<Click on chart for larger image> Bloomberg.com – The Fed Can’t Lower Your Grocery Bill Ben Domenech of the Federalist and James Pethokoukis of the American Enterprise Institute are arguing about inflation and what it means. Domenech points to rising food prices as evidence of bad government policy; Pethokoukis blames structural factors. This is a… Continue reading Core Inflation vs. Headline Inflation
The Wall Street Journal – Calpers Pulls Back From Hedge Funds Public pensions from California to Ohio are backing away from hedge funds because of concerns about high fees and lackluster returns. Those having second thoughts include officials at the largest public pension fund in the U.S., the California Public Employees’ Retirement System, or Calpers.… Continue reading Hedge Funds Under Fire
The Wall Street Journal – Saving Taxpayers From Money Funds The seas part and the SEC removes an implied federal guarantee. Since 2008 politicians have put taxpayers on the hook for guaranteeing losses in ever more of the financial system. So behold Wednesday’s little miracle, in which the Securities and Exchange Commission began shrinking the… Continue reading Breaking The Buck
Bloomberg.com – Druckenmiller’s Right: Tune Out the Fed Last week, hedge-fund manager Stan Druckenmiller said that the Federal Reserve’s current policy “seems not only unnecessary, but fraught with unappreciated risk.” My takeaway from his warning, informed in part by what’s happened in the U.K. this year, is that investors should ignore the prognostications of policy… Continue reading Fed Actions Speak Louder Than Words
The Financial Times – The big test: what happens when rates rise Britain is set to be the testbed for the next big monetary policy experiment. The real-life research – expected by the end of the year – will establish what happens when interest rates rise. Investors are watching closely, as it has become accepted… Continue reading Examining A Rising Rate Environment
The Financial Times – Long-term returns boosted by illiquidity And then there were four. Followers of the dialogue between financial academics and investors will know there is agreement on three factors that cause stocks to outperform the market in the long term. They are size (small stocks beat large one in the long run); value… Continue reading Liquidity As A Factor In Stock Returns
Reuters – Economists worry rising wages may catch the Fed off guard Wages may be growing at a faster clip than envisaged by U.S. policymakers, with a recent raft of business surveys showing an increase in the number of companies raising compensation. One closely watched wage growth measure, a gauge produced by the National Federation… Continue reading Wage Growth
MarketWatch – IMF forecasts lower interest rates than Fed does The Federal Reserve will be able to hike rates gradually given slack in the labor market and continued low inflation, according to a report from the staff of the International Monetary Fund released Wednesday. The IMF staff and the Fed agree that the first rate… Continue reading The IMF Offers Its Own Rate Predictions
The Wall Street Journal – John Taylor: John Taylor’s Reply to Alan Blinder In a Wall Street Journal op-ed on July 18 called “An Unnecessary Fix for the Fed,” economist Alan Blinder takes aim at legislation now under consideration in the House of Representatives to amend the Federal Reserve Act. Mr. Blinder focuses on what… Continue reading Rules-Based Monetary Policy
The Wall Street Journal – The Lingering, Hidden Costs of the Bank Bailout The rescue of incumbent investors in the government bailout of the largest U.S. banks in the autumn of 2008 has been widely viewed as unfair, as indeed it was in applying different rules to different players. The bailout through the Troubled Asset… Continue reading The Hidden Cost Of Bailouts
Charts of the Week Topics Covered This Week Include: Earnings Update Earnings Update – 2 Revenue Update Why Markets Do Not Respond To Geopolitical Events Yellen’s Noise Grows A Little Louder Making The Case Against A Stock Market Correction Will The Treasury Issue Bonds Longer Than 30 Years Is The Eurozone Growth Falling Back? Comparing… Continue reading Charts of the Week