Bloomberg – How This Economic Recovery Ends Every boom in the U.S. economy is different, but over the past several decades, each has ended the same way. First you get full employment. Then you get a spike in the price of oil. And then there’s a recession. The U.S. hit full employment in August 2015.… Continue reading A History Lesson On Low Unemployment, Spiking Crude Oil & Recessions
Bloomberg – Tim Culpan: Getting High On Cryptocurrencies There are now four times as many cryptocurrencies in circulation as fiat currencies. The CoinMarketCap website lists 753 cryptocurrencies, all the way from Bitcoin and Ethereum down to StrongHands and Paccoin (current value: $0.00000014). Morgan Stanley posited last week that government acceptance will be key to Bitcoin’s continued rise,… Continue reading Over 750 Cryptocurrencies And Counting
The Fed’s Projections By Meeting: The chart below shows the history of the FOMC’s targeted fed funds projections by meeting date. The Fed’s Projections By Year: By contrast, the chart below shows the FOMC’s targeted fed funds projections across all meetings by the year projected. FOMC Word Count: After each FOMC… Continue reading The FOMC Meeting
Central Bank Balance Sheets: As the chart below shows, the five largest central bank balance sheets (ex: China) hold over $15 trillion in assets in dollar terms. This is up from $5 trillion at the onset of the global financial crisis. Central Banks Own A Third Of Global Bond Markets: The orange line… Continue reading Central Bank Balance Sheets
Gold-Related ETFs: Gold-related ETFs have seen steady inflows in June ahead of today’s FOMC meeting and a host of other geopolitical events. Net 5-day flows have been positive throughout June and totaled $389 million over the past five days. Physical Gold vs. Miners: Flows in gold-related ETFs continue to favor less volatile physical… Continue reading Markets
Fed Funds Futures Curve: The market thinks the Fed is going to hike rates. In the post-Great Recession period, it always thinks this. Flow of Funds: The total value of credit in the U.S. is now at $66.42 trillion. Private credit market debt makes up $38.15 trillion of this total while government debt… Continue reading Miscellaneous Charts
Political Risk: The following chart shows the Economist’s Intelligence Unit Political Risk scores. Think of these as a “credit ratings” for political risk. Presidential Approval Rating: Trump continues to set records for the lowest popularity of any President. However, both Clinton (who won re-election) and Ford (who lost) were in similar ranges during… Continue reading Politics
OPEN Net Positions – Risks are Deeply Connected, but Confusion Reigns Comment In our latest webinar, Ben Breitholtz discusses risk in the financial markets. The correlation between U.S. treasuries and equities returns may not be high, but their volatility have certainly become joined at the hip. Past periods of high correlation have coincided with major… Continue reading Risks are Deeply Connected, but Confusion Reigns
Comment The top panel of the chart above shows the market’s track record in predicting the eventual outcome of 92 FOMC meetings during the Bernanke/Yellen era. Once a meeting is fewer than 10 days away, the market has been correct in predicting the upcoming FOMC meeting either 99% or 100% of the time.… Continue reading All Eyes On The Federal Reserve
Bloomberg – Fed Heads Into Unknown as Boringly as Possible The Fed wants the start of QE-unwind to be broadly anticipated and well understood by market participants. Based on recent guidance, policy makers are eager to initiate this process before year-end, meaning that the fed funds rate will be in the vicinity of 1.5% at the… Continue reading Federal Reserve Finally Sending the Funds Rate Above the Reversal Rate?
Reuters – OPEC’s simple problem. Despite Saudi cuts, it’s shipping more oil: Russell OPEC has finally acknowledged what the oil market already knows, namely that rebalancing is taking longer than expected. Perhaps this is because OPEC is actually shipping more crude. The Organization of the Petroleum Exporting Countries prefers to talk about output when assessing the… Continue reading OPEC Swimming Against the Tide