Bloomberg – BlackRock, Vanguard Say Bond Market’s Got This Trade All Wrong Bond traders are too complacent and TIPS ‘incredibly cheap’ Time and again, weak economic data have made the market’s inflationistas — many of whom were beguiled by President Donald Trump’s pro-growth promises — look a little foolish. But for Vanguard and BlackRock, it’s only a… Continue reading Investors Likely Too Bearish on Inflation
Bloomberg – Treasuries Look Like Insurance for a Crash Investors who expect big losses in stocks accept smaller ones on government bonds. The real answer may be that Treasuries are an attractive investment choice when the alternative investment is at risk of even greater losses. I am reminded of some testimony given before Congress by an… Continue reading Velocity of Fund Flows Remains Anemic
Bloomberg – Investors Have Never Been More Short Volatility Futures Never mind strategists warning of a potential VIX rebound, or historical data showing the index tends to jump the most in August. The number of short positions on VIX futures has hit a fresh peak, and an exchange-traded fund that benefits when volatility falls just… Continue reading Speculators’ Record Net Short Position In VIX Futures
The Financial Times – Apple: trillion dollar baby Could Apple become the first US company with a $1tn market value? Results this week inspired claims it might, particularly if the new iPhone sells well. Given the puffed-up valuations of other tech companies, it is not the only contender; RBC has predicted Amazon could hit $1tn… Continue reading The Race To $1 Trillion Market Cap
The Financial Times – Lessons from the credit crunch The risk-weighted Basel capital adequacy regime, despite post-crisis tweaking, is fundamentally flawed. Sovereign debt enjoys excessively favourable treatment so eurozone banks stuff their balance sheets with the IOUs of seriously over-indebted governments. A parallel problem in the English speaking countries is the excessively favourable treatment of… Continue reading Learning From The Credit Crisis On Its 10th Anniversary
Journal of Economic Perspectives – The Safe Assets Shortage Conundrum In the short- and medium-term, the quantity of safe assets may increase via stronger exchange rates in the safe asset issuers, and via public debt issuance in those countries. Over time, a lasting solution to the shortage of safe assets will require a combination of finding… Continue reading The Risk of a Structural Safety Trap
Bloomberg – Bitcoin Soars to Record as Buyers Look Beyond Miners’ Split Bitcoin extended gains to a record, ignoring a split in the cryptocurrency over its future. The digital exchange rate jumped as much as 16 percent from Friday to an unprecedented $3,292.41, even after bitcoin’s division last week. The debate has revolved around… Continue reading Bitcoin Off To The Races Again
Bloomberg – World’s Top Stock Market Really Just a Handful of Top Stocks Among the world’s biggest stock markets, there haven’t been any better investments this year than Hong Kong’s Hang Seng Index. But under the surface of that 26 percent surge, gains are getting more concentrated — and that means for some shares, volatility… Continue reading Concentrated Returns Are Not Unique To FAANG
The Wall Street Journal – A Mortgage Mystery: What Happens to ARMs When Libor Goes Away? The Libor index is going away. For U.S. consumers, its demise is most likely to be felt in adjustable-rate mortgages. So-called ARMs—where the interest rate rises and falls with broader indexes—are often closely tied to Libor, or the London… Continue reading Untangling The Mortgage Market Without LIBOR
The Wall Street Journal – Investors Chase Beneficiaries of Dollar’s Decline Some investors are betting that an already weak dollar will keep weakening, a decline that is helping boost corporate profits and fueling rallies in everything from U.S. stocks to commodity prices. The dollar has been suffering through one of its worst stretches in… Continue reading Investors Taking Advantage Of The Falling Dollar
The Wall Street Journal – Hot-Stock Rally Tests the Patience of a Choosy Lot: Value Investors Value funds around the globe are on track to post their worst performance since before the financial crisis Value investing is mired in one of its worst stretches on record, prompting concerns that the investment style favored by generations… Continue reading Value Funds Continue To Struggle
The Wall Street Journal – You’re Fired! No, Wait, Please Keep Working There’s another reason that unemployment is high relative to layoffs: Many unemployed Americans have been out of work for months and are sitting in the economy’s sidelines. The number of Americas unemployed for 27 weeks or more was about 35% more last month than when the recession began… Continue reading Layoffs Remain Low