Morning Note: Unsavory

As we’ve stressed herein over the past year, the present state of financial markets, by itself, does not allow the Fed to get, let’s say, consequential, in terms of combating inflation going forward. 

Per recent unsavory revelations it appears as though the personal portfolios of two regional fed presidents (and monetary policy voting members) couldn’t have withstood anything but the most aggressive, unconventional, technically illegal (or, let’s say, exceedingly sketchy) if you connect the dots to the intervention into the corporate bond market, monetary policy in history either. In fact, in one case, the gentleman literally traded S&P 500 futures contracts and allocated capital to the bond funds managed by the very same firm hired to do the Fed’s bidding in said corporate bond market throughout the turmoil of 2020.

While of course the official word is that it was all legal, “officially” they’re to not invest in a manner that remotely smacks of conflicting interests or of impropriety whatsoever. 

Well, okay…. the latter?!?

So now, to comply with the latter, both promise to have their positions liquidated by this month’s end. 

Bloomberg today: 

“Fed’s Kaplan, Rosengren to Sell All Stocks Amid Ethics Concerns

The presidents of the Federal Reserve banks of Boston and Dallas said Thursday they would sell their individual stock holdings by Sept. 30 amid ethical concerns about their trading activity in the past year.”

And, lo and behold (although this isn’t the first hint), here’s this morning’s Wall Street Journal Headline:

“Fed Prepares for November Reduction in Bond Buying.”

I kid you not…

Global stocks are hanging in there so far this morning; I suspect largely due to a phone meeting yesterday between Presidents Biden and Xi that was deemed constructive. I.e., if there’s any digesting of the latest around the potential for the Fed easing off the pedal over the next few months, it’ll begin reflecting in the pricing later today, or early next week I suspect. Or — I say with a bit of sad humor, cynicism and facetiousness — after a couple of Fed governors exit their equity positions…

Asian equities mostly rallied overnight, with all but 3 of the 16 markets we track closing higher.

Europe’s leaning green this morning with 11 of the 19 bourses we follow trading up as I type.

U.S. stocks are mixed to start the day: Dow down 39 points (0.12%), SP500 up 0.01%, SP500 Equal Weight down 0.17%, Nasdaq 100 up 0.36%, Nasdaq Comp up 0.26%, Russell 2000 down 0.18%. 

The VIX sits at 20.91, down 2.66%.

Oil futures are up 2.0%, gold’s down 0.14%, silver’s up 0.18%, copper futures are up 3.52% and the ag complex is down 0.54%.

The 10-year treasury is down (yield up) and the dollar is down 0.03%.

Led by uranium miners, ALB (lithium miner), MP (rare earth miner), base metals futures and solar stocks — but dragged by KRBN (carbon credits), utilities stocks, Viacom, wind stocks and AT&T — our core mix is up 0.23% to start the session.


“Boiled down to its essentials, a central bank is a bank that has been granted a monopoly over the issuance of currency. This power gives it the ability to regulate the price of credit—interest rates—and hence to determine how much money flows through the economy.”

–Ahamed, Liaquat. Lords of Finance: The Bankers Who Broke the World 

Yep, I’d say Messrs. Kaplan and Rosengren have some serious splaining to do…

Have a great day!


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