The Financial Times – Yellen kept markets calm but 2018 may be rockier Fed officials, economists and traders disagree on the outlook for rates next year Next year is also likely to be an inflection point in global monetary policy. Central banks have swelled their collective balance sheets by about $15tn over the past decade, in… Continue reading Will The Fed Go Too Far And Invert The Curve?
Summary The yield curve is following historical norms by flattening in response to improving economic data. We estimate the U.S. 2-year 10-year spread should reside near 29.4 bps. Languishing inflation remains a significant problem for the global economy, keeping a lid on longer-term sovereign yields. Comment We can estimate the level of the U.S. 2-year… Continue reading U.S. Treasury Yield Curve Still Following the Playbook
Wall Street Journal – Bank Stocks Can Fight the Fed, for Now Investors who are worried about higher interest rates hurting banks are looking in the wrong place Banks make money by taking short-term deposits and extending longer-term loans, the reasoning goes. So when short-term interest rates are rising and long-term rates aren’t, it ought to… Continue reading Can Bank Stocks Fight the Fed?
Bloomberg Business – Central Banks Want the World to Carry On While They Quietly Tighten Led by interest-rate increases by the Federal Reserve and the People’s Bank of China, central banks around the world shifted toward a tighter monetary stance this week. Yet the moves were either so well-telegraphed, or so tiny, and the language about… Continue reading Rate Hikes And Markets
Bloomberg Business – Next Year Could Be the Last Time Stock Pickers Rule Investing The assets of U.S. indexers may surpass active managers in 2019, signaling the end of an era for stock pickers. Stock pickers, who once beat markets with their gut instinct and appetite for risk, will be relegated to second place in the… Continue reading Active vs Passive Funds
Bloomberg Business – Volatility Back With a Vengeance for Emerging-Market Stocks “The big gains in EM assets seen over the past year are unlikely to be repeated in 2018,” analysts at Capital Economics Ltd. wrotde in a note Thursday. “With earnings growth set to slow and risk appetite likely to wane, EM equities will do little… Continue reading Emerging Market Stocks
Bloomberg Business – JPMorgan Sees S&P 500 Hitting 3,000, Warns on Tech Stocks The strategist sees large-cap tech, the group that’s done the heavy lifting in a 2017 rally that’s added 18 percent to the S&P 500, turning into a laggard next year. Tech stocks in the index have surged 37 percent so far this year,… Continue reading JP Morgan Is Bullish On Stocks
Bloomberg View – Daniel Moss: Fault Lines Are Growing at the Fed The outlook for inflation could deepen divisions among policy makers. That said, inflation has defied projections pretty consistently. Yellen famously called its relative absence a “mystery,” a term Powell quietly used a little earlier. Some doves at the Fed have sounded increasingly concerned this… Continue reading Division At the Fed
Bloomberg View – Lena Komileva: Stocks and Bonds Are Sending the Correct Signals Although the economy is not about to fall into recession, it is close to the peak for the current growth cycle. Central banks are looking to extend the business cycle by removing policy accommodation in a gradual and transparent manner, minimizing financial volatility.… Continue reading Are We Nearing the End of the Growth Cycle?
Bloomberg View – Michael Bloomberg: This Tax Bill Is a Trillion-Dollar Blunder Congress and President Trump put politics ahead of smart reform. Corporations are sitting on a record amount of cash reserves: nearly $2.3 trillion. That figure has been climbing steadily since the recession ended in 2009, and it’s now double what it was in 2001. The reason… Continue reading Michael Bloomberg Does Not Like The Tax Bill
The Wall Street Journal – Initial Coin Offerings Surge Past $4 Billion—and Regulators Are Worried Money raised from initial coin offerings has surged past $4 billion for the first time, even as regulators world-wide have escalated warnings about the new form of corporate funding. An initial coin offering, or ICO, is a method of corporate fundraising… Continue reading Regulators Begin To Worry About The Size of the ICO Market
Bloomberg Business – MiFID Bond-Price Rules a Gift for Traders as Just 1% Covered The industry has also challenged the definition of liquidity in MiFID II, and ESMA’s publication of transitional transparency calculations for determining which securities fall under the disclosure rules hasn’t softened this opposition. The transitional findings apply until May 15 as ESMA computes… Continue reading More On The MiFiD Rules