There are “portfolio effects” for individual investors, bank balance sheets and even interbank tendencies, or at least that is according to central bankers. The rather tame ECB announcement this week did highlight and clarify what Mario Draghi and his euro monetarists wish to accomplish. The new measures will support specific market segments that play a key role in the financing [...]
For all the supposed and assumed disparities between US monetary policy direction and that in Europe, credit markets in both locations seem to be far too much in lock-step agreement. That would suggest a few implications, the first of which is that the global financial system does not really consist of many closed systems with only minor connections as assumed [...]
Open Sesame is, of course, the phrase used by Ali Baba to open the 40 thieves' cave and plunder their riches in the Arabian Nights tale. It would seem an apt phrase to describe the frenzy surrounding the IPO of Alibaba, the Chinese internet commerce firm that floated shares in the US last week. Certainly early investors in Alibaba reaped [...]
Part of the tale being spun perpetually about the economy, any economy in this day and age, relies on nothing more than circularism. Because monetary policy is so captured by managing expectations, meaning that economists and policymakers will never be anything but positive about anything ever again, you end up with nonsense as a foundation for prediction. That might pass [...]
With the yen precipitating levels not seen since the very week Lehman collapsed and finally confirmed just how global the crisis was (and would remain), “markets” in Japan and everywhere have begun to “anticipate” (beg?) even more. The yen briefly touched (devalued) 107 to the US$, a remarkable run that threatens to even further upend the now-very weakened state inside [...]
I don't believe it. ... You can't predict a weak number, but August tends to be weak consistently, and it tends to get revised up consistently. I think the trend is still north of 200,000. Every other data point is pointing to stronger growth, not weaker growth. Mark Zandi, Chief Economist at Moody's after last week's employment report That, my [...]
The ECB’s experimentation with negative nominal interest rates is exactly that – an experiment whose range of conclusions spans the full spectrum of possibilities. I have absolutely no doubt at all that they have done enough regression calculations and monte carlo simulations to have estimated “central tendencies”, but at the same time I highly doubt recent developments fell within them. [...]
They say the road to hell is paved with good intentions, but that is not the only ingredient in the asphalt used to make the highway to Perdition. Typically, intent is augmented (or actually degraded) by a degree of incompetence that masquerades as complexity. The breadth of that observation is staggering in the current circumstances as Japanification has seemingly gained [...]
What should most troubling to investors of all stripes and locales is that what is going on in Europe is almost exactly the same as what is taking place in Japan. Despite nearly all outward appearances, Japan and Europe have far more in common than differences, at least where it counts. The Japanese have finally created the monster they sought, [...]
There is a growing bid for safety in almost every corner of the globe at this moment, save for a few outliers. Even the 10-year JGP sits at 50 bps today despite the spike in consumer inflation engineered by the Bank of Japan’s QQE. Of course, with BoJ buying up almost everything in sight, that may not be a relevant [...]
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