Wall Street Journal – Bank of America’s Profits Caught Between the Fed and 10-Year Treasury A flatter yield curve threatens to pinch bank profits, even as the Fed’s move to end nearly a decade of near-zero rates promises to help bolster them The spread between yields on 10- and two-year government debt has fallen in… Continue reading Financials Still Looking Past Flatter Treasury Curve
FiveThirtyEight – Why Is Trump Causing Chaos In Washington But Not In The Stock Market? Markets are notoriously bad at assessing this kind of “tail risk” — events that are unlikely to occur but that matter a lot when they do. Just think of the 2008 financial crisis, when markets failed to foresee how the collapse… Continue reading Volatility – Don’t Cross the Streams!
The Financial Times – John Authers: Fed sides with reflationists as bond battle resumes US central bank sticks to view that inflation will quicken as bond market scepticism intensifies But it is perhaps more about a straight disagreement over incoming economic data, on which the Fed says it is dependent. The biggest fall in US bond… Continue reading The Fed And The Markets Disagree On Inflation
Business Insider – Janet Yellen is starting to warm to a policy the Fed once regarded as radical Federal Reserve Chair Janet Yellen had a surprising answer to the question of what she thought of a recent proposal by 22 prominent economists for the central bank to raise its 2% inflation target given the economy’s subdued… Continue reading More On The Fed’s Strategy
Bloomberg Business – The U.S. Stock Market Belongs to Bots Widening gap between quants, fundamental long-short managers That money you see sloshing around in the U.S. stock market, it belongs to the robots. At least, that’s the picture emerging from a growing divergence between quantitative funds and discretionary managers. Systematic strategies have barely budged from near-record… Continue reading Quant Funds Continue To Underperform, Get Money
Bloomberg Business – The Housing Recovery Is Leaving Out Most of America For further evidence of the uneven recovery among U.S. housing markets, how’s this: In the 10 most expensive U.S. metropolitan areas, median home values have increased by 63 percent since 2000, after adjusting for inflation. In the 10 cheapest metros, median values rose… Continue reading What Housing Recovery?
Bloomberg Business – Don’t Underestimate This U.S. Expansion: It’s Headed to a Record Economists see 60% chance growth streak will pass 10-year mark This U.S. expansion may be moving like a tortoise, but it’s on its way to win the race. Widely disdained for its relatively weak growth and pay gains, the expansion is about to… Continue reading Economists Think The U.S. Economy Will Continue To Grow
Bloomberg Gadfly – The Long-Term Price of Oil Is … What’s the right way to think about the long-term price of oil? This question consumes the industry — and markets — no matter what prices are on any given day. Back in 2000, when mega-mergers formed giants like Exxon Mobil Corp., it was typical to… Continue reading Long-Term Crude Oil Futures Fall
The Wall Street Journal – Slower Eurozone Wage Growth Is Setback for ECB Eurozone wages increased at a slower pace in the first three months of this year, despite a pickup in economic growth that has seen unemployment rates fall to eight-year lows. That slowdown in pay growth will likely reinforce the European Central Bank’s caution… Continue reading Slow Wage Growth In The Eurozone
The Wall Street Journal – China’s Monetary Policy Zigs Where U.S. Zags A day after the U.S. Federal Reserve tightened monetary policy, China’s central bank effectively loosened, in a move that suggests Chinese authorities are now more concerned about financial turmoil inside the country than money flowing out of it. The People’s Bank of China on… Continue reading China Effectively Loosens Its Monetary Policy As The U.S. Tightens
The Financial Times – Illinois is on a straight path to junk credit at the end of June US state has more than $14.5bn of past-due bills from suppliers, writes John Dizard People are talking about a looming governance crisis in Washington, but that moment has already arrived for the state of Illinois. Thanks to the… Continue reading More On The Problems In Illinois
The Financial Times – Martin Wolf: Austerity is dead. Long live austerity What is needed is honesty: the country can choose to raise spending. But, if it wants to run a sound fiscal policy, this will mean substantially higher taxes. Labour has broken the taboo on the latter. But it has dishonestly suggested that a substantial… Continue reading Long Live Austerity