(May 2015 Update) by Fulton Sheen

The first quarter didn’t finish the way the Federal Reserve expected, causing them to lower their own growth projections for 2015 from 2.8% to 2%.  The Dow Jones News wrote, “The nation’s central bank pointed to cooling economic activity and reduced job-market gains in its policy statement Wednesday, underscoring uncertainty among officials about when the economy will rebound and clouding the timing of when they will begin to raise interest rates. Now it looks highly unlikely.”  The dollar is strong, but its value has continued drop against its peers, since its first quarter high, especially in the last four weeks.  The Wall Street Journal reported on April 5th, “The dollars downshift reflects heightened concerns that the US economy is cooling, which was reinforced on Friday by a much-weaker-than-expected jobs report.”

On March 21^st the WSJ said, “For the week, the dollar is down 35 against the euro posting its biggest loss since October 2011.”  In an updated WSJ article on April 5^th it was reported, “Some investors say U.S. currency’s biggest gains are over, as weaker data raise doubts about a Fed rate increase.  The dollar’s record rally, which rattled everything from the oil market to U.S. corporate earnings, is running out of gas.  Before the Fed met Reuters reported, “The dollar fell on Tuesday to a two-year low against a basket of major currencies after soft data on housing and consumer confidence underscored a trend of slowing U.S. economic growth.” The article went on to say the Fed will probably have to cut interest rates instead of raise them if things don’t improve.

Slowing Growth Muddles Fed Plans (4-30-15) John Hilsenrath | http://uk.advfn.com/news/DJN/2015/article/66634007

Dollar Sputters After Surge (4-5-15) http://www.wsj.com/articles/dollar-sputters-after-surge-abreast-of-the-market-1428258744

Speeding Dollar Begins to Sputter (4-7-15) By Ira Iosebashvili | http://vladimirbrody.com/2015/04/07/the-speeding-dollar-begins-to-sputter/

Dollar Slumps as Data Points to Slowing U.S. Growth (4-24-15)
http://www.reuters.com/article/2007/04/24/us-markets-forex-idUSN2445451420070424

Global Economic Growth
The US is not the only nation not meeting their expectations.  The WSJ reported, “The world’s top finance leaders warned Friday that currency volatility, low inflation and high debt levels threaten to undermine an already uneven global economic recovery.”  The G-20 Nations stated, “In many advanced economies, accommodative monetary policies are needed to anchor inflation expectations and support recovery.”

Both Japan and EU nations are “accommodatively” printing money, but are not experiencing the desired economic results.

The IMF said, “Global economic growth will accelerate only marginally this year as slowing output in major emerging markets and a feeble expansion in wealthier countries drag down near-term prospects.” Those competing pressures are putting authorities in policy binds and could “trigger a cascade of disruptive adjustments,” according to the IMF.  In a nutshell, central banks are continuing to intervene, but those interventions are creating an artificial environment which can’t be sustained without continued stimulus.  Just like a drug addict who needs more and more, there will come a point where the drug/stimulus will not be enough and the only choice will be a cold-turkey withdrawal, which will be difficult and very unpleasant.

G-20 Sees Mounting Threats to Recovery (4-17-15) By Ian Talley
http://www.wsj.com/articles/g-20-warns-of-threats-to-global-economic-recovery-1429295405

IMF: Slowing Emerging-Market Growth Is Sapping Global Economic Prospects (4-14-15) WSJ
http://www.wsj.com/articles/imf-slowing-emerging-market-growth-is-sapping-global-economic-prospects-1429016407

Mounting Debt Bridles Asia (4-22-15) By: Tom Wright
http://online.wsj.com/public/resources/documents/print/WSJ_-C001-20150422.pdf

Negative Interest Rates & Bond Yields
Until the first week in April, the WSJ reported that, “no country had ever sold 10-year debt that gives investors a yield of below 0%. And no country had ever issued a 100-year bond denominated in euros.  But in the latest stark sign of how easy the era of easy money has become, Switzerland on Wednesday sold 10-year bonds that investors are actually paying to hold, while Mexico lined up a rare transaction to borrow euros it promised to repay a century from now.”  This trend is expanding rapidly, especially in the EU, Franck Dixmier, CIO for Allianz Global Investors in Paris said:

“Only six weeks into the European Central Bank’s €1 trillion-plus ($1.07 trillion-plus) bond-buying program, more than half of the eurozone government-debt market now offers investors a negative yield.”  Investors buying negative-yielding bonds can make money only if inflation consistently remains below zero, or someone else agrees to buy the bond from them at an even higher price.… There is a complete disconnect with economic fundamentals and nominal GDP growth.”

Over half the Euro zone now offers negative yields.  When artificially low interest rates were not enough central banks began setting negative interest rates, so far these rates range between -.1% and -1%.  These new unprecedented rates raise the following questions: How low can the rates go, how long can they stay there, and what effect will this have on international markets?

Chances for Positive Return on Eurozone Government Debt Diminish (4-23-15) Christopher Whittall
http://www.wsj.com/articles/chances-for-positive-returns-on-eurozone-government-debt-diminish-1429720411

Swiss, Mexican Bond Deals Represent Milestones for Debt (4-8-15)
http://www.wsj.com/articles/switzerland-first-with-10-year-bond-at-negative-yield-1428489209

Germany Sells Five-Year Debt at Negative Yield for First Time (2-25-15) WSJ
http://www.wsj.com/articles/germany-sells-five-year-debt-at-negative-yield-for-first-time-on-record-1424871074

Negative Interest Rates Threaten the Banking System (3-5-15) By Paul H. Kupiec
http://www.wsj.com/articles/paul-h-kupiec-negative-interest-rates-threaten-the-banking-system-1425600889

The Negative Yield Matrix: Red Pill or Blue Pill? (4-24-15) by Charlie Bilello | http://davidstockmanscontracorner.com/the-negative-yield-matrix-red-pill-or-blue-pill/?utm_source=wysija&utm_medium=email&utm_campaign=Mailing+List+Mid+Day+Friday

Too Much of Everything
Most commodities are down right now because there is too much of everything.  The WSJ said:

“The global economy is awash as never before in commodities like oil, cotton and iron ore, but also with capital and labor-a glut that presents several challenges for policy makers struggle to stroke demand.

The backlog is causing a scramble in many markets to find storage for excess supplies, clobbering commodity prices across the board, and foreshadowing painful output cuts down the road for many producers. In some cases, producers even increase their output to make up for the revenue losses due to lower prices, exacerbating the problem of oversupply.  An article from David Stockman’s Contra Corner states, “This lack of “demand” for global goods flies in the face of all expectations about the “dollar” and how that is supposed to transmit US strength globally.  Instead, it is clear that US strength is as absent as the expected “dollar” effects.  US exports to the rest of the world fell for the third consecutive month, and the fourth time in the past five. Worse yet, the decline in March was 6%.”

This is also something that’s never happened before to the degree it has at this moment, but nobody is slowing production as the above article states.

Glut of Capital and Labor Challenge Policy Makers (4-25-15) WSJ
http://www.wsj.com/articles/global-glut-challenges-policy-makers-1429867807

Inside The March Trade Report US Economy Clearly Weakening (5-5-15) by Jeffrey P. Snider | http://davidstockmanscontracorner.com/inside-the-march-trade-report-us-economy-clearly-weakening/?utm_source=wysija&utm_medium=email&utm_campaign=Mailing+List+AM+Tuesday

Oil
The WSJ reported, “American oilmen have seized on one solution to their financial woes in the face of low oil prices: They want to export U.S. crude oil, soon. This would require overturning a decades-old federal ban on selling American crude abroad.”  The US is one of the largest producers of oil in the world, unlike the rest of the world we have a law which prohibits the sale of unrefined oil to other nations.   This law originated from a deal President Nixon made with Saudi Arabia and the establishment of the petro-dollar in which they agreed to sell oil only in dollars and we agreed, among other things, not sell unrefined oil.  Since the Obama administration has already angered Saudi Arabia with their focus on Iran and the Saudi’s have already said publicly they will no longer sell oil exclusively in dollars, we should change this law and change it quickly.  It is estimated that the US is currently, about four weeks away from its maximum oil storage capacity, at which point oil drilling businesses would shut down.

In Pain, U.S. Oilmen Plead For Exports (WSJ, 4/23)
http://www.ilfb.org/e-media-publications/ag-news-review/agbites-for-april-23.aspx?alttemplate=Print

The Oil Expert Ban: A Relic of the 1970s (4-24-2015) By: John Hess
http://www.wsj.com/articles/the-oil-export-ban-a-relic-of-the-1970s-1429913717

New Asian Infrastructure Investment Bank (AIIB)
The most significant event of the 1^st quarter happened in the final weeks of March when the UK signed on as a founding member of the new World Bank giving it complete legitimacy.  In the next two weeks most of the EU, Japan, New Zealand, Australia and almost every major nation in the world except the US, became a founding member.  The US has been in unchallengeable control of the current World Bank and the world banking system since 1944, and has criticized the AIIB, the UK and every other nation for becoming members of the new World Bank.  The new bank will greatly reduce US control of world banking.  Previously all funds had to be wired through the US-controlled banking system, but now the world has another option for international wiring, and cannot be pressured by the US with a threat of their wiring privileges being taken away, if they don’t do what the US wants.

This is a clear sign that the world no longer views the US as the dominant economic super power and has had enough of the US refusal to yield some of their control of the IMF and the current World Bank.  The world now has another option and the signers don’t care what the US thinks about it.  The enrollment window closed April 1, 2015.  In an editorial published in the Financial Times, former US Treasury Secretary Larry Summers summed it up plainly saying that this “may be remembered as the moment the United States lost its role as the underwriter of the global economic system.”

U.K. to Join China-Backed Development Bank (3-13-15) WSJ
http://www.wsj.com/articles/u-k-to-join-china-backed-development-bank-1426211662

UK support for China Backed Asia Bank Prompts US Concern (3-13-15) BBC
http://www.bbc.co.uk/news/worYld-australia-31864877

Conclusion
The world is still waiting for Greece to default, and as soon as they do, the focus will fall on another nation, most likely Italy.  Bill Gross says the bull market super cycle is almost over.  The IMF is about to approve China’s Yuan as one of the world’s eight reserve currencies recognized by the IMF. Many of the large international banks are pushing the limits to turn a profit in our almost 0% interest rate environment and paying record fines to regulators.

Anyone that tells you to “stay the course, what’s happening now has happened before,” has no idea what’s going on in the international financial world.  Never before have the primary central banks of the world set negative interest rates which cause people and businesses to pay interest to keep their money in the bank, instead of receive it.  Never before have nations, and now private corporations, ever sold bonds with negative yields which cost people and businesses to invest in them.  Never before have there been two world banks and another option to the US controlled World Bank.  There is no outline, no 1-yr, 5yr or 10yr analysis to look at, so the nations, the international markets, the fund managers and investors really have no idea what to expect.  The only thing that is certain is uncertainty; so stay tuned, come up with a plan B and start to implement and reposition yourself now.

Here Are the Most Important Dates Ahead in the Greek Crisis (3-26-15)
http://www.bloomberg.com/news/articles/2015-03-26/here-are-the-most-important-dates-ahead-in-the-greek-crisis

Greek Markets Show All at Risk Should Mistake Trigger a Default (3-30-15)
http://www.bloomberg.com/news/articles/2015-03-30/greek-markets-show-all-at-risk-should-mistake-trigger-a-default

The Bull Market Super Cycle Is Nearing Its End Says Bill Gross (5-4-15) Bloomberg Interview
http://www.bloomberg.com/news/articles/2015-05-04/gross-calls-bull-market-end-again-as-oxygen-running-out

China’s Yuan Set for IMF Win (5-3-15) WSJ | http://www.wsj.com/articles/imf-to-brighten-view-of-chinas-yuan-1430697814

Deutsche to Pay Record Fine on Libor (4-23-15) By Eyk Henning
http://www.wsj.com/articles/deutsche-bank-expects-1q-profit-despite-litigation-costs-1429724845

Banks Feel the Heat From Lawsuits (4-28-15) WSJ http://www.wsj.com/articles/banks-feel-the-heat-from-lawsuits-1430259260

Wells Fargo Warms Up to Risk (4-12-15) WSJ | http://www.wsj.com/articles/wells-fargo-warms-up-to-risk-1428877356

Fulton Sheen

The UK signed on as a founding member of the new World Bank giving it legitimacy and it looks as if New Zealand and Australia will join them.  Twenty-one other countries have signed on as well.  The US has been in unchallengeable control of the current World Bank and the world banking system since 1944 and criticized the UK for becoming a member.  This will greatly reduce US control of world banking.  Now the world has another option to wire money from one place to another and cannot be pressured by the US with a threat of their wiring privileges being taken away, if they don’t do what the US wants.  This is a clear sign that the world no longer views the US as the dominant economic super power and has had enough of the US refusal to yield some of their control of the IMF and the current World Bank.  The world now has another option and the signers don’t care what the US thinks about it.

U.K. to Join China-Backed Development Bank (3-13-15) WSJ
http://www.wsj.com/articles/u-k-to-join-china-backed-development-bank-1426211662

UK support for China Backed Asia Bank Prompts US Concern (3-13-15) BBC
http://www.bbc.co.uk/news/world-australia-31864877

We have seen both surprising and expected events in the first two months of 2015.   The European Central Bank (ECB) decided to move forward with their QE plan to print 1.1 Trillion Euros, which has driven down the value of the Euro.  The Federal Reserve Chair, Janet Yellen, testified in Congress that the US central bank’s “patience” with holding interest rates near zero has limits and suggested the central bank might drop its pledge to be patient, due to low oil prices stifling inflation.  Yellen strongly criticized a proposal to allow congressional audits of the Fed’s monetary policy, saying it would curtail central bank independence and expose it to political meddling: “Audit the Fed is a bill that would politicize monetary policy, would bring short-term political pressures to bear on the Fed,” said Yellen.  While opposing regulatory scrutiny on the Fed, she also called for more scrutiny of large Wall Street banks, as many banks like Morgan Chase, Citigroup and Bank of America have recently paid out record fines to settle civil investigations.

ECB Seeks to Inject Up to 1.1 Trillion Euros Into Economy in Deflation Fight (1-21-15)
http://www.bloomberg.com/news/2015-01-21/ecb-said-to-propose-qe-of-50-billion-euros-a-month-through-2016.html

Yellen Signals Feds Patience With Zero Interest Rate Has Limits (1-24-15)
http://www.bloomberg.com/news/articles/2015-02-24/yellen-signals-fed-s-patience-with-zero-interest-rate-has-limits

Yellen Says Effective Supervision of Big Banks One of Fed’s Top Priorities (3-4-15) WSJ
http://www.wsj.com/articles/yellen-says-effective-supervision-of-big-banks-one-of-feds-top-priorities-1425431701

Fed to Continue to Err on Side of Caution Says Zentner (2-27-15)
http://www.bloomberg.com/news/videos/2015-02-27/fed-to-continue-to-err-on-side-of-caution-zentner

Raising Interest Rates
Former manager of PIMCO Total Return Fund, Bill Gross, is concerned that the job creation we’ve seen over the past decade is not what it seems, because real wages have declined. “We can create jobs, but can we create profitable jobs and productive jobs that pay money to elevate labor back into the old middle class?  … I don’t think we’ve done that and that’s what we need to do.  Wages need to increase at least 3 percent to help offset the impact of lower commodity prices and get to the Fed’s inflation target of 2 percent,” Gross said.

Bloomberg columnist Matthew Boesler wrote:
“The Group 20 finance ministers this week urged the Federal Reserve to “minimize negative spillovers” from potential interest-rate increases, they omitted a key figure: $9 trillion.  That’s the amount owed in dollars by non-bank borrowers outside the U.S., up 50 percent since the financial crisis, according to the Bank for International Settlements. Should the Fed raise interest rates as anticipated this year for the first time since 2006, higher borrowing costs for companies and governments, along with a stronger greenback, may add risks to an already-weak global recovery.”

Here’s a $9 Trillion Question (2-13-15) by Matthew Boesler
http://www.bloomberg.com/news/articles/2015-02-13/-9-trillion-question-is-how-tighter-fed-will-impact-world

Gross Says Fed Must Be Very Careful in Raising Rates (2-6-15)
http://www.bloomberg.com/news/articles/2015-02-06/gross-says-fed-must-be-very-careful-in-move-to-raise-rates

Deflation & Inflation
Deflation played a role in two of the worst economic disasters we’ve seen, the Great Depression and more recently, Japan’s lost decades with almost no economic growth.  We’ve all heard that inflation was bad, but because of deflation and the desire to expand exports, central banks are setting inflation goals and doing everything they can to ignite inflation.  Bloomberg columnist Mark Gilbert does a great job of defining inflation and deflation using comments from one of the readers of his column:  “Inflation rewards borrowers and punishes savers and people on fixed incomes. Deflation rewards savers and people on fixed incomes and punishes borrowers. I’m tired of being on the losing team because I’ve been frugal, instead of a borrowing spendthrift.”

Deflation is a prolonged period of falling consumer prices; rational consumers will defer purchases because they expect to be able to buy goods and services cheaper in the future. That drives prices into a tailspin and the economy into a funk.  Many other people aren’t buying that theory. “If you expect food prices to drop, will you stop eating?” he asks. “If you expect housing prices to drop, will you start living in a cardboard box? If you expect clothing prices to drop, will you walk around naked?”  We certainly don’t want a starving, homeless Steve wandering around in the altogether. But that’s what the most recent inflation figures from around the world suggest might be coming.

Deflation The Trouble With Falling Prices (1-21-15) By Simon Kennedy http://www.bloombergview.com/quicktake/deflation

Will Deflation Make You Naked, Homeless and Hungry? (1-21-15) By Mark Gilbert
http://www.bloombergview.com/articles/2015-01-21/will-deflation-leave-us-naked-homeless-and-hungry-not-everyone-is-convinced-

Currency Wars
One of the tools being used by central banks to combat deflation and improve exports is the de-valuing of currency, because a strong currency means that a nation’s export products are more expensive and a weaker currency means their exports are less expensive.  David Woo, head of global rates and currencies research at Bank of America Merrill Lynch in New York said:

“There is a growing consensus in the market that an unspoken currency war has broken out … The reason why this is a war is that it is ultimately a zero-sum game — someone gains only because someone else will lose … The standard view on war-mongering is that by easing monetary policy, central banks from Asia to Europe are hoping to weaken their currencies to boost exports and import prices. Trade rivals then retaliate, creating a spiral of devaluations as witnessed in the 1930s … A weak currency might provide a short-term boost to the countries engaging in currency devaluation, however, if everyone is playing the same game, what we all will end up with is more and higher FX volatility. This in turn will likely exact a toll on global trade and capital flows.” 

Currency Devaluations Are an Undeclared War (2-6-15) Simon Kennedy
http://www.bloomberg.com/news/articles/2015-02-06/a-stealth-war-with-currencies-as-weapons-silent-killers

Did the Fed Just Enter the Currency Wars? (2-18-15) Rachel Evans
http://www.bloomberg.com/news/articles/2015-02-19/did-fed-just-enter-the-currency-war-traders-detect-dollar-angst

Is America Losing the Global Currency Wars? (2-3-15) Bloomberg Video
http://www.bloomberg.com/news/videos/2015-02-03/is-america-losing-the-global-currency-wars-

Swiss Central Bank De-pegs from Euro
The Swiss Central Bank de-pegged the Swiss Franc from the Euro and lowered its interest rate to negative 0.75%.  The Swiss are reacting to the European Central Bank (ECB) plans to print 1.1 trillion euros.  They could no longer hold down the value of the Swiss Franc and keep it pegged to the rapidly de-valuing Euro.  Swiss markets are all down because the de-pegging will drive up the value of Swiss products in international markets and hurt Swiss exports.  This, however, likely now makes the Swiss Franc the top safe haven currency.  This was a very significant event and financial commentators and professionals are all saying nothing like this has ever happened before.  No country has ever purposefully raised the value of their currency, nor has a respected central banking system ever fully embraced negative interest rates to combat deflation in an attempt to ignite inflation.  After this decision, the Swiss Franc gained 15 cents on the US Dollar in one day.

What Made the SNB End the Minimum Exchange Rate? (1-15-15) Bloomberg Video
http://www.bloomberg.com/video/snp-what-made-them-end-the-minimum-exchange-rate-yDVPsbYUS_qRBCXAYyJhqA.html

SNB Ends Minimum Exchange Rate, Cuts Interest Rate (1-15-15) Bloom berg Video
http://www.bloomberg.com/video/snb-ends-minimum-exchange-rate-cuts-interest-rate-uXR2QtLETAWbk0zsCFyS6A.html

SNB Ends Franc Floor, Cuts Interest Rate to -0.75% (1-15-15) Bloom berg Video
http://www.bloomberg.com/video/snb-ends-franc-floor-cuts-interest-rate-to-0-75-MPHRlF5IQTexYU6Me4gUFA.html

FX Strategists on SNB’s Surprise Removal of Franc Cap (1-15-15) Bloom berg Video
http://www.bloomberg.com/video/fx-strategists-on-snb-s-surprise-removal-of-franc-cap-pZ8iQwXERMyQ6dKC2nHr6A.html

SNB Franc Move a `Major Deflationary Shock’: Halpenny (1-15-15) Bloomberg Video
http://www.bloomberg.com/video/snb-derek-halpenny-sees-franc-move-as-deflationary-shock-9JqQH2w8RtO4wEa6azuYKA.html

SNB Had to Act Ahead of QE From the ECB: Sri-Kumar (1-15-15) Bloomberg Video
http://www.bloomberg.com/video/snb-had-to-act-ahead-of-qe-from-the-ecb-komal-sri-kumar-t6GFMtNWT7SmLdK9HT0~vQ.html

OIL
The drop in oil prices is being characterized as a bad thing for international markets and economies because of the high percentage of oil companies in mutual fund portfolios, weighted market measures and loss of tax revenues from oil profits.  The drop, however, it’s great for consumers, farmers, factories, transportation providers and other businesses.  Bloomberg columnist Michael Snyder, explains the problem this way:

“The oil sector has added over a half million jobs — many of them high paying — since the recession ended in June 2009. That’s 13% of all US job growth over that period.  Now energy companies and related sectors are laying off thousands. Expect that trend to continue, bears say.  But losing good jobs is just the tip of the iceberg of this oil crisis.  At this point, the price of oil has already dropped to a catastrophically low level. The longer it stays at this level, the more damage that it is going to do. If the price of oil stays at this level for all of 2015, we are going to have a complete and total financial nightmare on our hands… For the first time in 18 years, oil exporters are pulling liquidity out of world markets rather than putting money in.”

Birth Pangs of The Coming Great Depression (1-29-15) by Michael Snyder
http://theeconomiccollapseblog.com/archives/birth-pangs-coming-great-depression

The reduction in oil prices is also creating great concerns in international bond markets.  In a Bloomberg article Lisa Abramowicz wrote, “An accident could be on its way.  The stage is set for another financial crisis to unravel years of relative calm in debt markets.  At least that’s how firms from UBS Group AG to Invesco Ltd. see it. Here’s why: Prices in the world’s biggest bond market are swinging and the plunge in oil is sinking the economies of nations from Venezuela to Nigeria.  To top all that off, the fundamental structure of the bond market has changed in a way that makes it difficult for regulators to gauge exactly where risks are building.  As stresses grow, we believe the probability of an ‘accident’ increases.”

Invesco analyst Rob Waldner, wrote in the firm’s February fixed-income outlook: “The overall environment for risky assets, and particularly for credit, is deteriorating.”  “Oil, which has plunged to below $50 per barrel from $107 in June, may cause more energy companies to default on their billions of dollars of debt than many investors are expecting,” according to UBS analysts.

Major Firms Are Saying the Stage Is Set for Another Crisis in the Bond Market (2-27-15)
http://www.bloomberg.com/news/articles/2015-02-26/ubs-to-invesco-detect-bond-accidents-brewing-in-unstable-markets

The Obama administration wants more regulations and restrictions on brokers who manage retirement accounts.  This is creating another confrontation with the financial services industry over rules affecting trillions of dollars in 401ks and other savings accounts.  The Associated Press wrote, “The change would put brokers — who sell stocks, bonds, annuities and other investments — under the stricter requirements for registered financial advisers when they handle clients’ retirement accounts.”  SEC Commissioner Daniel Gallagher, a critic of the Labor Department proposal, said in a speech Friday, “This is something the nanny state has a hard time comprehending.”  Along with the government IRA plan already in place, keep an eye on the administration as it continues to position itself to get its hands on the estimated $5T in retirement accounts so it can be placed in US debt securities.

Obama to Propose Tighter Restrictions on Retirement Brokers (2-23-15) Associated Press http://www.foxnews.com/politics/2015/02/23/obama-to-propose-tighter-restrictions-on-retirement-brokers/#.VOzn6rLKOno.email

US Banks are coming under more and more scrutiny and Janet Yellen doubts our largest ones will be able to pass the first stress test.  The Federal Reserve will meet again later this month, but we will not hear about what happened at the meeting until chairman Yellen testifies again at the end of April.  We will continue to watch the events in Russia and Greece.  Putin has an agenda and he doesn’t seem to care about sanctions which are also causing many financial problems for the EU.  Greece has been given a little more time, but most do not expect them to follow through.  So stay tuned and keep watch.  Between now and then you can check out my blog at: www.FultonSheenUpdates.com

Below are few additional articles of interest.

Fulton Sheen
fsheen@gmail.com

Fed Officials Voiced Doubts First Bank Stress Test Would Succeed (3-5-15) Yalman Onaran
http://www.bloomberg.com/news/articles/2015-03-05/fed-officials-voiced-doubts-first-bank-stress-test-would-succeed

Yellen Says Effective Supervision of Big Banks One of Fed’s Top Priorities (3-4-15) WSJ
http://www.wsj.com/articles/yellen-says-effective-supervision-of-big-banks-one-of-feds-top-priorities-1425431701

Strange World of Russian Sanctions Levies Uneven Penalties (2-18-15)
http://www.bloomberg.com/news/articles/2015-02-18/the-strange-world-of-russian-sanctions-levies-uneven-penalties

Russia Gets Second Junk Rating From Moody’s on Ukraine, Oil (2-20-15)
http://www.bloomberg.com/news/articles/2015-02-20/russia-cut-to-junk-by-moody-s-on-ukraine-crisis-oil-price-fall

Germany Rejects Loan Request Saying Greece Must Meet Conditions (2-19-15) Bloomberg Video 
http://www.bloomberg.com/news/articles/2015-02-19/eu-says-greek-letter-may-pave-way-for-reasonable-compromise-i6c3go5j

Why Austerity Won’t Save Greece (2-19-15) Bloomberg Video
http://www.bloomberg.com/news/videos/2015-02-19/explainer-why-austerity-won-t-save-greece

Where is Germany’s Gold? (2-2-15) Bloomberg Report
http://www.bloomberg.com/news/features/2015-02-05/germany-s-gold-repatriation-activist-peter-boehringer-gets-results

Greek Debt Crisis:
Greece’s new leader and people have no interest in doing anything they can to pay off their debt.  They want an easy way out.  They want all or portion of their debt to be forgiven and they think they can change the way they govern and do business, but they have no plan or course of action on how this would happen.  The new Greek leader has criticized the EU and Germany and blamed Greece’s problems on them to the point that is becoming difficult to take him seriously. Greece has two months to raise billions of dollars or the EU will no longer stand behind them.  Greece has been in technical default for four years, the EU should step away and leave Greece to its own devices, instead of giving them any more money that will never be paid back when they finally do default.

Why Austerity Won’t Save Greece (2-19-15) Bloomberg Video
http://www.bloomberg.com/news/videos/2015-02-19/explainer-why-austerity-won-t-save-greece

Merkel’s Coalition Unites in Criticizing Tsipras Speech (2-9-15) Patrick Donahue & Brian Parkin
http://www.bloomberg.com/news/articles/2015-02-09/merkel-s-coalition-unites-in-criticizing-tsipras-speech

Tspiras Taunts Germany, Reinforces Anti-Austerity Stance (2-9-15) Bloomberg Video http://www.bloomberg.com/news/videos/2015-02-09/opec-sees-u-s-cuts-in-lower-oil-supply-forecast

Swiss Franc De-pegs from Euro:
The Swiss Central Bank de-pegged the Swiss Franc from the Euro and lowered its interest rate to negative 0.75%.  The Swiss are reacting to the European Central Bank (ECB) plans to print 1.1 trillion euros.  They could no longer hold down the value of the Swiss Franc and keep it pegged to the rapidly de-valuing Euro.

FX Strategists on SNB’s Surprise Removal of Franc Cap (1-15-15) Bloom berg Video http://www.bloomberg.com/video/fx-strategists-on-snb-s-surprise-removal-of-franc-cap-pZ8iQwXERMyQ6dKC2nHr6A.html

Currency Wars:
One of the tools being used by central banks to combat deflation and improve exports is the de-valuing of currency, because a strong currency means that a nation’s export products are more expensive and a weaker currency means their exports are less expensive.

Currency Devaluations Are an Undeclared War (2-6-15) Simon Kennedy
http://www.bloomberg.com/news/articles/2015-02-06/a-stealth-war-with-currencies-as-weapons-silent-killers

The Swiss Central Bank de-pegged the Franc from the Euro and lowered its interest rate to negative -0.75%.  The Swiss are reacting to the European Central Bank (ECB) plans to print 500B Euros.  They could no longer hold down the value of the Swiss Franc and keep it pegged to the rapidly de-valuing Euro.  Swiss markets are all down, because this will drive up the value of Swiss products in international markets and hurt Swiss exports.  However, this now makes the Swiss Franc possibly the top safe haven currency.

This was a very significant event and all the financial commentators and professionals keep saying nothing like this has ever happened before.  No country has ever purposely raised the value of their currency, nor has a respected central banking system ever fully embraced negative interest rates to combat deflation in an attempt to ignite inflation.

What Made the SNB End the Minimum Exchange Rate? (1-15-15) Bloomberg Video
http://www.bloomberg.com/video/snp-what-made-them-end-the-minimum-exchange-rate-yDVPsbYUS_qRBCXAYyJhqA.html

SNB Ends Minimum Exchange Rate, Cuts Interest Rate (1-15-15) Bloom berg Video
http://www.bloomberg.com/video/snb-ends-minimum-exchange-rate-cuts-interest-rate-uXR2QtLETAWbk0zsCFyS6A.html

SNB Ends Franc Floor, Cuts Interest Rate to -0.75% (1-15-15) Bloom berg Video
http://www.bloomberg.com/video/snb-ends-franc-floor-cuts-interest-rate-to-0-75-MPHRlF5IQTexYU6Me4gUFA.html

FX Strategists on SNB’s Surprise Removal of Franc Cap (1-15-15) Bloom berg Video
http://www.bloomberg.com/video/fx-strategists-on-snb-s-surprise-removal-of-franc-cap-pZ8iQwXERMyQ6dKC2nHr6A.html

SNB Franc Move a `Major Deflationary Shock’: Halpenny (1-15-15) Bloomberg Video
http://www.bloomberg.com/video/snb-derek-halpenny-sees-franc-move-as-deflationary-shock-9JqQH2w8RtO4wEa6azuYKA.html

SNB Had to Act Ahead of QE From the ECB: Sri-Kumar (1-15-15) Bloomberg Video
http://www.bloomberg.com/video/snb-had-to-act-ahead-of-qe-from-the-ecb-komal-sri-kumar-t6GFMtNWT7SmLdK9HT0~vQ.html

These are some of the largest banks in the US and they have massive derivative exposure.

5 US Banks Each Have More Than 40 Trillion Dollars In Exposure To Derivatives (9-25-14) By Michael Snyder |http://www.zerohedge.com/news/2014-09-25/5-us-banks-each-have-more-40-trillion-dollars-exposure-derivatives

I don’t agree with everyone’s predictions, but the discussions of what’s taking place from a variety of opinions and viewpoints is very engaging and there is A LOT taking place.  Most of these are 1-2 pages or  2-3 minute videos.

The articles address very volatile currency movement, the effect of the free-fall in oil prices, inflation/deflation and ECB QE taking place in the last week.

The Commodity Markets Collapsing Beyond Oil (1-13-15) Bloomberg Video
http://www.bloomberg.com/video/oil-decline-part-of-normal-market-volatility-john-taft-xnUzHxXtT~yNCNF1qM9LZQ.html

Venezuela’s Credit Rating Cut to Caa3 by Moody’s (1-13-15) Bloomberg Video http://www.bloomberg.com/video/venezuela-s-credit-rating-cut-to-caa3-by-moody-s-3IiD_APHQSSOn0lLlC1goQ.html

Banks Oil Exposure Concerns Rise as Prices Tumble (1-13-15) Bloomberg Videos
http://www.bloomberg.com/video/banks-oil-exposure-concerns-rise-as-prices-tumble-QdQmM3rTRo~~OO05GGOzsA.html

World’s Best Forecaster Targets Euro for Dollar Parity (1-13-15) Bloomberg Video
http://www.bloomberg.com/video/world-s-best-forecaster-targets-euro-dollar-parity-HEEFh_1XTI6oZsET_caCNw.html

U.K. Inflation Rate Drops to Lowest in Almost 15 Years (1-13-15) By Jennifer Ryan & Tom Beardsworth http://www.bloomberg.com/news/2015-01-13/u-k-inflation-rate-drops-to-0-5-lowest-in-almost-15-years-1-.html

Draghi Faces Legal Test on Bond Buys as ECB Readies QE Plan (1-13-15) By Stephanie Bodoni
http://www.bloomberg.com/news/2015-01-13/draghi-faces-legal-test-on-bond-buys-as-ecb-readies-qe-plan.html

Treasury Yields Rise from 2013 Low Before $21 Billion Auction (1-13-15) By Susanne Walker
http://www.bloomberg.com/news/2015-01-13/treasuries-rise-with-sale-set-to-draw-lowest-yield-in-20-months.html

Dollar Slips on Wages as Oil Drops; Chinese Stocks Drop (1-12-15) Fresh News U.K.- Bloomberg
http://fresh-news-uk.com/news/dollar-slips-on-wages-as-oil-drops-chinese-stocks-drop-bloomberg

ECB Weighs Bond Purchases Up to 500 Billion Euros to Juice Economy (1-10-15)  By Jana Randow http://www.bloomberg.com/news/2015-01-09/ecb-said-to-study-bond-purchase-models-up-to-500-billion-euros.html

Venezuelans Throng Grocery Stores Under Military Protection (1-9-15) By Andrew Rosati & Noris Soto http://www.bloomberg.com/news/2015-01-09/venezuelans-throng-grocery-stores-on-military-protection-order.html

Gross Says Wage Growth Isn’t Great Enough to Sustain U.S. Expansion (1-9-15) By Liz Capo McCormick | http://www.bloomberg.com/news/2015-01-09/gross-says-wage-growth-not-enough-to-sustain-u-s-expansion.html

Why the Fed Worry About Others (1-9-15) Mohamid El-Erian
http://www.bloombergview.com/articles/2015-01-09/why-the-fed-worries-about-others

World’s Best Forecaster Targets Euro-Dollar Parity Currencies (1-9-15) By Lucy Meakin http://www.bloomberg.com/news/2015-01-08/world-s-best-forecaster-targets-euro-dollar-parity-currencies.html

Things Are Going to Get Worse in Europe Eichengreen (1-8-15) Bloomberg Video
http://www.bloomberg.com/video/-things-are-going-to-get-worse-in-europe-eichengreen-aDrhA5yIQPSp2tWyXN5NtQ.html

Pound to Gain Versus Euro on Rates Outlook: BNP Paribas (1-8-15) Bloomberg Video
http://www.bloomberg.com/video/pound-to-gain-versus-euro-on-rates-outlook-bnp-paribas-xqApJV6NRLCY7ZepJDA0_w.html

The BRICs Will Be Cut to the ICs if Brazil & Russia Don’t Shape Up, Warns Phrasemaker O’Neill (1-8-15) By Bloomberg News|  http://www.bloomberg.com/news/2015-01-08/bric-in-danger-of-becoming-ic-says-acronym-coiner-jim-o-neill.html

Euro Drop a Turning Point for Central Bank Reserves (1-7-15) By Lananh Nguyen http://www.bloomberg.com/news/2015-01-07/euro-drop-a-turning-point-for-central-bank-reserves-currencies.html

HSBC Sees Destructive Potential Behind Strong Dollar (1-7-15) Bloomberg Video
http://www.bloomberg.com/video/hsbc-sees-destructive-potential-behind-strong-dollar-MRb2Coa7QN6FGxf8JCdugw.html

Bill Gross Says Good Times Over as Markets Set to Fall (1-6-15) Bloomberg Video
http://www.bloomberg.com/video/bill-gross-says-good-times-over-as-markets-set-to-fall-HzjhS2XTQQWVRGpCtHcjsw.html

Bill Gross Calls It 2015 Is Going to Be Terrible (1-6-15) By Ben Steverman
http://www.bloomberg.com/news/2015-01-06/bill-gross-calls-it-2015-is-going-to-be-terrible.html

It looks like Greece may become the first country to exit the Euro and that the rest of the EU is resigned to the fact this may happen.  This will probably also result in the Greek government defaulting.

A Greek Exit From the Euro Raises Fears of Fiscal Contagion (1-5-15) Simon Kennedy http://www.bloomberg.com/news/2015-01-05/greek-euro-exit-risk-revived-as-merkel-bluff-overlooks-contagion.html