no one seriously disputes these numbers. In the longer term, the debt ratio will probably continue to climb to 150 per cent of GDP by 2047, mainly because of a rise in annual debt interest payments of 4.8 percentage points of GDP and increases in annual spending on social security and healthcare of 5.1 percentage points. Over these decades, the debt/GDP ratio will be rising at a pace that is technically unsustainable, in the sense that it would rise forever, given the policy settings that are assumed to be in place. [1]

It goes without saying that this is a very worrying situation for the US, not least because debt interest will eat up more than two-thirds of personal income taxes paid by the end of the period. But that is not the same thing as claiming that a “fiscal crisis” is inevitable, certainly not on any timescale that is relevant to investors.

The debt ratio has been rising “forever” in Japan without causing any kind of acute crisis. A crisis requires sudden and disruptive changes in the economy and markets, not just a gradual increase in debt payments over a long period. In the US, it is almost impossible for a collapse in confidence to stem from fears that the government will formally default on its debt payments. Any country with a conventional central bank can ultimately create all of the money it needs to remain technically solvent on domestic debt.

Furthermore, the US is unlike all other economies because the dollar is the worldwide medium of exchange, which gives it a much larger capacity to service its foreign debts in its own currency.

This “exorbitant privilege” can certainly be abused but it does mean that a formal insolvency is close to impossible — or, at least, it could only occur if the central bank refuses to increases its balance sheet beyond certain limits. That is hard to envisage. Short of an insolvency crisis, there could still be a damaging battle for policy dominance in Washington DC. In macroeconomic language, the policy conflict would be between monetary dominance, the norm of recent decades, and fiscal dominance. If fiscal dominance prevailed, monetary policy would be required to accommodate the rising fiscal deficit. An inflation crisis could then happen quite suddenly, resulting in a plummeting dollar exchange rate and precipitous increases in short rates. That is what happened in 1971, when President Nixon suspended the dollar’s convertibility into gold, and bullied Arthur Burns at the Federal Reserve to adopt inflationary monetary policies. Of course, that would be devastating for global asset prices. But it is hard to see how an inflation crisis could suddenly come out of the blue, starting from today’s benign economic situation.

Inflation is definitely beginning to edge higher in the US but, according to Fulcrum’s new inflation models, there is a probability of only 14 per cent that the Fed’s target variable (the PCE deflator) will be rising at a 12-month rate above 3 per cent in two years’ time.

These inflation risks could worsen as the fiscal stimulus takes effect, creating conditions under which there could be a political confrontation between the Trump administration and the FOMC. After 18 months of good behaviour, administration officials have started to question the FOMC’s intention to raise interest rates further in the next two years.

La politique de la Fed: monter les taux lentement, très lentement!

But the Fed is well prepared for this battle. So far, the administration has made very conventional choices for several of the central bank’s most senior officials, so the opportunity for political interference has largely passed.

John Williams, the new President of the New York Fed (and not appointed by the White House), said very explicitly this month that there will be no compromises with politicians on monetary policy.

A battle for fiscal or monetary policy dominance in Washington would certainly not be good for markets. But as long as it is won by the Fed, inflation would remain broadly under control, and any fiscal crisis would play out over a much longer horizon.

[1] Actually, these long term estimates are probably too low, since they were made in 2017, before the Trump stimulus packages.

[Bloomberg] Stocks in Asia Climb, Dollar Maintains Its Advance: Markets Wrap

[Bloomberg] Asia’s Top Stock Market Is Having Its Worst Month in Two Years

[Bloomberg] How 3% Yields Could Reshape the Investing Landscape

[CNBC] Tax bill will slash by half the number of homeowners using the mortgage deduction

[AP] US brands suffer collateral damage in Chinese corporate war

[FT] Greenwich: the rich town on the frontline of US hedge fund fight

[FT] Turkey’s corporate debt burden sparks jitters on economy

[FT] Companies must start preparing for transition from Libor now



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