Weekly Commentary: Money Matters

Doug Noland 2.88K Followers Follow Summary The Fed Chair delivered an impressive presentation at Jackson Hole. He continues to talk a good game, and his focus on traditional central bank principles is commendable. The "Markets Approve" headline ran after the initial bullish market reaction. The S&P 500 advanced 0.5% on Warsh, with the Nasdaq 100 notching a solid (0.4%) gain. The rates market went from pricing a 35% probability of a rate increase at the September 16th meeting to 60%, with odds for a hike by October 28th jumping to 92% (from 62%). Warsh successfully brandished his inflation-fighting credentials, while offering some needed clarity on his thinking and approach. That said, no one believes the Warsh Fed would dare resort to "slamming on the brakes." The market is now pricing two 25 bps increases by next March - with short rates forecast back above 4%. Tast Nawarat/iStock via Getty Images An old "Helicopter Ben" crack was always good for a chuckle: "Chairman Bernanke is only human. He puts his pants on one leg at a time, just like everyone else. And then he prints money." The former Fed Chairman is clearly This article was written by Doug Noland 2.88K Followers Follow I'm at about 30 years persevering as a “professional bear.” My lucky break came in late-1989, when I was hired by Gordon Ringoen to be the trader for his short-biased hedge fund in San Francisco. Working as a short-side trader, analyst and portfolio manager during the great nineties bull market – for one of the most brilliant individuals I’ve met – was an exciting, demanding and, in the end, a grueling and absolutely invaluable learning experience. Later in the nineties, I had stints at Fleckenstein Capital and East Shore Partners. In January 1999, I began my 16 year run with PrudentBear (that concluded at the end of 2014), working as strategist and portfolio manager with David Tice in Dallas until the bear funds were sold in December 2008. In the early-nineties, I became an impassioned reader of The Richebacher Letter. The great Dr. Richebacher opened my eyes to Austrian economics and solidified my lifetime passion for economics and macro analysis. I had the good fortune to assist Dr. Richebacher with his publication from 1996 through 2001. Prior to my work in investments, I worked as a treasury analyst at Toyota’s U.S. headquarters. It was working at Toyota during the Japanese Bubble period and the 1987 stock market crash where I first recognized my love for macro analysis. Fresh out of college I worked as a Price Waterhouse CPA. I graduated summa cum laude from the University of Oregon (Accounting and Finance majors, 1984) and later received an MBA from Indiana University (1989). By late in the nineties, I was convinced that momentous developments were unfolding in finance, the markets and policymaking that were going unrecognized by conventional analysis and the media. I was inspired to start my blog, which became the Credit Bubble Bulletin, by the desire to shed light on these developments. I believe there is great value in contemporaneous analysis, and I’ll point to Benjamin Anderson’s brilliant writings in the “Chase Economic Bulletin” during the Roaring Twenties and Great Depression era. Ben Bernanke has referred to understanding the forces leading up to the Great Depression as the “Holy Grail of Economics.” I believe “The Grail” will instead be discovered through knowledge and understanding of the current extraordinary global Bubble period.