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To: longnshort who wrote (1192341)	1/10/2020 7:41:15 AM
From: sylvester80	Read Replies (1) \| Respond to of 1575601

OOPS! FED INJECTING LARGEST LIQUIDITY IN US HISTORY & SETS UP MARKETS FOR EVENTUAL CRASH & BIGGEST BUBBLE THE WORLD HAS EVER SEEN bloomberg.com Are easy-money policies setting up global markets for the next Minsky Moment? Plus, a 60/40 picture of a perfect year. By John Authers January 9, 2020, 10:01 PM MST bloomberg.com The latest U.S. non-farm payroll numbers arrive on Friday, and it is remarkable how little interest they are generating in world markets. It’s always possible that a big surprise in one direction or another will move markets after the announcement, but attention is elsewhere. The banking system and the money markets seem to be altogether more important. Why? With a nod to this month’s book club selection, this is down to the ideas of the economist Hyman Minsky. He argued that the economic cycle is driven more by surges in the banking system and in the supply of credit than by the relationship which is traditionally thought more important, between companies and workers in the labor market. In “ The Cost of Capitalism,” Robert Barbera’s explanation of Minsky’s ideas, this dynamic is explained well here: The last five major global cyclical events were the early 1990s recession — largely occasioned by the U.S. Savings & Loan crisis, the collapse of Japan Inc. after the stock market crash of 1990, the Asian crisis of the mid-1990s, the fabulous technology boom/bust cycle at the turn of the millennium and the unprecedented rise and then collapse for U.S. residential real estate in 2007-2008. All five episodes delivered recessions, either global or regional. In no case was there as significant prior acceleration of wages and general prices. In each case, an investment boom and an associated asset market ran to improbably heights and then collapsed. From 1945 to 1985 there was no recession caused by the instability of investment prompted by financial speculation — and since 1985 there has been no recession that has not been caused by these factors. So, it may be more important to look at flows of money through the banking system and money markets than to check up on average hourly earnings and the unemployment rate. And they suggest a startling scenario. The following charts all come from London’s CrossBorder Capital, which monitors global liquidity. By its measure, global liquidity has just surged upwards over the last few months. All else being equal, we can expect business activity to follow. The bad news in terms of the Minsky cycle is that we have the conditions for speculation to run riot — but the good news is that we are still early in the cycle. Why does liquidity look quite so bullish? As ever, we can thank central banks and particularly the Federal Reserve. Twelve months ago, the U.S. central bank intended to restrict liquidity steadily by shrinking the assets on its balance sheet on “auto-pilot.” That changed, though. It reversed course and then cut rates three times. And most importantly, it started to build its balance sheet again in an attempt to shore up the repo market — which banks use to access short-term finance — when it suddenly froze up in September. In terms of the increase in U.S. liquidity over 12 months, by CrossBorder’s measures, this was the biggest liquidity boost ever: Other central banks matter as well. Last year, the People’s Bank of China tightened liquidity as it attempted to clean balance sheets in over-extended local governments. Tightening up also helped to make life difficult for its trading partners as its trade conflict with the U.S. intensified. Now that there is a truce in the trade conflict, will it be able to loosen liquidity again? The signs are that this could happen. After dramatic withdrawals of liquidity, the PBoC has now returned to injections, while also reducing the reserve ratio that banks must maintain, effectively allowing them to lend more. It certainly looks as though they are leaving their defensive crouch. If so, the chances are that we will see yet more liquidity gushing through the world economy. The Minsky schema shows that there are dangers in this. Even 1987, the year of the Black Monday stock market crash, could be a parallel, as it also followed the resolution of difficult trade and currency conflicts — in that case centered on Japan rather than China — that allowed for a surge of liquidity. Movements in the bond market could be crucial. A rise in longer term yields could spoil the party much as they did two years ago, when a sharp rise in stock prices ended as bonds appeared to move into a bear market. If bond yields stay low, presumably thanks to weakness in the economy, then in the long term, as in a few years, this could be a dangerous situation that sets up stock markets for a crash. In the shorter term (which significantly does include the U.S. presidential election), the liquidity administered by the Fed should keep everything floating upwards. Bear all of this in mind. And then see how much you care about Non-Farm Payroll Friday. 60 of One, 40 of the OtherHere is one last chart to illustrate how ridiculously benign the year of 2019 was for investors. It also shows just how difficult it will be for the current conditions to continue for much longer. For many years, the default portfolio for investors has been 60% stocks and 40% bonds. The idea of having both is to protect against one of them performing very badly. And at present, the UBS investment blog One for the Ages shows the 60/40 portfolio is performing better than at any other time than the immediate aftermath of the financial crisis: Apart from two brief spikes driven by the recoveries after the crashes of 2000 and 2008, a multi-asset portfolio hasn’t performed so well since the great bull market of the late 1990s. It is of course possible that it can do even better for a while. Starting from a position when the market believed the Fed was restricting liquidity too much, lower yields have reinforced the strong stock market. But the likelihood is that at least one of the two asset classes will start to let the side down. It’s hard to see how bond yields go much lower unless they are driven down by poor economic performance. And if that happens, it will be tough for the stock market to extend its gains.

To: longnshort who wrote (1192341)	1/10/2020 9:15:43 AM
From: sylvester80	Respond to of 1575601

BREAKING: Trump Must Face Rape Accuser Carroll’s Defamation Lawsuit By Erik Larson January 9, 2020, 1:37 PM MST Updated on January 9, 2020, 3:51 PM MST bloomberg.com A judge rejected President Donald Trump’s argument that living in Washington means he can’t be sued in New York by an advice columnist who claims he raped her two decades ago and then lied about it. The decision denying Trump’s bid to dismiss the case, revealed on Thursday, is an early victory for E. Jean Carroll, who went public with her allegations in a June magazine article and sued in November. The judge also denied Trump’s request to delay the exchange of evidence between the parties. Trump failed to include a written statement supporting his claim that the case should be dismissed on the grounds that the court lacks jurisdiction, New York State Supreme Court Justice Doris Ling-Cohan said in her ruling. “There is not even a tweet, much less an affidavit by defendant Trump in support of his motion,” the judge wrote. Trump’s lawyer in the complaint, Lawrence S. Rosen, didn’t return a call for comment. Read More: Trump Sued for Defamation by Woman Making 1990s Rape Claim Carroll says Trump assaulted her in a dressing room at the Bergdorf Goodman luxury department store in Manhattan in 1995 or 1996 after she bumped into him while shopping, a claim the president has denied. In the lawsuit, she alleges he damaged her reputation with a series of false tweets denying her account. Her lawyer, Roberta “Robbie” Kaplan, argued in a court filing this week that New York has jurisdiction over Trump because his residency at the White House “is not permanent” and his tax returns would prove it. Breaking with decades of presidential tradition, Trump has declined to release his returns. “We are pleased, yet unsurprised, that the court refused to tolerate Donald Trump’s latest attempt to avoid discovery in our client’s case,” Kaplan said in a statement. “We look forward to moving ahead and proving that Donald Trump lied when he told the world that he did not rape our client and had not even met her.”