For Bernanke and QE 3 (the MBS strand) there was only good news in Q1 ’13 GDP. Residential housing “investment”, i.e., housing-related construction, was revised upward to a 14% growth rate from 12.1%. That meant the frothy real estate “markets” provided 0.34% of the 1.8% growth rate in Q1 GDP. Unfortunately, that was less than the 0.41% provided in Q4, [...]
The FOMC picked up another dissenter in its St. Louis branch, but the real consequences of trying to talk down bubbling, frothy markets are beginning to show up. Like the JGB market, UST volatility is dramatically higher (Bank of America Merrill Lynch’s MOVE index jumped from a record low/complacent 48.87 in May to 84.75 in early June). Perhaps the most [...]
I had a conversation with Joe Calhoun yesterday regarding an uptick in construction activity in Miami and some other places in the Southeast. He mentioned that some of his contacts had in the past few months begun to see a huge increase in the number of bidsheets for construction work that was ready to break ground – some of it [...]
In trying to sound modest and even magnanimous, Ben Bernanke in November 2010 penned an oped in the Washington Post justifying the recently implemented QE 2. Toward the end of his piece he acknowledged that the Federal Reserve and monetary policy could not work miracles. But given that obsequious qualification, the Fed Chairman was very clear on what he expected: [...]
When even Eric Rosengren, Boston Fed President, is thinking about “tapering” you know something is a tad askew in FOMC-land. Again and again, these doves (including Charles Evans at the head of the Chicago Fed branch) had advocated the heaviest of hands of monetary intervention. QE 3 & 4 could not have been big enough for this cabal. Now in [...]
The talk of tapering QE has been incessant the past few weeks, no doubt playing a huge role in the volatility of the US Treasury market (as if there is some competition with the JGB market). Yesterday’s dramatic selloff has been absurdly linked to consumer confidence numbers and “improving” economic fundamentals, as if bond rates suddenly care about improving consumer [...]
I noted last week that housing data has become increasingly noisy, largely due to the sharp rise in activity last summer. With that in mind, recent data has been coming in largely consistent with a slowdown or pause in housing and housing-related activity. If this new data is correct (again, it is hard to tell if it is real or [...]
Late Friday the Treasury Department released its semi-annual report on global exchange rates or as I like to call it, the semi-annual report on why all other countries on planet earth should let their currencies rise against the UD Dollar. Or maybe the semi-annual report on how easy monetary policy by other countries' central banks is bad but it isn't [...]
I wrote last week that investing today requires a huge dose of humility and so with that in mind, I have to admit that I've been.....well, to be kind to my ego, I'll just say I've been too cautious about the market recently. Anyone who bothers to read these weekly missives knows that I turned more cautious about the economy [...]
John Templeton, one of the greatest investors of all time, said that investors should buy at the point of maximum pessimism. Nothing illustrates the adage of something being easy to say and hard to do more than that statement. It is of course at the point of maximum pessimism that our natural psychological barrier to executing that strategy is greatest. [...]
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