Today one of the greats in the business warned we are now at the end of the road of monetary activism.

At The End Of The Road
November 19 (King World News) – 
Peter Boockvar:  “As you know I’ve argued that the BoJ and ECB are at the end of their road in terms of monetary activism. An article today from Bloomberg News said: 

“An unprecedented level of concern about damaging side effects of Japan’s multi decade experiment with ultra low interest rates has gripped policy makers, regulators and legislators. The key takeaway: fiscal policy is set for a more prominent part during the next economic downturn.”

Now, the Japanese have also experienced 25+ years of Keynesian fiscal spending building a lot of nice roads and bridges that were just steroid shots into an economy that always wore off so the complexion of the fiscal policy will be most important…

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It’s All On Us
Again, we are realizing that when it comes to financing the exploding size of US debts and deficits, it’s all on us. Foreigners are not only not helping, they continue to be outright sellers of US Treasuries. In September, foreigners were net sellers of $34.3b of US notes and bonds after selling $30.5b in August. This brings the year to date level of selling to $82b. Back in 2011 and 2012 foreigners were net buyers of $400b+ in each years. China and Japan, our two biggest foreign holders, continued to be sellers. Don’t worry though, the Federal Reserve is back to monetizing US debt by a total of $60b per month in T-bills. 

I forgot to mention yesterday the trade data out of Singapore in October, a great proxy for economic activity in Asia. Its non oil exports fell by 12.3% y/o/y, more than the estimate of down 10%. It’s a decline for the 9th month in the past 10. Exports specifically to China fell by 5.5%. It’s economy shrunk by 2.7% in Q2 and Q3 out this week is expected to be up by .1%. 

In the UK, the CBI industrial orders figure for November improved to -26 from -37 and that was 4 pts more than expected. Call it less bad as it comes off the lowest since 2010.

CBI said:

“While the thick fog of uncertainty from a no deal Brexit has lifted somewhat, the manufacturing sector remains under pressure from weak global trade and a subdued domestic economy. Order books remain below average, and output volumes continue to fall. When taking into account the deteriorating outlook for manufacturing globally, it’s clear that the outlook for the sector remains precarious.”

Brexit resolution will of course be a huge lift of pressure off the backs of UK businesses but they are still going to need help from rest of the world in terms of improving global trade and UK exporters.

Gold & Silver
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