Gold is the ultimate hedge, but it is far from perfect. Unlike, say, sovereign bonds there should be no expectation for a negatively correlated price. You can buy a UST or German bund even at negative yields and at least expect the price to rise when things are at their worst. Flight to safety or flight to liquidity. You can’t [...]
In January 2018, Bill Gross was at it again. Famous for being the longtime public face of PIMCO, he’d acquired as much notoriety for being the boy who cried bear. By the way he talked and by what he predicted, you’d have to think the US Treasury had visited some horrible circumstance on a young Bill early in his life. [...]
Curiously short on star power, the Jackson Hole gathering this year has already taken an odd turn. It’s been practically subversive. Usually when the Kansas City Fed gets together for these things each and every August, the main attraction is the top central bankers in the major economies. Outside of the Bank of England’s Mark Carney, this year there’s only [...]
What if Germany’s economy falls into recession? Unlike, say, Argentina, you can’t so easily dismiss German struggles as an exclusive product of German factors. One of the most orderly and efficient systems in Europe and all the world, when Germany begins to struggle it raises immediate questions about everywhere else. This was the scenario increasingly considered over the second half [...]
It is absolutely amazing the lengths people will go to in order to deny the most straightforward and obvious explanation; to torture and twist plain evidence. That’s the thing about rationalizing, though. The narrative usually matters more than the facts. Take tax reform and interest rates. The problem with tax reform wasn’t actually tax reform. The Tax Cuts and Jobs [...]
The insurance rate cut has been issued. Telling the assembled members of the press this is nothing more than a “mid-cycle adjustment”, Chairman Powell was cautious not to betray too much concern. The first rule of central banking is not to make anything worse. Subprime must always be contained. Yet, he has the unenviable task of explaining what is a [...]
The markets we use to monitor the economy (and those that influence it, which amounts to the same thing) have been tracking an economic slowdown since the 4th quarter of last year. That's when interest rates, real and nominal, long term and short term, started to decline, credit spreads started to widen and the copper to gold ratio started to [...]
It seems a paradox, at least like it is backwards. The financial media doesn’t help because good editorial standards rely upon the opinions and beliefs of credentialed people who have no idea what they are talking about. If you hold high office in some central bank, we are to assume you are competent about monetary issues. It’s all given a [...]
The benchmark 10-year US Treasury yield closed below 2% for the first time since Donald Trump was elected President. Having flirted with that level several times over the past week, today the most-watched interest rate on the planet finally breached this one startling round number. And it comes during a week which by every conventional account should have been hugely [...]
It was supposed to be the Chinese government who was going to rescue the global economy. Once the rationalizations ended and officials around the world realized there was serious economic weakness building at the end of 2018 instead of a globally synchronized inflationary recovery, the green shoots of 2019 were going to be in one big part a fiscal stimulus [...]
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