The Wall Street Journal – A Correction Now Might Not Be So Bad, Some Investors Say Investors don’t typically root for stocks to fall, but some now think a period of declines might be healthy. Many investors and analysts fear a postelection rally that has driven the S&P 500 up roughly 10% has cleaved… Continue reading Corrections & Bear Markets, By The Numbers
Bloomberg View – Ben Carlson: History Is No Help When Handicapping the Bond Market The problem with the bull market in bonds since 1981 is that it has distorted investor expectations for returns. Before Paul Volker and the bone crushing inflation of the 1970s caused bond yields to hit double-digit levels, bonds were a very low-yielding… Continue reading Fixed Income Returns In Different Interest Rate Environments
The Bismarck Tribune – Edward Lotterman: Autonomy of Federal Reserve essential If we politicize the financial system, confidence in the U.S. dollar will erode rapidly. We are far better off with the dollar as a respected and desired currency than as one viewed askance because we chose to flout wise legislation and sacrifice 80 years… Continue reading Federal Reserve Independence
Bloomberg.com – A German Bank Accidentally Transferred $5.4 Billion to Four Other Banks Germany’s state-owned KfW repeats single payment several times Glitch was discovered early, money has been returned Germany’s state-owned development bank KfW, which gained publicity for erroneously transferring hundreds of millions of euros to Lehman Brothers Holdings Inc. the day the U.S. firm… Continue reading A $5.4 Billion Computer Error
The Financial Times – Global reflation trade is in need of fresh impetus Slide in inflation expectations signals investors need a further lift from economic data So the world has now reached this juncture; reflation seems to be on course, but the fall in inflation expectations shows that there is now some anxiety to see more… Continue reading The Inflation vs Global Risk Tug-of-War
Bloomberg – `Noisy GDP’ to Undergo Another Weak First Quarter The Federal Reserve delivered an interest-rate hike earlier this month at a time when tracking estimates for first-quarter GDP were slipping into the mid-1% range. At the press conference following the FOMC meeting, Fed Chair Janet Yellen noted that “GDP is a pretty noisy indicator,” saying… Continue reading Federal Reserve and Markets Choosing to Ignore Q1 GDP Weakness
Bloomberg – Markets Are Witnessing a Yellen Fed at Its Humblest But while they may be focused now on the long-run, be wary that they might lurch back to the short-run. Market participants are losing faith in the Trump trade. A sharp downturn in equities this spring could delay the next hike just as… Continue reading Can the Federal Reserve Keep Their Eyes Off Markets And On The Long Term?
Bloomberg Business – Carstens Says Peso Undervalued by as Much as 10% on U.S. Concern Inflation progressing as it should given shocks Mexico faces Mexico’s peso is undervalued by as much as 10 percent even if the “unknown” of bilateral relations with the U.S. is taken into account, central bank Governor Agustin Carstens said. The currency… Continue reading Mexican Peso Fighting to Erase Post-Trump Election Swoon
The Wall Street Journal – Why China’s Latest Cash Crunch Is Scarier This Time The country’s financial system has become more complex since 2013 At first glance, things don’t look as desperate now. In June 2013, the cost of borrowing money overnight touched more than 20%, pressuring banks’ funding costs. This week the rate surged, but… Continue reading China’s Economy More Complex and Reliant on Borrowing
Reuters – Fed research signals inflation overshoot possible, but is it tolerable? In the current Fed debate, acceptance of 3.0 percent inflation is unlikely. The 2.0 percent goal is a global norm for central banks, a recognition that a modest but steady rise in prices is actually healthy for the economy overall. Prices that rise too… Continue reading Overshooting Inflation
Barron’s – Are We in a Stock Market Bubble? Recent talk about the stock market being in a bubble appears to be little more than just that—talk. At least that’s the conclusion I draw from a just-released study into the predictability of stock-market bubbles. In contrast to earlier studies, which consistently found that bubbles were impossible… Continue reading Don’t Call It A Bubble