What Is Happening With The Auto Debacle, Fed, Gold, And More Will Surprise You…
KingWorldNews.com
April 04, 2017
In the aftermath of comments from some Fed members, what is happening with the auto debacle, Fed, gold, and more will surprise you.
Here is what Peter Boockvar wrote today as the world awaits the next round of monetary madness: With the hoped for Fed plan to hike interest rates two more times this year and a building swell of discussion on when to start allowing balance sheet shrinkage, I’m beginning to sense a pattern on what the preferred timing might just be with this all. Bill Dudley on Friday said “If we start to normalize the balance sheet, that’s a substitute for short term hikes…and we might actually decide at the same time to take a little pause in terms of raising short term interest rates.” Fed President and voting member Patrick Harker last night said they may start the shrinkage process “possibly by the end of this year, or beginning of next year” which “would be an appropriate time.”…
Well, if press conference meetings are truly the only ‘live’ ones (June, September and December) notwithstanding what Fed members say and they would like to possibly start letting their bond holdings run off by year end, it seems like they would want to get that 3rd hike of the year in by September so they can shift focus. Then by December or January, Janet Yellen can see the full exit from an unprecedented one decade experiment underway as she rides off into the retirement sunset. Play the violin’s.
Boom And Bust
Before those tunes are played though, they might have to watch another sequel of ‘Boom and Bust’ this time in the auto sector produced and directed by easy money. I say ‘might’ because as the writing is on the wall we’ll of course have to see how things play out. This is not tech in the late 1990’s and certainly not the housing boom/bust in the naughts in terms of dollar size but talk about sensing a pattern over the past 20 years. At $1.1 Trillion, the auto loan market is a size pretty similar to the student loan debt market which is another problem itself (See Dudley’s comments yesterday on the impact there). To move cars/trucks off the lot in March at a rate similar in size to the mid 2000’s with a US population that is much greater and at a pace last month that was the lowest since February 2015, it took incentives that totaled 10.3% of the sticker price, the highest since 2009. Days of inventory was 70 in March, the most since July 2009. We saw the stock action in US auto makers yesterday and those in Japan and Germany today are down between 1 and 3%.
The Rest…HERE
