Charts of the Week Topics Covered This Week Include: The Stock Bond Relationship Mutual Fund Flows An Updated Look At The Myth Of Cash On The Sidelines An Updated Look At The Myth Of Cash On The Sidelines – 2 Nothing Has Changed In Employment! Employment In Pictures Employment In Pictures -2 Treasury Yields Rise,… Continue reading Charts of the Week
<Clock on chart for larger image> The Financial Times – QE worries drive Treasury rates up The US Treasury will have to pay a positive real interest rate on new 10-year borrowing for the first time in 18 months as investors get cold feet about a possible slowing of the Federal Reserve’s bond buying programme.… Continue reading Treasury Yields Rise, 10-Year TIPS Fall
Comment Most market watchers still subscribe to the belief that corporations hold record amounts of cash on their balance sheets just waiting to unleash into the economy. In March 2012 we pointed out how the Federal Reserve revised away nearly half a trillion dollars from corporate balances sheets (red line, all charts below). One of… Continue reading An Updated Look At The Myth Of Cash On The Sidelines
The Wall Street Journal – Global Tumult Grips Markets The tectonic plates of the world economy are shifting, moving the yield on the 10-year Treasury to the highest level in more than a year and shaking financial markets from Tokyo to Mumbai and Johannesburg to São Paulo. For the past few years, the global economy,… Continue reading The New World Economy
Bloomberg.com – Can Bernanke Avoid a Meltdown in the Bond Market? The past few weeks have given us a hint of what might happen when the Federal Reserve starts to reverse its super-easy monetary policy. Expect turbulence in financial markets, especially for assets that have moved far above normal or reasonable valuations. A return to… Continue reading Can Bernanke Save The Bond Market?
The Big Picture – Is the Cyclical Bull Over Or Is This Just a Pullback? Since the peak in May, global markets have been bouncing about. There have been various explanations given for these crosscurrents, but few ring true to this seasoned trader. Perhaps we can derive a better explanation as to what this might… Continue reading More On Global Markets…Is The Bull Market Over?
The Financial Times – The overstated inflation danger A high rate may be a risk in the very long run – but right now the risk is that it may be too low Almost three years ago, at the World Economic Forum’s “Summer Davos”, in Tianjin, I heard a Republican politician say that the US… Continue reading Inflation
The New York Times – In a Shift, Rates Are Rising It has been a reliable fact of life for investors, corporations and ordinary borrowers: interest rates, for the most part, keep heading lower. But all of that may be about to change. For prospective homeowners, the cost of mortgages has been going up in… Continue reading Rising Rates
MarketWatch.com – Wall Street can’t quit Fed addiction Commentary: Cheap money has fueled the recent rally, profits Wall Street is addicted to cheap money. Since the Fed, under Ben Bernanke, announced its $85-billion-a-month bond-buying program in September 2012, the stock market has been on an absolute tear. The Dow Jones Industrial Average DJIA -0.76% ,… Continue reading Addicted To Easy Money
The Wall Street Journal – Japan’s Worrying Probability Tree Ultimately–though it might take another decade to get there–the burden of ever fewer productive workers supporting ever more old people at a high standard of living becomes too much. Workers rebel and pension provisions are cut back. Since many of these inter-generational obligations are in the… Continue reading Japan
The Financial Times – S&P warns top US banks are still ‘too big to fail’ The largest US banks are still “too big to fail” and holding company creditors could lose out in the event of a collapse, according to a change in ratings guidance from Standard & Poor’s on Tuesday. The question of whether… Continue reading Banks Are Still Too Big To Fail
<Click on chart for larger image> Bloomberg Businessweek – Behind the Car Sales Boom: Piles of Cash on the Hood The economy may be having a car sales party, but automakers are spiking the punch. U.S. auto incentives in May jumped to 8 percent of market value—or almost $2,500 per vehicle—marking the highest level in… Continue reading Auto Sales