Barron’s – Why Ben Will Remain Your Friend Kenneth Leech, co-chief investment officer of Western Asset Management, sees opportunities in several sectors, including sovereign debt issued by Mexico and Brazil, and corporate and high-yield bonds in the U.S. Q: What keeps you up at night? A: There are two major risks, and they are opposite… Continue reading Q&A With Ken Leech
The Wall Street Journal – Spencer Jakab: Tame Inflation Also Has Some Drawbacks Since the current bull market began in March 2009, inflation has grown at a compound annual rate of just 2.14%—a full point-and-a-half below its average of the past 65 years. That would be fine if underlying economic growth was strong. It hasn’t… Continue reading Inflation
<Click on chart for larger image> The Financial Times – Chinese economy slows to 7.5% growth China slowed to 7.5 per cent growth in the second quarter, putting the economy on track for its weakest year since the late 1990s as the country’s new leaders focus more on deep reforms than short-term stimulus. Weighed down… Continue reading China
The Wall Street Journal – Bank Makes Case for Higher Short-Term Rates With banks’ second-quarter earnings season getting into full gear this week, investors will focus on the impact of the jump in long-term interest rates caused by the Federal Reserve’s potential pullback on economic stimulus. Banks have been saying for several quarters they need… Continue reading Rising Rates
The Atlantic – Don’t Invest in Hedge Funds As you can see in the chart to the right from The Economist, hedge funds have cumulatively underperformed a simple 60-40 stock-bond index going back to 2003 — and underperformed it badly. Hedge funds have returned just 17 percent after fees the last decade; a stock-equity index… Continue reading More On Hedge Funds
Real-Times Economics – Number of the Week: Potential Perfect Storm of Debt Ceiling and Fed $173.49 Billion: About how much headroom the Treasury currently has under the debt ceiling. The U.S. will once again run into is debt limit this fall, and the smart money isn’t on whether there will be another congressional showdown, but… Continue reading The Return Of The Debt Ceiling
Barron’s – David Kotok: Why the Fed Wants Higher Prices It’s trying to exploit the power of positive wealth effects. HISTORY SUGGESTS THAT the Fed is loath to do so publicly. It does not want to be guaranteeing stock-price levels or profits for traders, just as it does not want to be assuring households of… Continue reading The Wealth Effect
Barron’s – Why Milton Friedman Lies Uneasy in His Grave Economist Allan Meltzer has been criticizing the Federal Reserve for decades, and he continues with the current central-bank policies THE TROUBLE WITH “data-driven policy” is that it doesn’t have a strategy, says Meltzer, who also works at Stanford University’s Hoover Institution. The policy that most… Continue reading Excess Reserves
MoneyBeat (WSJ Blog) – Fed’s Forward Guidance Failing to Deliver The U.S. Federal Reserve’s policy of providing forward guidance was designed to bring more clarity and certainty about its monetary plans. But there’s little of either right now. On the contrary, confusion reigns over exactly what and when the Federal Open Market Committee will do… Continue reading Forward Guidance
BusinessWeek – Treasury Asks Dealers for Ways to Boost TIPS Auction Demand Dealers were also requested to comment on “specialness and fails” of the repurchase-agreement market in March and June in “on-the-run” 10-year Treasuries. The Treasury plans to meet with the firms July 25-26, before it releases guidance on the amount of bill, note and… Continue reading Collateral Shortage
The Atlantic – Don’t Invest in Hedge Funds As you can see in the chart to the right from The Economist, hedge funds have cumulatively underperformed a simple 60-40 stock-bond index going back to 2003 — and underperformed it badly. Hedge funds have returned just 17 percent after fees the last decade; a stock-equity index… Continue reading More On Hedge Funds
The Financial Times – Markets feast on ‘good news is bad news’ But “good news is bad news” may be about to change. Although interest rate increases remain far off, the Fed plans to scale back or even end its asset purchases by the end of this year, assuming the US economy is sufficiently strong.… Continue reading The Market That Wouldn’t Go Down