Real Time Economics (WSJ Blog) – Fed’s Williams: Best to Raise Rates Before Ending Bond Reinvestment Federal Reserve Bank of San Francisco President John Williams said Wednesday he’s inclined to delay any action that would allow the central bank’s balance sheet to get smaller until after the Fed has lifted interest rates for the first… Continue reading The Exit Strategy
<Click on chart for larger image> MoneyBeat (WSJ Blog) – Margin Debt Takes a Breather Risk taking in the stock market is showing signs of cooling. The latest example comes from the New York Stock Exchange’s April figures on margin debt, or the amount that investors borrowed against their brokerage accounts. NYSE reported margin debt… Continue reading Margin Debt
CNN Money – Get ready for lousy stock returns The party on Wall Street may not be over yet, but some of the guests are starting to sober up. Stock prices have reached levels that experts believe could set the stage for lackluster returns over the next few years. Say hello to the era of… Continue reading The Relationship Between P/E & Stock Returns
Project Syndicate – Mohamed El-Erian: Markets’ Federal Reserve Love Story For many years market participants have been richly rewarded for falling in love – quickly and decisively – with the new policy measures adopted by America’s Federal Reserve. Indeed, the romance has overwhelmingly followed the Disney script. Yes, there may have been some bumps along… Continue reading The Codependency Between The Fed & The Markets
<Click on chart for larger image> Bloomberg.com – Junk-Rated? Horribly Illiquid? Perfect, I’ll Buy Them All It’s getting harder to trade bonds. Hours, sometimes days can go by before investors can complete a transaction. That’s not dissuading them from piling into the most-illiquid debt out there. Junk-bond investors are earning practically nothing extra to own… Continue reading Trading Illiquid Securities
The Wall Street Journal – The Fed’s Blueprint for Financial Control Much of the financial world hangs on Janet Yellen’s every word, looking for policy portents in language that is crafted to be circumspect about the central bank’s plans. A more useful place to look for guidance on regulation of the financial system is Daniel… Continue reading Financial Regulation
The Financial Times – Hard sell: why fund managers underperform Effects of poor selling decisions outweigh good buying ideas Here is the good news. On the whole, fund managers who are good at working out which stocks to buy, and when, are not difficult to find. The bad news is that the great majority of… Continue reading Looking For Reasons For Fund Underperformance
Philosophical Economics – Profit Margins: Accounting for the Impact of a Changing Financial Share When a U.S. corporation earns profit from foreign operations, “CPATAX/GDP” counts the profit in the numerator, but doesn’t count the costs of the profit–the wages and salaries of the employees of the foreign operations–in the denominator. All else equal, the omission… Continue reading Corporate Profits
Charts of the Week Topics Covered This Week Include: The Bond Rally In Perspective Volatility More On Bond Bearishness Earnings Are Not Good Revenue Is Poor Company Guidance Updated Philly Fed Forecasts Goodbye Fed Funds Rate Russian Holdings Of Treasuries Declines Again Russian Holdings Of Treasuries Declines Again – 2 FHA Insurance Cost To Remain… Continue reading Charts of the Week
Comment Jim was on CNBC yesterday discussing central banks and the bond market. To view the interview, click on the image above. To view any of our recent interviews click here. In the interview we sat at a table to spoof Bernanke’s $250,000 dinners where he supposedly reveals secrets about the Federal Reserve. Of course… Continue reading Discussing The Bond Market
<Click on chart for larger image> Inman – Government’s moves to ease mortgage credit are mostly for show FHA Commissioner Carol Galante announced a “Blueprint for Access” designed to lower the costs of obtaining an FHA mortgage for underserved borrowers. HUD Secretary Shaun Donovan called Galante’s plan, which would extend reductions in mortgage insurance fees… Continue reading FHA Insurance Cost To Remain Low To Encourage Borrowers