Top News Headlines Paris terrorists dispatched; hostage crisis in Mali ends with 27 dead. Stocks have a big week, up over 3%. Fed minutes are dovishly hawk-like. United Health says losing millions on Obamacare, may pull out of exchanges next year. Israeli spy Jonathan Pollard released from US prison. Square prices IPO at half off last private funding round giving [...]
Following up from yesterday’s nod toward monetary policy irrationality, the “relevant” markets today continue to profess their concurrence with it all categorized in that manner. I’m not just critiquing the readings of economists at the Fed and their conditional responses, I’m stating unequivocally that the entire affair, and all in it, has been reduced to pure farce. That starts squarely [...]
By all count of orthodox economics, the harmonization of “inflation” rates across the US, Europe, and China should not happen. While the former two might be more forgiving given close economic ties, the assumed vast differences with the Chinese economic framework (particularly PBOC operations) should prevent what can only be observed as a highly contagious global environment. With China’s CPI [...]
With the state of the “dollar” being what it is, including the devastating darkening afforded by negative swap spreads everywhere, it isn’t exactly surprising to find that primary dealers continue to hoard UST collateral. By September, dealers were reporting a net positive balance of all coupon holdings of nearly $60 billion. With everyone in the world predicting higher interest rates, [...]
It all started with Japan so it makes sense to start there. As anyone who wishes might know, the Bank of Japan has pioneered the QE business to the point beyond extrapolation. They were first to do it, first to “have” to expand it, and first to go back to it over and over and over. BoJ is on at [...]
The US Central Bank has a dual mandate to promote maximum employment and stable prices. Originally, this meant the Central Bank would help to smooth the business cycles that tend to occur in an economy. When an output gap emerged, they would lower the interest rate. This would not only lower the debt burden on the economy but would lower the [...]
There probably should be a cottage industry trying to figure out what Albert Einstein actually said or wrote quite against what is typically attributed to him (or Abraham Lincoln, Winston Churchill and many others). One such nugget purported from his genius was that compound interest is the most powerful force in the universe. That is how the sentiment seems to [...]
An interesting side benefit of the Fed having pegged interest rates effectively to zero and having accomplished so little with QE, is that we get to see markets' self-correcting tendency. Consider what has happened over the last year or so since the Fed made it clear their goal was to start normalizing policy, i.e. raise interest rates. As I've pointed [...]
The Federal Reserve left interest rates at 0 after their 2 day policy meeting this week. Less concerning, they lowered the forecast for future rates. We have red and green street lights. Why? Because society finds it beneficial that people using our streets aren't speeding through an intersection from both directions at the same time. We have laws against stealing. Why? [...]
Well, thank goodness that's over. The Fed met last week and decided to maintain the Fed funds rate in the 0 - 0.25% range in which it has been confined since the great financial crisis of 2008. Of course, the fed funds market is essentially kaput having been usurped by the Fed itself during the crisis so the rate charged [...]
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