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What Is The Difference Between Inflation Expectations And Falling Stock Prices?

October 17, 2014

Comment Bullard’s comments on QE were not the only interesting topic he expounded on yesterday: This is a serious macroeconomic development. It’s primarily coming out of Europe. It’s just that Europe was expected to have a good year and they’re not. And so growth prospects there are looking bleaker than they were. And the disinflation… Continue reading What Is The Difference Between Inflation Expectations And Falling Stock Prices?

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The Relationship Between Interest Rates & Corporate Investment

October 17, 2014

The Economist – Tight, loose, irrelevant Interest rates do not seem to affect investment as economists assume Establishing what drives business investment is difficult, not least because it expands and contracts far more dramatically than the economy as a whole. These shifts were particularly manic in the late 1950s (both up and down), mid-1960s (up),… Continue reading The Relationship Between Interest Rates & Corporate Investment

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Are They Buying Or Selling?

October 17, 2014

The New York Times – Fears That Pimco and Other Big Firms Could Be Unable to Unload Risky Bonds When it comes to high-risk bonds, the asset management giant Pimco has pretty much cornered the global market. Be it bonds issued by the automotive financier Ally Financial or the student loan financier SLM in the… Continue reading Are They Buying Or Selling?

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What Is Liquidity?

October 17, 2014

The Financial Times – Gillian Tett: Markets are parched for liquidity despite a flood of cash This week’s price gyrations show that the degree to which assets can be traded matters hugely What is worrying is liquidity appears to have decreased because unorthodox monetary policy experiments have collided with financial reforms and technological upheaval in… Continue reading What Is Liquidity?

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More On Crude Oil’s Decline

October 17, 2014

The Economist – Both symptom and balm The oil price is tumbling. Is that good or bad news for the world economy? With demand weak, much of the extra output has gone into rebuilding oil stocks in rich countries. But that cannot go on indefinitely. As the hoarding slows, prices are likely to weaken again—unless… Continue reading More On Crude Oil’s Decline

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Corporate Debt

October 17, 2014

The Wall Street Journal – Corporate-Debt Market Slows to a Crawl Banks’ Reduction of Bond Inventories Is Fueling Lack of Liquidity Corporate-bond investors have struggled this week to find trading partners for some large orders, causing unusual price drops and raising concerns that trading could freeze in future market turmoil. “Buyers just disappeared” early Thursday… Continue reading Corporate Debt

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China’s Debt Problem

October 17, 2014

The Economist – The great hole of China Its debt will not drag down the world economy, but it risks zombifying the country’s financial system OF THE many things that are worrying investors around the world, from tumbling oil prices to the spectre of recession and deflation in Europe, one of the most important, and… Continue reading China’s Debt Problem

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Deflation Fears

October 17, 2014

<Click on chart for larger image> The Telegraph (UK) – Ambrose Evans-Prtichard: World braces as deflation tremors hit Eurozone bond markets ‘The forces of monetary deflation are gathering. Global liquidity is declining and central banks are not doing enough, either in the West or the East to offset the decline Eurozone fears have returned with… Continue reading Deflation Fears

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What Are Claims Measuring?

October 17, 2014

<Click on chart for larger image> Comment As the chart above shows, yesterday’s initial claims of 264,000 was the lowest level since April 20, 2000. The April 2000 reading was the lowest since 1973. Translated another way, as the next chart shows, initial claims as a percentage of the workforce totaled just 0.17%, by far… Continue reading What Are Claims Measuring?

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The Battle For House Seats

October 17, 2014

The Economist – If the Republicans win the Senate… Two scenarios for the next two years Many in Congress would like to draft a new authorisation for the use of force against Islamic State. The current authorisation dates back to 2001, is narrowly tied to the September 11th attacks and gives the president sweeping powers.… Continue reading The Battle For House Seats

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Cartoons

October 17, 2014

Newsclips

Bond Market Flash Crash

October 16, 2014

<Click on graphic for larger image> CNBC – Abnormal bond market move signals bears capitulating A wild and historic move in the Treasury market Wednesday stunned traders and signaled capitulation by some investors who have been clinging to bearish positions. The dramatic buying and big swing in rates coincided with a swift downdraft in stocks… Continue reading Bond Market Flash Crash