This morning, Atlanta Fed President Dennis Lockhardt said, “I assure you, we’ll be talking about tapering at future meetings.” Well, DUH – given such discussions are what you are paid to do! Of course, CNBC blared this headline as if it actually meant something; which is why its ratings have fallen back to 20-year lows. Subsequently, Lockhardt made the most damning statement possible about the futility the Fed has become, when saying, “We’ll taper when the economy is ready, and the market prepared.” In other words, admitting the stock and bond markets are primary areas of focus; which is all the more comical, given the Fed’s own QE policy purchases 70%+ of all Treasury issuance!
Just in the past day, the supposed “recovery” Lockhardt’s taper talk is predicated on was contradicted by a Philly Fed survey plunging from 19.8 to 6.5, led by a horrific collapse in the employment component, from 15.4 to 1.1. Meanwhile, the Chinese PMI unexpectedly dropped from 50.8 to 50.4, depicting a barely expanding economy; whilst the European PMI also unexpectedly dropped, led by the imploding French economy, which saw a PMI plunge to a six-month low of 47.8. Even Goldman Sachs admits the overall trend is down, as its “global leading indicator” is collapsing.
Meanwhile, while the UK boasts of the housing bubble created by the BOE; it neglects to discuss the impact of such inflation on the average person. The average British family’s household debt has doubled in the past decade, to £54,000; while this month, average personal debt hit an all-time high. Which is exactly what is occurring in the States, where “deleveraging” has abruptly ended given the desperate need for cash. And then you have Japan, where the BOJ yesterday said it is considering more QE; as apparently, doubling the money supply in two years – following nine other QE rounds – isn’t enough. Take a look at what the Yen has done since that statement two days ago, and it becomes painfully clear what direction Japanese inflation is headed.
Finally, we have the upcoming catastrophe of a U.S. holiday season. Yesterday, Target and Ross added to the cacophony of dismal outlooks from low-end retailers; with Target’s CEO referring to “an upcoming holiday season we believe will be the most intensely competitive and promotional in recent years.” And oh yeah, did I forget the December 13th deadline for a new Congressional budget; you know, what we haven’t had in five years, but is necessary to prevent a second government shutdown on January 15th? As Boehner says the House will simply pass a “stopgap” spending bill of $967 billion if not. Don’t worry, there’s nothing to see here; that is, so long as the Fed continues to “turboQE” rates down and stocks continue to rise. What could possibly go wrong?