Britons Vote In Conservatives As Boris Johnson Rides Populist Landslide To Majority

"We broke the deadlock, we've ended the gridlock, we've smashed the roadblock - we did it!"

Those were the words Britain's Boris Johnson used to describe his his Tory party victory in Thursday's UK general election, as the conservative party was swept into power with a commanding majority in the House of Commons, crushing the liberal Labor party and others.

Johnson's resounding message during the campaign was to "get Brexit done," and it appears the path is now clear, nearly four years after the general population voted in a referendum to leave the European Union. With not all of the districts reporting, the conservatives hold 364 seats to Labor's 202. 325 votes are needed for an outright, one-party majority and the Tories have it.

The size of the majority was of a magnitude not seen since the 1980s when Margaret Thatcher ruled over decade of conservatism. Some of the Labor seats that were lost had been voting for liberals since the 1930s. The sweep and scope of the landslide is historic.

Johnson, party leader and Prime Minister, has been pushing for a resolution to the Brexit problem over the past six months and finally was pushed into a general election, a move that eventually backfired on his opponents and has now paved the way for Britain to regain its independence and restrain or reverse the liberal spending and immigration policies that the country so desperately needs.

This election, viewed on a global basis, is an extraordinary victory for conservatives and working-class populism, mush as Donal Trump's election in 2016 was in the United States. The wave of populism just got another boost, sending the worn-out, fear-ridden policies of the left screaming for cover.

Even as the results were being tabulated Thursday night in Great Britain, voices of the losing liberals were heard using words and phrases such as "devastating," "disastrous," and "dangerous for our country," to describe the stunning victory for the right, with the general public sending a loud mandate to fix what's broken and move on.

No doubt, the liberal politicians will moan and wail, just as they have in the United States, but, in the end, the handwriting is on the wall. People want less government intervention into their lives, less meddling, and more positive, clear-headed solutions.

While many in America will have little understanding of the importance of the British elections, they send a clear message and make the case for Trump in a very distinct way.

Here is Johnson's victory speech:



At the Close, Thursday, December 12, 2019

Dow Jones Industrial Average: 28,132.05, +220.75 (+0.79%)
NASDAQ: 8,717.32, +63.27 (+0.73%)
S&P 500: 3,168.57, +26.94 (+0.86%)
NYSE Composite: 13,697.41, +117.48 (+0.87%)

Fed Holds Rates Steady; Repo Madness Debunked

There was little reaction to the final FOMC policy decision of 2019, as the Fed chose to stand pat on the federal funds rate, adding that they expected to be no rate movement at all in 2020.

Keeping rates fixed for the next 12 months may be wishful thinking, but it also may be a level-headed approach, since, after all, 2020 will be an election year, the country has been through all manner of pain and suffering for the past three years, and a bit of stability would surely be welcome to many.

Coming from the Fed and the sobering mellow intonations of Chairman Jay Powell, the calming effect on not just markets, but society as a whole may provide a soothing tonic. With steady interest rates, businesses can plan with more confidence, individuals can maintain their standards of living and maybe balance their budgets for a change. It's a welcome relief.

At the press conference, Chairman Powell fielded one question on the intriguing REPO malaise, but didn't express any kind of apprehension or surprise. Perhaps the whole thing has been a little overblown by various pundits and press people. One article in which the Repo scare is debunked by Jeff Snider at Alhambra Partners suggests that there never was a reason to be worried about a market crash or any other unforeseen, nasty event in the first place.

So, as the holiday season continues apace, the Fed has apparently managed to calm the markets, albeit temporarily, but with an eye toward the future. If there are no interest rate changes in the coming year, that would be a feat worthy of high praise toward an institution - the Federal Reserve - that is normally the butt of jokes and the object of roundhouse criticism.

If, come late December 2020, the federal funds rate remains at 1.50-1.75%, we can call it a "Christmas miracle." For now, we can temper our optimism, relying on the scattered and unpredictable nature of world events and markets to prove the Fed wrong.

At the Close, Wednesday, December 11, 2019:
Dow Jones Industrial Average: 27,911.30, +29.58 (+0.11%)
NASDAQ: 8,654.05, +37.87 (+0.44%)
S&P 500: 3,141.63, +9.11 (+0.29%)
NYSE Composite: 13,579.92, +34.62 (+0.26%)

Waiting On The Fed Futility Amid Repo Crisis

Back in mid-September, as many will no doubt recall, the Fed had to step into the REPO market and provide liquidity via collateral auctions, mainly in the form of treasury bills and notes, and mortgage-backed securities (yes, the deadly MBS), which are still out there, floating around, handled like hot potatoes.

Since that time, the Fed has kept up appearances by continuing to provide POMO and TOMO (Permanent (P) and Temporary (T) Open Market Operations) to the tune of anywhere from $30 billion to $60 billion per day. That's right, PER DAY, and it's often been more. That's how big the overnight lending business is. Huge. The REPO market is also what triggered the Great Financial Crisis of 2008, when first, Bear Stearns, then, Lehman Brothers, were forced into bankruptcy by being unable to borrow from the overnight REPO market.

The problem with both Bear and Lehman was that their collateral consisted of highly toxic, dodgy MBS, or as is commonly referenced, sub-prime packaged loans. Lenders on the other side of the ledger were hesitant to lend to either, fearing that not only was the collateral of a suspect nature, the firms - Bear and Lehman - were buying more of them as an integral part of their business structure.

In 2008, this all blew up, the Fed stepped in, flooded the world with liquidity (buying up all the toxic MBS it could) and the collapse of the global financial system was averted.

Note that the collapse was averted, not solved, not cured, not by a long shot. The Fed's been busy keeping markets in some degree of stability ever since.

On Wednesday (today), the Fed's FOMC will likely announce no change n the federal funds rate, but that, besides being a foregone conclusion, isn't the real story. For that, in the interest of time and space, Money Daily bids adieu to this commentary, and offers a couple of links that may or may not render the REPO markets as something understandable to the reader.

First, this excellent video with Paddy Hirsh explaining just how the REPO market operates (about 8 minutes of time well spent):


Then, just to make matters a little more interesting, this ZeroHedge story featuring Zoltan Pozsar claiming that the REPO market is about to explode again, and that a stock market crash is imminent.

Take that ZeroHedge article with as many grains of salt or sugar your risk appetite will absorb, but bear in mind that Mr. Pozsar was, as ZeroHedge purports,...

instrumental during his tenure at both the US Treasury and the New York Fed in laying the foundations of the modern repo market, orchestrating the response to the global financial crisis and the ensuing policy debate (as virtually nobody at the Fed knew more about repo at the time than Pozsar), serving as point person on market developments for Fed, Treasury and White House officials throughout the crisis (yes, Kashkari was just the figurehead); playing the key role in building the TALF to backstop the ABS market, and advising the former head of the Fed's Markets Desk, Brian Sack, on just how the NY Fed should implement its various market interventions without disrupting and breaking the most important market of all: the multi-trillion repo market.

The Fed's FOMC policy meeting concludes at 2:00 pm ET on Wednesday, with the release of their statement followed by a press conference headed by Fed Chairman, Jay Powell, who will try his best to avoid answering direct questions dealing with the REPO market, for obvious reasons.

Party on!

At the Close, Tuesday, October 10, 2019:
Dow Jones Industrial Average: 27,881.72, -27.88 (-0.10%)
NASDAQ: 8,616.18, -5.64 (-0.07%)
S&P 500: 3,132.52, -3.44 (-0.11%)
NYSE Composite: 13,545.31, -9.77 (-0.07%)

Stocks Struggle Second Straight Monday; Paul Volker Passes

In what is beginning to look like a recurrent theme, stocks struggled to open the week, with all the major US indices down on the day.

This is the same condition that prevailed last week. Stocks were down hard to start the week, only to be rescued on Friday by a surprisingly good jobs report.

That may not be the case this time around. There will be no salvation by numbers later on the week. Market participants will have to deal with the troika of incessant impeachment hearings, troubling trade talks, and fruitless Federal Reserve operations.

It's no secret that the Fed has opened the spigots again, starting in September with what they're currently calling "not QE," a series of open market operations conducted on a daily basis that was originally intended to ease the malaise in overnight lending markets, and, while still performing that function, has morphed into another monstrosity, already having increased the size of the Fed balance sheet by some $300 billion.

And this will go on at least through the first quarter of next year, and probably further, because once the Fed shuts down the free money booth, there will be carnage, which is not to say there won't be carnage beforehand or that they will ever be able to completely close down their operations of largesse to the yield-starved banks.

Beyond the ordinary absurdities that has become the financial world, a moment of pause was given to mourn the passing of former Fed Chairman Paul Volker, who served in that post from August 1979 to August 1987, under presidents Carter and Reagan. Widely credited as the man to defeat the high inflation of the 70s and 80s through the use of tight money controls and ridiculously high interest rates, Volker was first seen as ridiculous, then hated, and finally emerged an American hero, rescuing the US economy from a terrific bout of inflation, unemployment, and a deep recession - caused, in part, by his raising of the federal funds rate from 11% to a record 20% - in 1981-82, that lasted 16 months.

Volker died Sunday. He was 92.

At the Close, Monday, December 9, 2019:
Dow Jones Industrial Average: 27,909.60, -105.46 (-0.38%)
NASDAQ: 8,621.83, -34.70 (-0.40%)
S&P 500: 3,135.96, -9.95 (-0.32%)
NYSE Composite: 13,555.07, -33.22 (-0.24%)

WEEKEND WRAP: Stocks Flat After Week Of Turmoil; Media Concentration Killing Free Press

Due almost entirely to a stunning November non-farm payroll report, Friday's massive gains offset the losses incurred on the main US indices earlier in the week, leaving the Dow and NASDAQ with minimal losses and the S&P and NYSE Composite with smallish gains for the week.

With the prior month's job gains calculated to be 266,000, there was a great deal of encouragement for the US economy, despite almost no progress in US-China trade talks.

Though the week was a tumultuous one, ending with a bang, the overall arc was about as noticeable as the earth's curvature from a three-story building.

While stocks were going nowhere, crude caught a bid, as Saudi Arabia and OPEC nations vowed to cut another 500,000 barrels a day production in the first quarter of 2020. The move was seen as bullish for crude, though the cohesion of OPEC members remains questionable. The Saudi's are convinced that some members are failing to meet promised production cuts, putting lid on global oil prices. WTI crude oil closed out the week at $59.07. Gas prices shot up across the United States and Europe.

As is usually the case, gold and silver were beaten down during Friday's stock ramping. Gold ended at $1,458.40 per ounce, while silver bit the dust at $16.49.

Bonds were also whipsawed, with the 10-year note lost 11 basis points on Monday, with yield dropping from 1.83% to 1.72%, only to see it all eviscerated by Friday, finishing the week at 1.84%.

All markets appeared to be on unstable ground as the holiday season progressed and such condition may persist for the foreseeable future. The impeachment of President Trump continues apace in the House of Representatives, the trade war is likely to get hotter, holiday shopping usually lulls during the second and third week of December, and protests in Hong Kong and France (and in many other countries, over various issues) are taking a toll.

Oddly enough, America's mainstream media wishes to have nothing to do with protests in other countries, perhaps hoping that by not airing real news, Americans will not get any ideas about speaking up on issues that affect them. None of the major TV networks allowed any air time to the French protests over pensions, nor did the Washington Post. It's as though 800,000 people protesting in Paris, while the massive public transportation system was halted due to striking workers, actually did not happen. Americans are being kept in the dark about international developments unless it somehow fits their narrow narrative of "impeach Trump" and "trade war bad."

It wasn't long ago - maybe 30 years or so - that the United States had a free, fair, and balanced press. Since media cross ownership rules were relaxed, first in 1975, again in 1996, and again in 2003, media ownership concentration has gotten to the point at which we are today, where six or seven companies control roughly 95% of all mainstream media. It's no wonder that Americans are perplexed about world affairs, economics, and politics. The powers in the media have conspired together to keep the general public blissfully ignorant.

The internet has changed where Americans look for news to some degree, but, the large media companies own or control much of that as well, making it difficult for the average person to discern what is real, what is opinion, and what is fake. Until the FCC rolls back the liberalization of ownership concentration rules, Americans are almost certain to be shielded from news and stories that those overseeing network conglomerates believe to be too dangerous, too damaging, or simply to controversial to air.

The status quo, deep-state owned media in America is second only to congress as its own worst enemy and it may become even worse during the coming election year.

At the Close, Friday, December 6, 2019:
Dow Jones Industrial Average: 28,015.06, +337.27 (+1.22%)
NASDAQ: 8,656.53, +85.83 (+1.00%)
S&P 500: 3,145.91, +28.48 (+0.91%)
NYSE Composite: 13,588.29, +105.99 (+0.79%)

For the Week:
Dow: -36.35 (-0.13%)
NASDAQ: -8.94 (-0.10%)
S&P 500: +4.93 (+0.16%)
NYSE Composite: +43.08 (+0.32%)