Bloomberg.com – Narayana Kocherlakota: The Fed Should Ease Do we face a similar danger today? Financial market data suggest not. Consider, for example, what prices of Treasury securities suggest that traders expect the average inflation rate to be over the five-year period starting five years from today: <Click on graphic for larger image> Far from… Continue reading Everyone Has An Opinion On Fed Policy
Barrons – Has Monetary Policy Become Hazardous Groupthink? Today, global developed world monetary policy settings are more extreme than in the immediate aftermath of the crisis. What were once considered “emergency” policy settings have become the norm. These policies, coupled with massive amounts of open market intervention, have all aimed to lower nominal interest rates… Continue reading Central Bank Groupthink
Bloomberg.com – The Invisible Money Makers Who Thrived During 2015’s Oil Slump Even in the closely knit energy industry they are virtually unknown. On the streets of Geneva, London and Houston they go unrecognized. Yet a handful of executives were oil-industry standouts in 2015. They thrived because of — not despite — plunging crude prices.… Continue reading Making Money On Oil’s Plunge
<Click on chart for larger image> MoneyBeat (WSJ Blog) – Here’s a Sign European QE Isn’t Working The widening of European sovereign bond spreads this week once again underscored the limits of central banks’ asset-buying firepower. Yields for 10-year sovereign bonds in peripheral eurozone nations—such as Italy, Spain and Portugal—have edged up since the start… Continue reading European QE
<Click on graphic for larger image> <Click on graphic for larger image> Bloomberg Business – Lisa Abramowicz: Cheap Bond Funds Fueled Oil Bubble U.S. bond markets more fragile. Namely, these funds enabled the borrowing binge by U.S. oil and gas companies, which are now struggling to remain solvent in the face of drastically lower oil… Continue reading Oil Company Debt
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Comment At the start of the year the Fed projected four rate hikes in 2016. Then the markets fell and the Fed backed off. Now, in the wake of recent Fed statements, the market is pricing in one rate hike this year, in December. The next chart shows the probability of a rate hike at… Continue reading Is Bond Bearishness Finally Gone?
The Wall Street Journal – WSJ Survey: Most Economists Expect Next Fed Rate Increase in June Nearly 75% surveyed expect the next Fed rate rise to come at the central bank’s June meeting Most private forecasters surveyed expect the Federal Reserve will leave short-term interest rates unchanged at its April policy meeting, and next raise… Continue reading Are Economists Paying Attention To The Fed?
Bloomberg Business – Bond Managers Beware! Index Funds Are Coming for Your Money, Too A record 27% of money in bond funds is now in index trackers Low returns favor cheap funds as active managers warn of risks If you’re a bond manager, you may think index funds are the headache of your stock-picking colleagues.… Continue reading Active Bond Managers vs Index Funds
The Washington Post – Basically all of Wall Street is betting Donald Trump will lose Billionaire mogul Donald Trump’s odds of winning the White House have plunged over the past six weeks to just 12 percent at ElectionBettingOdds.com. But to Wall Street, the prospect of a President Trump is even more remote. Maybe too remote.… Continue reading Wall Street And Trump
The Economist – Betraying the promise America’s Congress has allowed a pension-insurance scheme to become dangerously underfunded MANY workers depend on their employers for their retirement income. But, for defined-benefit schemes, this is an explicit bet that their employer will still be around several decades later: quite a gamble. So governments in Britain and America… Continue reading Underfunded Pensions
CNBC – George Gilder: The Fed ‘is a god that has failed’ Why does Wall Street keep recovering after recessions but the economy seemingly never does? The reason, as I document in my book, “The Scandal of Money: Why Wall Street Recovers but the Economy Never Does” is that Washington and the Federal Reserve together… Continue reading How The Fed Failed