While You Were Working - August 23

The Gruber Brothers let 674 tons of gold slip by them

If you were a central bank and you were setting out to physically transfer 674 tons of gold bars from other central banks back into your coffers, would you announce your intentions to the world? Well, that’s what the folks at the Bundesbank did, and they pulled it off!

Kudos to the Germans. I probably would have opted to keep a plan like that hush-hush so as to not attract the attention of any bad guys looking to pull a heist. In fact, the moment I read the bit about how some of the gold bars were being withdrawn from the Federal Reserve Bank of New York, all I could think about was the third Die Hard movie – Die Hard with a Vengeance. I mean, who do you think of when you hear about Germans removing gold bars from the NY Fed other than Simon Gruber and his band of dump truck-driving hooligans?

Sooner or later, they’ll figure it out

This wrap-up from the New York Fed recaps a recent event focused on what the appropriate role of the US government should be in the mortgage market. It is kind of funny that nearly a decade after the crisis, not much has changed in the functioning of the US mortgage market. Sure, risk retention and things like that been tweaked, but the underlying plumbing remains the same.

I am a big fan of anything that requires a bigger down payment. It might sound crazy, but it seems like a house is something someone should have to oh… I don’t know … maybe … save up money to buy! And yes, lenders should also be required to retain a bigger chunk of the risk for each loan. The biggest problem of the 2004-2007 era was that nobody had any skin in the game. End result? Ka-boom!

In Donald they trust

As Treasury Secretary Steven Mnuchin not so eloquently pointed out at the Milken Institute Global Conference earlier this year, bank stocks have benefitted from the election of Donald Trump. However, here is an interesting piece on who hasn’t. Hint: It is not who you think.

Speaking of banks stocks…

… It looks like no one is quite certain if they are going up or down. Barclays says down because Trump’s pro-growth agenda is petering out, but Bloomberg says up because of all the light-touch/no-touch regulatory environment banks are beginning to enjoy. Only time will tell.

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