Daily Reading – Thursday, July 14, 2011

Gavyn Davies: Bernanke and the divided Fed

The financial markets seem determined to interpret today’s statement by the Fed chairman in a dovish light, but a careful reading of his words does not support that point of view.

The Big Picture: Bernanke speaks

While stocks are responding to Bernanke’s talk of doing more if needed (exactly what the minutes revealed yesterday), he is at the same time implicitly saying he doesn’t think they need to do more because he thinks the economy will get better in the 2nd half of the year as he still believes the factors slowing growth right now are ‘transitory’ and he thinks inflation pressures will recede and he gives a variety of reasons why. He also went on to defend QE2 against the criticism as he said it helped the economy thru “easier financial conditions” that reduced the “risk of deflation” and shored up economic activity.

The Big Picture: More or not more

Not to long after Bernanke today reiterated what was in yesterday’s FOMC minutes, that ‘more’ is always on the table, voting member Fisher is sounding like he will be one of the dissents on this. While he complained about QE2 over the past 6 months but still voted each time for continuing it, in a speech today he sounds like someone in the Fed saying ‘no more.’ He said, “I firmly believe that the Fed has already pressed the limits of monetary policy.

self-evident: The Ron & Ben show

Ron asks a great question. Why do central banks hold gold? They do not hold silver, copper, oil, or real estate… The only non-financial asset they hold is gold.

FT Alphaville: On the matter of misvalued Chinese land

Phew..! What a relief.

The Chinese danger is no more.

FT Alphaville: Subprime selling off, again

Securitised subprime — it’s still not doing well.

FT Alphaville: Moody’s puts the US on review for possible downgrade

Well, it said it would. And it has.

FT Alphaville: Risk on… wait, never mind

Remember when risk assets bounced on Bernanke’s testimony suggesting that QE3 was now under more serious consideration within the FOMC?

FT BeyondBRICs: China: the taxman boometh

China is a country where statistics tend to be coupled with exciting adjectives. Rampant inflation, up 6.5 per cent in June. Blistering economic growth 9.5 per cent in Q2. Scorching industrial production, up 15.5 per cent last month.

But how’s this for a growth figure – China’s fiscal revenues grew over 31 per cent in the first half of 2011, bringing in over Rmb5,000bn to state coffers.

JESSE’S CAFÉ AMÉRICAIN: Silver Dealer Inventory Continues to Spiral to New Lows at the Comex – Pax Goldmana

The deliverable dealer silver inventory at the Comex dropped to another new low of 27.37 million ounces.

Capital Chronicle: Monkeys with guns: high frequency trading

Andrew Haldane, one of the Bank of England’s Executive Directors, illuminated the high frequency trading debate last week with this speech. It contains many gems such as this one…

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