Wall Street Vs. Main Street – Settling The Debate Over The Real Reason For QE

It’s settled…

For politicians, the chart sums up the frustrations that have helped propel the populism that Brexiteers and Donald Trump rode to victory.

While wages would never show swings on par with the likes of high-yield bonds, Bloomberg notes that the chart above illustrates how well financial markets recovered from the 2007 to 2009 meltdowns. By contrast, consumer price inflation, incomes and other such gauges of the “real” economy have put in muted performances.

“We don’t know how effective QE has been because we don’t know what would have happened without it,” said Peter Oppenheimer, chief global equity strategist at Goldman in London.

 

Falling interest rates supported most financial assets, while for the economy “QE has been effective to prevent downside risk,” he said.

Economic growth and wage increases have disappointed in recent years, depressed by poor productivity gains and historically low labor-force participation — dynamics that lie outside the purview of central banks. Now that monetary policy makers are leaving the onus on governments to address growth, and contemplating the easing off of stimulus, the big question for investors is how resilient markets will be. For now, optimism prevails – everything from corporate-bond premiums to emerging-market bonds are flashing confidence.

But, as BofAML notes, perhaps it’s time for that to reverse…Economic Nationalism is back

Long Main Street, Short Wall Street

Electorates are voting for trade & immigration policies to boost wages on Main Street, not for central banks to support stock & bond prices on Wall Street.

Now, “the withdrawal of QE is sending a signal of confidence that central banks have in growth,” Goldman’s Oppenheimer said. “But undoubtedly we’ll get to a stage where rising inflation will push up bond yields to a level that will act as a damper on asset prices” across financial markets, he said.

And after yesterday’s rate-hike decision – in the face of declining real wages, weak retail sales, and collapsing GDP expectations – is there really doubt exactly who The Fed is working for…

 

Because there is really only one cohort benefitting from this…

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Analysis: White House meeting on Saudi underscores Kingdom’s influence

Author: 
VIVIAN SALAMA | AP
Wed, 2017-03-15
ID: 
1489651415360678700

WASHINGTON: The White House indicated Wednesday that Saudi Arabia will remain a close consultant to President Donald Trump on security and economic challenges in the Middle East, including the Israeli-Palestinian conflict and the Iran nuclear deal.
The White House statement offered a glimpse at how this nascent administration’s Middle East policies are taking shape, and how influential Saudi Arabia may be in shaping them. It left little doubt of the president’s commitment to reinforcing relations with Saudi Arabia in a lengthy readout Wednesday — a day after the visit.
Trump’s rhetoric toward the Israel-Palestinian conflict has notably softened since he was sworn into office. Trump abandoned, at least for now, his vow to move the US Embassy from Tel Aviv to Jerusalem, a plan long in the works but never executed due to the potential security implications.
Trump has also urged Israel to stop settlement expansions in disputed territories and said that the Israelis and Palestinians should determine for themselves whether a one- or two-state solution may work best.
Saudi Arabia has long said that any normalization of relations with Israel must include a just resolution first to Palestinian statehood, including claims to east Jerusalem.
More broadly, the statement also addresses the need for collaboration in the fight against the Islamic State militant group — the White House referring to the group as “Daesh,” its Arabic acronym, for the first time. The Trump administration typically refers to the group by its English acronym, ISIS.
The White House emphasized the need to normalize relations between the US and Saudi Arabia, which had soured in recent years over Saudi objections to the Iran nuclear deal, reached by the Obama administration.
Saudi Arabia has welcomed Trump’s hard line rhetoric on Iran, but the White House statement Wednesday notes “the importance of confronting Iran’s destabilizing regional activities while continuing to evaluate and strictly enforce the Joint Comprehensive Plan of Action,” indicating that the agreement may not be dismantled, as Trump had promised during the campaign.
The statement emphasized the need to strengthen economic and commercial ties as well. The two sides discussed the creation of a new US-Saudi program, undertaken by joint US-Saudi working groups, which would embark on initiatives in the energy, industry, infrastructure and technology sectors, with opportunities worth more than $200 billion, the statement said.

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