Bloomberg – Charles Lieberman: Bond Traders Are Relying on Wishful Thinking Investors dismiss Yellen’s analysis at their own peril. It is correct that the Phillips Curve relationship has proven itself to be far more complex than just relating inflation to unemployment, though this is not a recent discovery. In fact, the original simple Phillips Curve unraveled… Continue reading The Phillips Curve’s Last Stand
Reuters – Oil bear market separates strong, weak U.S. shale producers The Permian Basin of West Texas and New Mexico, America’s largest oilfield, can produce profitably even if oil prices drop below $40 per barrel. “Investors are starting to make that separation between companies that were already outspending cash flow and those that weren’t,” said Baird’s Katzenberg. Permian… Continue reading Shake-out in the Oil Patch
The Financial Times – Fed policymaker rejects criticism of rate rise decision Philadelphia central bank president argues for ‘pause’ during balance sheet reduction A senior Federal Reserve policymaker has batted aside investor concerns that US officials made an error in lifting interest rates against a backdrop of weak inflation, arguing the central bank should forge ahead with… Continue reading Fed Official Advocates A Pause In Rate Hikes During Balance Sheet Reduction
The Wall Street Journal – In the New Bond Market, Bigger Is Better Giant bond firms increasingly are taking on a price-setting role in global debt markets, elbowing aside big banks facing tighter postcrisis regulation and generating concerns about the toll paid by smaller investors. The bond funds, which traditionally turned to banks for prices,… Continue reading Big Banks Leaving Vacuum In Bond Market
Bloomberg – Long Bond Fever U.S. Treasury Secretary Steven Mnuchin said this week he’ll consider issuing ultra-long bonds provided there’s sufficient demand for an ongoing program, not just a one-off sale. The U.K. Debt Management Office says it’s open to investor persuasion on issuing bonds with maturities beyond 2068. One of these countries needs… Continue reading More On The 100-Year Bond
Bloomberg – Investors Are Now Piling Into the Emerging Market Equivalent of the FANGs Investors weary of the biggest U.S. technology stocks after their unprecedented rally and recent bout of volatility are eyeing cheaper alternatives in emerging markets. Just like their U.S. counterparts, developing-nation tech giants including Samsung Electronics Co. and Tencent Holdings Ltd. have surged… Continue reading Finally! An Investment Idea That Does Not Include FAANG
Bloomberg – Yellen’s Future at Fed Resisted by Trump Aides Wanting New Blood People familiar with Trump’s sentiment suggest that the next chair — if not Yellen — is likely to have several qualities already visible in White House policies and nominations: a deregulatory bias, and a concern for credit flowing down to small businesses.… Continue reading Kevin Warsh Campaigns For Yellen’s Job
Business Insider – Ethereum flash-crashes to $13 before bouncing back to $296 The red-hot cryptocurrency Ethereum flash-crashed on Wednesday afternoon but has recouped all its losses. The cryptocurrency tumbled from about $296 to a low of $13 in a matter of minutes. The entire decline cannot be seen on the chart, as it shows the… Continue reading Cryptocurrency Mania
The Wall Street Journal – Greg Ip: The Economy Needs Amazons, but It Mostly Has GEs Amazon is now profitable, yet cash retention remains secondary to retaining customers. Asked by an analyst in April whether Alexa, a voice-activated assistant, was boosting sales, the company’s finance chief, Brian Olsavsky responded: “The monetization, as you might call… Continue reading The Old Economy vs. The New Economy
Handout, mp3 replay and webcast replay for our conference call titled Understanding The Yield Curve And How It Drives Growth on June 22, 2017. A transcript of the Q&A from this conference call can be found here. The handout can be found here (starts with the second post). Mp3 replay can be heard below: Your browser does not… Continue reading Understanding The Yield Curve And How It Drives Growth
Research by Steven Zeng at Deutsche Bank that argues the yield curve needs to be adjusted for the current low rate environment. As Zeng says: We believe today’s interest rate environment severely limits the effectiveness of the existing model. To give some context, plugging in a 1.00% 10yr yield and a flat 3m10y curve,… Continue reading Understanding The Yield Curve