As we argued in our Chart of the Day from the 19th of September:
"No bank lending...no Fed tightening", and we agreed with Bank of America Merrill Lynch takes on the subject at the time:
"The Fed may taper once housing sustainably picks up. But in our view it is very unlikely to tighten until banking sectors around the world start lending again."
.We also agree with their latest take on the subject of the liquidity induced rally from their note from the 16th of October entitled "Red, White & BOOM":
"Unintended Consequences according to Martin Sibileau:
"With the Fed swaps, as we pointed out on September 12th, the Euro is still artificially stronger than without the swaps, which makes the EU less competitive. Finally, the institutional uncertainty of the EU zone remains unaddressed. All these factors only contribute to prolong the recession and a high unemployment rate."Given today's decision of the FOMC to maintain US rates low until late 2014, it seems to us that the European recession can only be prolonged."
For us it is simply the manifestation of the Gibson paradox, because, while the manifestation of "Cantillon effects" in asset prices come from negative interest rates, the suppression of the rate of interest under ZIRP, intensifies gold hoarding as clearly explained by Antal Fekete in his 2006 article "When Atlas Shrugged...Part Two: Gibson's Paradox and the Gold Price":
We always point out shipping as indicative of the deflationary forces at play, and we keep tracking shipping rates to that effect. The latest rates figures from the Drewry container prices point to slack demand which was evident in the earnings figures coming out from corporate giant such as IBM where Emerging Markets' demand had been impacting the bottom line. The Drewry Hong-Kong-Los Angeles container rate - graph source Bloomberg: