IMF Fires a Warning Shot at the Fed on Deflation

By Pam Martens: February 20, 2014

The IMF Released the Above Chart With Its Statement on February 19, 2014, Sounding a Warning on the Potential for Deflation
The U.S. government’s economic policy wonks are the habitual finger wags. They’ve lectured Japan incessantly for 20 years on how to beat its intractable deflation problem and in more recent years pointed at China for keeping its currency artificially low to boost exports.  Last October 30, when the U.S. Treasury released its semi-annual “International Economic and Exchange Rate Policies” report to Congress, it turned its finger-pointing on Germany, grousing that:
“Within the euro area, countries with large and persistent surpluses need to take action to boost domestic demand growth and shrink their surpluses.  Germany has maintained a large current account surplus throughout the euro area financial crisis, and in 2012, Germany’s nominal current account surplus was larger than that of China.  Germany’s anemic pace of domestic demand growth and dependence on exports have hampered rebalancing at a time when many other euro-area countries have been under severe pressure to curb demand and compress imports in order to promote adjustment.  The net result has been a deflationary bias for the euro area, as well as for the world economy.”
Wagging the finger at Germany because it lacks sufficient altruism toward its economically struggling neighbors is certainly cheeky from the country whose reckless and misguided deregulation of Wall Street mega banks created the 2008 financial collapse which then played a central role in destabilizing the world economy.
Given this backdrop, it was noteworthy that yesterday the International Monetary Fund (IMF) pointed its own finger squarely at the U.S. central bank, the Federal Reserve Board of Governors, in its statement on “Global Prospects and Policy Challenges” prepared for the upcoming G-20 meeting of finance ministers and central bank governors in Sydney, Australia on February 22 and 23.
To understand what the IMF is actually signaling requires a quick review of central bank jargon versus public jargon. Central bank flooding of the financial markets through bond purchases in hopes something will stick in terms of job creation, economic growth, and longer term financial stability is referred to as quantitative easing or QE by the general public. The U.S. Federal Reserve prefers the more scholarly LSAP or Large Scale Asset Purchases. Not to be outdone, the IMF has its own acronym, UMP, for Unconventional Monetary Policy. Regardless of the chosen phrase, no one is sure how all of this unconventional meddling is going to end, although at least three Republican Senators suspect it is akin to either a morphine drip, disguising chronic pain and a seriously ill patient, or leading the financial markets into a “sugar high” complacency as another asset bubble forms.
Clearly pointing to the fact that the Federal Reserve has made two separate announcements of cutting back its bond purchases by $10 billion a month (a total of $20 billion), the IMF warned: “Advanced economies should avoid premature withdrawal of monetary accommodation as fiscal balances continue consolidating.”
The IMF is clearly worried about the onset of the kind of intractable deflation that plagued the U.S. and the global economy during the Great Depression of the 30s. That is also what kept former Fed Chairman, Ben Bernanke, up at night. While the Fed has numerous monetary tools to whip inflation, when your short-term interest rate is already at the zero-bound range and you’ve racked up a $4 trillion balance sheet from your prior QE-LSAP-UMP monetary experiments, the monetary tools to battle deflation are scarce.
This is specifically what is worrying the IMF:
“Capital outflows, higher interest rates, and sharp currency depreciation in emerging economies remain a key concern and a persistent tightening of financial conditions could undercut investment and growth in some countries given corporate vulnerabilities. A new risk stems from very low inflation in the euro area, where long-term inflation expectations might drift down, raising deflation risks in the event of a serious adverse shock to activity.  Further action and cooperation are needed to promote financial stability and robust recovery…Given still large output gaps, very low inflation, and ongoing fiscal consolidation, monetary policy should remain accommodative in advanced economies. There is scope for better cooperation on unwinding UMP, including through wider central bank discussions of exit plans. In the euro area, repairing bank balance sheets remains critical to monetary policy transmission. Finally, fiscal consolidation should proceed at a measured pace, while preserving the long-run growth potential of the economy.”
On October 3 of last year, John C. Williams, the President of the Federal Reserve Bank of San Francisco, delivered some very astute observations on the impact of the Fed’s bond purchases, noting that when it first began this process in 2008, it had “no first-hand experience with such policies.” Williams continues:
“The evidence to date provides support for the view that financial markets are segmented and that asset purchase programs affect interest rates and other asset prices.  There have been numerous studies of the effects of our asset purchases on longer-term interest rates. This analysis suggests that each $100 billion of asset purchases lowers the yield on 10-year Treasury notes by around 3 to 4 basis points, that is between 0.03 to 0.04 percentage point. That might not sound like much.  But consider the Fed’s so-called QE2 program in 2010-11 that totaled $600 billion of purchases.  According to estimates, that program lowered 10-year yields by about 20 basis points.  That’s about the same amount that the 10-year Treasury yield typically falls in response to a cut in the federal funds rate of ¾ to 1 percentage point, which is a big change. Applying the same logic to the current, much larger, asset purchase program, the implied reduction in longer-term interest rates is roughly 40 to 50 basis points.”
The IMF clearly understands the flip side of the above scenario, writing:
“Many emerging markets came under renewed financial pressure in the second half of January — equities fell, spreads rose, and currencies of major economies depreciated. Markets appear to be reassessing emerging market fundamentals as global conditions change. While the pressures were relatively broad-based, countries with higher inflation and current account deficits were amongst the most affected (Brazil, Indonesia, Turkey, and South Africa). The sell-off came against the backdrop of several negative factors in some countries and weakening sentiment toward emerging economies. Specifically, China’s shadow banking and weaker-than-expected PMI data, continued or rising political tensions (Thailand, Turkey, South Africa, and Ukraine), and Argentina’s depreciation, all contributed to the negative sentiment against the broader context of continued Fed tapering.”
Janet Yellen, who took the reins at the Fed just this February 3, is no doubt thinking at this moment: “Uneasy lies the head that wears a crown.”

A Third Death at JPMorgan and Another Press Lockout on Information

JPMorgan's Hong Kong Headquarters
By Pam Martens and Russ Martens: February 19, 2014
Since January 28 of this year, one tragic death per week has occurred at JPMorgan among men in their 30s, the latest occurring yesterday — a statistically improbable random occurrence. Each JPMorgan employee worked at a headquarters’ building in a key financial market for JPMorgan – London, New York, and Hong Kong. And in each and every case, the press has been blocked from obtaining vital information to properly do its job.
The deaths started on January 28 when Gabriel Magee, a 39-year old technology Vice President, was found dead on the 9th level rooftop of JPMorgan’s European headquarters at 25 Bank Street in the Canary Wharf section of London. After much prodding by Wall Street On Parade, the Metropolitan Police in London could not confirm that one eyewitness to the fall existed despite London newspapers widely circulating the story that commuters and colleagues observed Magee leap from the building. After more prodding, the Metropolitan Police now state that no further details will be released until a Coroner’s Inquest is held on May 15. That’s more than 100 days from the date of death when mainstream media will have likely lost interest.
According to friends and family, Magee was a vibrant, happy individual with a great sense of humor. He had emailed his girlfriend the evening before his body was discovered that he would be home shortly. When he did not arrive, his girlfriend reported his disappearance to police. Magee’s body was spotted on the 9th level rooftop by co-workers looking out windows on higher floors of the building who then called police at around 8:02 a.m. the next morning.
Six days after the death of Magee, Ryan Crane, an Executive Director who was involved in trading at JPMorgan’s New York office, was found dead in his home in Stamford, Connecticut on February 3. A total and complete press blackout has been instituted in that death. The Chief Medical Examiner’s office will only say that the cause of death is “pending” and final results will not be announced for several more weeks. Wall Street On Parade called the Stamford Police yesterday to ask for the police incident report. Under Connecticut sunshine laws that report should be available to the press. We were informed that if we were able to obtain the incident report, most information would likely be redacted.
Why is the press not able to report to the public the time of day that Crane’s body was discovered and the location of the body when the police arrived. Those details are clearly known to the police and the Chief Medical Examiner. Why are they being withheld from the press?
Crane’s death on February 3 was not reported by any major media until February 13, ten days later, when Bloomberg News ran a brief story.
Press reporting on the third unexplained death at JPMorgan in three weeks has now entered the twilight zone of “news” reporting thanks to obfuscation by JPMorgan. Major media have characterized the worker as an “investment banker,” a “foreign exchange trader,” and a low level employee who worked in “operations.”  These are job functions that are highly remote from one another; they are decidedly not interchangeable job titles.
Yesterday, JPMorgan explained away its information lockout as follows: “Out of respect for those involved, we cannot comment further.” We can understand that a responsible human relations department would want to notify the family before releasing the individual’s name to the press but it is now more than 24 hours later and the press is still in the dark.
At 5:13 a.m. this morning, February 19, reporter Charles Riley assisted by Vivian Kam of CNN released an update to the scant information reported yesterday. The report shows that JPMorgan is still refusing to release the man’s name. CNN reports that: “A source at the bank said the man — identified by police only by his surname, Li — was a junior employee.” We now have a fourth characterization of what this individual did at JPMorgan and we are no closer to any credible information than yesterday. There are tens of thousands of people with the surname Li.
The JPMorgan spokesperson who gave the information to CNN is directly contradicting the information a JPMorgan spokesperson gave to the New York Post yesterday. New York Post reporter Michael Gray reported at 10:25 a.m. yesterday: “A 33-year-old JPMorgan investment banker leaped to his death Tuesday from the roof of the bank’s 30-story Hong Kong office, according to a bank spokesperson.” Gray reports further that the “identify is being withheld pending notification of next of kin…”
The one major newspaper that has failed to report on the string of deaths is the New York Times. The last we heard on this matter from the New York Times was on January 28 when Chad Bray and Jenny Anderson reported on the death of Gabriel Magee.
A search in The Times news archive to ascertain if the paper ever reported on the death of Ryan Crane turned up only news of his football triumphs in school. On December 5, 1993, The Times wrote: “Ryan Crane passed for an 8-yard touchdown to Charlie Minervino with 4:41 left, and Steve Bienko made his third placement to lift Delbarton (11-0) to a 24-23 upset victory over  St. Joseph (10-1) for the Parochial Group 3 championship in Montvale.”
Given that criminal charges were leveled against JPMorgan by the U.S. Justice Department for facilitating the Bernard Madoff fraud just 21 days before the onset of these weekly, unexplained deaths – one would expect to hear that the FBI is involved in this matter. (Wall Street On Parade emailed the media relations department for the FBI and did not receive a response.) While JPMorgan was permitted to settle the Madoff charges with a deferred prosecution agreement and a payment of $1.7 billion, the bank now has a rap sheet and the deferred prosecution document contains an overt threat to indict the company if more criminal conduct is detected.
The Madoff charges were part of a yearlong series of costly settlements for every manner of alleged fraud at JPMorgan: from mortgage fraud, to credit card malfeasance, to rigging electric markets, to gambling with insured deposits in the London Whale debacle — bringing the tally of its get-out-of-jail free cards to $30 billion in a period of 13 months. The company remains under investigation in the Libor and foreign exchange rigging matters.
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Memo to UK’s Serious Fraud Office: Your System Is Broken

By Pam Martens: February 18, 2014

Global Banks in London's Canary Wharf
Yesterday, the UK’s Serious Fraud Office brought criminal charges against three more individuals in the matter of rigging the interest rate benchmark known as Libor. But the sum total of what we learned about those charges from the Serious Fraud Office are the following two sentences:
“Criminal proceedings by the Serious Fraud Office have commenced today against three former employees at Barclays Bank Plc, Peter Charles Johnson, Jonathan James Mathew and Stylianos Contogoulas, in connection with the manipulation of LIBOR.  It is alleged they conspired to defraud between 1 June 2005 and 31 August 2007.”
There was no formal criminal complaint released to the press; no smoking gun emails; no transcripts of collusion in chat rooms. Just the above two sentences.
In the U.S., we are certainly not getting financial crimes by the big banks under control any better than the UK but at least we provide the public with an evidentiary basis for charging people or institutions with crimes (making sure, of course, that nobody at the top ever sees the inside of a jail cell). If the same charges had been leveled yesterday in the U.S., here’s how it would have gone down: the night before, the details of the charges and the most titillating emails would have been leaked to the New York Times and Wall Street Journal. A press conference would have been preannounced and held in time to make the evening news. Preet Bharara, the U.S. Attorney for the Southern District of New York, part of the U.S. Department of Justice, would have shown up at the press conference with flip charts and flanked by at least one representative from the FBI.
Take the January 7 press conference to lay out the criminal charges against JPMorgan for facilitating Bernie Madoff’s fraud. Bharara’s press release was over 2300 words and the supporting documents with specific details of the crimes numbered more than 30 pages. (No individuals were charged and the bank was allowed to sign a deferred prosecution agreement – but, hey, the public got hundreds of sleazy, slimy, sordid details of how the crooks worked their scheme. We may not get justice in the U.S. but at least we get details.)
The UK’s Serious Fraud Office tells us on its web site that its “overarching aims and objectives” are to reduce “fraud and corruption”; deliver “justice and the rule of law”: and maintain “confidence in the UK’s business and financial institutions.”
Given that we now know that Libor was rigged under the nose of the British Bankers Association; that the UK’s Financial Conduct Authority has acknowledged that the foreign exchange markets in the UK have been rigged just as abominably as Libor; and allegations are currently flying that Bank of England officials approved of the sharing of information between traders from competing firms in the foreign exchange market – the Serious Fraud Office has to get a failing grade in maintaining confidence in its financial institutions.
And here’s why it matters to every breathing, investing American. Every time the U.S. public launches a protest or march or hearings to rein in the abuse of the big Wall Street banks, some politician or lobbyist or editorial writer at the Wall Street Journal warns us that our too-big-to-fail banks will move to London if we don’t let them have their way with derivatives or proprietary trading or dark pools or high frequency trading or what have you. This perpetual, ill-conceived whining has set up London and New York prosecutors in a perpetual race to the bottom.
New York’s incessant Whiner-In-Chief is Senator Chuck Schumer. Back on November 1, 2006 – one year before Wall Street would begin to collapse under the weight of its corruption, enabled by lax regulation – Schumer and Mayor Bloomberg wrote an OpEd for the Wall Street Journal titled “To Save New York, Learn from London.” (Today it reads like a skit from a Stephen Colbert episode.) The two staunch Wall Street cheerleaders were worried about over-regulation of Wall Street, suggesting that “our regulatory bodies are often competing to be the toughest cop on the street, the British regulatory body seems to be more collaborative and solutions-oriented.”
Thanks to five years of nonstop fraud investigations in the U.S., we now know that London has been keeping a lot of dirty secrets for the global banks. From Madoff, to AIG, to MF Global, to the London Whale, to Libor, the London-connection has come into play.
And despite that, Schumer is still myopically trying to finish the race to the bottom with London. As recently as July of last year, Schumer was writing to U.S. Treasury Secretary, Jack Lew, in an attempt to derail Gary Gensler, Chair of the Commodity Futures Trading Commission, from imposing cross-border rules to prevent U.S. banks from simply moving their derivative trades to London to escape the stricter U.S. rules that were to take effect.
To take control of the spiraling financial fraud problem, U.S. legislators like Schumer and prosecutors across the pond like the Serious Fraud Office must first accept the unprecedented scope of what unmanageable banking behemoths, deregulation and cross-border regulatory arbitrage have created. No one has said it better than John Mann, member of Parliament, in this exchange with the Chief Executive of the UK’s Financial Conduct Authority, Martin Wheatley, on February 4 during a hearing before Parliament’s Treasury Select Committee:
Mann: “Have we or have we not just had the biggest series of quantifiable wrongdoing in the history of our financial services industry?”
Wheatley: “Yes we have.”
Mann: “Is there any other industry in recorded history in this country who’s had a comparable level of quantifiable wrongdoing to your knowledge?”
Wheatley: “Not to my knowledge. I don’t know what other industries have suffered but certainly not to my knowledge.”
We know with absolute certainty that London’s problem is our problem because that precise exchange would be every bit as true if it occurred today in a U.S. Senate Banking Committee hearing.
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As Bank Deaths Continue to Shock, Documents Reveal JPMorgan Has Been Patenting Death Derivatives

By Pam Martens and Russ Martens: February 17, 2014
The probability of two vibrant young men in their 30s who are employed by the same global bank but separated by an ocean dying within six days of each other is remote. And few companies are in as good a position to understand just how remote as is JPMorgan: since 2010, it has received four patents on quantifying longevity risks and structuring wagers via death derivatives.
The two deaths at JPMorgan remain unexplained. Gabriel Magee, a 39-year old technology Vice President was found dead on the 9th level rooftop of JPMorgan’s European headquarters at 25 Bank Street in the Canary Wharf section of London on January 28 of this year. A London coroner’s inquest is scheduled for May 15 to determine the cause of death. Six days later, Ryan Crane, a 37-year old Executive Director involved in trading at JPMorgan’s New York office was found dead at his Stamford, Connecticut home. Wall Street On Parade spoke with the Chief Medical Examiner’s office in Connecticut and was told the cause of death is “pending,” with final results expected in a few weeks.
Magee’s death was originally reported by London newspapers as a jump from the 33rdlevel rooftop of JPMorgan’s building with the strong implication that eyewitnesses had observed the jump. The London Evening Standard tweeted: “Bankers watch JP Morgan IT exec fall to his death from roof of London HQ,” which then linked to their article which said in its opening sentence that “A man plunged to his death from a Canary Wharf tower in front of thousands of horrified commuters today.”
When Wall Street On Parade contacted the Metropolitan Police in London a few days later, there was no assurance that even one eyewitness was on record as having seen Magee jump from the building.
Crane’s death is equally problematic. The death occurred on February 3 but the first major media to report it was Bloomberg News on February 13, ten days after the fact, and making no mention of Magee’s unexplained death just six days prior.
According to information available at the U.S. Patent and Trademark Office, JPMorgan created the LifeMetrics Index in March 2007 as an “international index designed to benchmark and trade longevity risk.” The index was said to enable pension plans to hedge the risk of payments to retirees and incorporated “historical and current statistics on mortality rates and life expectancy, across genders, ages, and nationalities.” From 2010 through 2013, JPMorgan has received patent approval on four longevity related patents.
Reuters reported on August 26, 2013 that the long-term longevity bets taken on by the big banks have now started to cause pain as international capital rules known as Basel III require more capital to be set aside for longer-dated positions. The article noted that “JPMorgan likely has the biggest holdings of long-dated swaps because it is the biggest swaps trader on Wall Street, responsible for about 30 percent of the market by some measures, traders at rival firms said.”
One extremely long longevity bet taken on by JPMorgan was reported by Insurance Riskon October 1, 2008. According to the publication, JPMorgan entered into a 40-year £500 million notional longevity swap with Canada Life whereby Canada Life would make a fixed annual payment in return for a floating liability-matching payment that would increase if the annuitants lived longer than expected. JPMorgan was believed to have passed on some of the risk to hedge fund investors but retained the counterparty risk. Because many of these deals are private, the full extent of JPMorgan’s exposure in this area is not known.
Wall Street veterans have also commented on the fact that JPMorgan may actually stand to profit from the early deaths of the two young men in their 30s. As we reported in March of last year, when the U.S. Senate’s Permanent Subcommittee on Investigations released its report on JPMorgan’s high risk bets known as the London Whale debacle, its Exhibit 81 showed that JPMorgan’s Chief Investment Office was also overseeing Bank Owned Life Insurance (BOLI) and Corporate Owned Life Insurance (COLI) plans which allow the corporation to reap huge tax benefits by taking out life insurance policies on workers – even low wage workers – and naming the corporation the beneficiary of the death benefit. Both the buildup in the policy and the benefit at death are received tax free to the corporation.
According to the exhibit, the Chief Investment Office was tasked with “Maximization of tax-advantaged investments of life insurance premiums” for the BOLI/COLI plans. According to a report in the Wall Street Journal in 2009, JPMorgan had $12 billion in BOLI, noting that a JPMorgan spokesperson had confirmed the figure. Other insurance industry experts put the total for both BOLI and COLI at JPMorgan significantly higher.
In September of last year, Risk Magazine reported that the Basel Committee on Banking Supervision, the International Organization of Securities Commissions and the International Association of Insurance Supervisors had published a report in August warning regulators that longevity swaps may expose banks to longevity tail risk – meaning, for example, that actual death rates in a given portfolio may vary dramatically from a large population index.
One advisor is quoted as follows in the article: “You can see from the position paper that this market has a lot of characteristics that regulators don’t like in terms of banks getting involved in it. It’s based on long-dated risks, upfront payments and a serious element of hubris in assuming that the banks can model these risks better than the people who originated them. It’s potentially a market big enough to cause serious problems if it caught on and went wrong.”
That things are starting to go seriously wrong was evident in a Bloomberg News report that emerged last Friday. AIG reported that it was taking a $971 million impairment charge before taxes for 2013 on its holdings of life settlement contracts because people were living longer than expected. AIG is the company that was bailed out by the U.S. taxpayer to the tune of $182 billion during the financial crisis because of bets gone wrong.
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Ms. Yellen, It’s Time to Pay Attention to the Slowdown

By Pam Martens: February 13, 2014

Janet Yellen, Chair of the Federal Reserve Board of Governors
The new Chair of the Federal Reserve Board, Janet Yellen, is one of the most seasoned and knowledgeable central bank chiefs in the 100-year history of the Fed. But there was one sentence in Yellen’s testimony on Tuesday before the U.S. House Financial Services Committee which is alarming. Yellen told the Congressional panel:
“Inflation remained low as the economy picked up strength, with both the headline and core personal consumption expenditures, or PCE, price indexes rising only about 1 percent last year, well below the FOMC’s 2 percent objective for inflation over the longer run.”
A strong economy is incompatible with declining inflation. One or the other will win out. In a consumer based economy such as the United States, where personal consumption represents 70 percent of GDP, preventing deflation from getting a foothold is prominently on the Fed Chair’s radar screen, whether it is acknowledged or not.
Yellen’s greatest enemy to succeeding in her job may be her inundation with the vast quantities of economic research spewed out by her employer and its 12 regional banks. Unfortunately, much of that research takes the pulse of the economy in the rearview mirror rather than in real time. During rapid and volatile economic currents, Yellen would be well advised to start listening carefully to real-time reports coming from CEOs, CFOs, Purchasing Managers and real business owners across America.
Yellen should be paying close attention to see if the following phrases emerge from the above group: “sharp slowdown,” “unanticipated contraction in sales,” “weakness we did not foresee coming,” and “abrupt.”
Just such a message came yesterday when Cisco’s CFO, Frank Calderoni, told MarketWatch that “Clearly, there’s been a slowdown and it’s been very abrupt. It’s difficult to determine how long it will last.”
As has been regularly pointed out, but perhaps the Fed still needs to be reminded of, this economic period has no equivalent, other than the Great Depression. From the Wall Street collapse to the unprecedented income and wealth inequality which left a nation of consumers unable to consume, the parallels between now and then should not be dismissed. It was Herbert Hoover who pointed out in his presidential memoirs that U.S. output can and did abruptly hit a brick wall.
We did not see the same hitting of the brick wall from 2008 to 2012 as was witnessed between 1929 and 1933 because this time around we had safety nets already in place that did not exist after the stock market crash of ’29. The Social Security Act was enacted on August 14, 1935; FDIC insurance on bank deposits was created under the Banking Act of 1933; it was not until August 1937 that 48 states, Alaska, Hawaii, and the District of Columbia had enacted their own unemployment insurance laws, according to the U.S. Department of Labor.
But safety nets come at a steep price. The U.S. debt now stands at over $17 trillion and the Fed’s balance sheet has risen to over $4 trillion as a result of its bond-buying program that has pumped more than $1.02 trillion of artificial stimulus into the economy over the past year – money that now seems to have ended up artificially inflating stock and bond markets in emerging markets rather than creating U.S. jobs and a sound path toward U.S. economic stability.
Other real time economic warnings abound. According to data compiled by Bloomberg, the Personal Consumption Expenditures Price Index, minus food and energy costs, “rose 1.2 percent in 2013, matching 2009 as the smallest gain since 1955. Of 27 categories of goods and services in the gauge, 18 showed smaller price increases over the past two years.”
Last October, the U.S. Department of Education reported an all time high in the number of homeless students attending public schools – a figure of 1,168,354, which is acknowledged to underestimate the problem. That statistic is not compatible with an economy that has “picked up strength” as Yellen told Congress this week. It is compatible with more troubling news out of the region where Congress holds court. According to the Washington Post this month, the number of homeless families in Washington, D.C. is on pace to double this year.
A weakening economy is also compatible with news coming out of the farm belt where corn and soybean prices are slumping along with farm land prices. According to this morning’s Wall Street Journal, “a monthly survey of Midwestern lenders by Omaha-based Creighton University in January found the outlook for farmland and ranchland prices was the weakest in more than four years.”
The old adage on Wall Street that in times of economic distress people turn to comfort foods is not holding up this time around either. Nestle has just reported the smallest annual sales growth in four years.
As we reported in December, the Federal Reserve Board of Governors gets a great amount of its intelligence from the New York Fed. That is certain to be clouded with the trading positions and agenda of the Wall Street firms that constitute a large part of the input in the intelligence gathering operation. Going forward, Yellen would be well advised to monitor real time data coming directly from the mouths of business people with a front row seat to real time changes in economic conditions.