Is there an interest rate bubble? Has the bond market topped? It is something that has been on our mind for the past year and especially at the long end of the curve during Operation Twist. If and when bond yields normalize, the capital risk to investors is large, about 8.25-8.5% risk per 1% increase in interest rates at the [...]
There's Something Happenin' Here, What it is ain't exactly clear... "For What It's Worth" - Buffalo Springfield My friend Josh Brown (okay, he's linked to some of our stuff; maybe friend is a bit of an exaggeration) often quotes and links to videos of rap songs on his blog, The Reformed Broker. At the age of 50 (51 this month), [...]
There's an old saying on Wall Street that the market will always act in a way that frustrates the majority of market participants. If that is true, then it goes without saying that the majority must be bearish because this market has had ample opportunities to move lower and steadfastly refuses to do so. Coming into last week the conventional [...]
The market adage “sell in May and go away,” worked well this year for about one month. However, the end of May during an election year has often been a good time to buy stocks. (Good Time In The Election Cycle, Crossing Wall Street) Maybe not this year.... “This crisis has not even started. It will take an extremely long time to reach its [...]
Two central bankers this week, Mario Draghi and Ben Bernanke, started what I hope is a trend of placing blame for our economic troubles where it properly belongs - on the politicians who shirk their public responsibilities. Both bankers were expected to provide hints of future monetary policy accommodation and neither delivered the goods. At the press conference following the [...]
"Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again." Ben Bernanke on the occasion of Milton Friedman's 90th birthday Bernanke was referring to [...]
Guest post by friend of Alhambra, Jeffrey Snider: Since the panic days just after Lehman Brothers in September 2008 through September 2011, the Swiss franc had gained almost a third compared to the euro. It was an epic move that had gained steam in mid-2011 as the renewed crisis over Greece and the PIIGS threatened further instability in the Eurozone. [...]
Thinking Things Over April 22, 2012 Volume II, Number 16: Monetary Policy, the Real Economy, and Asset Prices: Where are We? By John L. Chapman, Ph.D. Canton, Ohio. In the wake of recent market volatility, and ahead of the Federal Reserve's Open Market Committee meeting here on April 24-25, calls for another round of Fed easing, "QE3," have again been stoked. It is worth [...]
What a strange week: North Korea's new leader, Kim Jong Un, tried to emulate his ancestors by firing off a rocket but it disintegrated minutes after take off. Following that Un-success the young Mr. Kim threatened to conduct a nuclear test so that his country could end "the days of enemies threatening and blackmailing us with nuclear weapons". The days [...]
Thinking Things Over April 8, 2012 Volume II, Number 14: Liquidity Traps, Unemployment, and the Future of U.S. Equity Markets By John L. Chapman, Ph.D. Canton, Ohio. Friday's less-than-robust unemployment report has its origins in monetary mismanagement, with attendant consequences for investors. In the following essay we connect the dots. In the spring of 2003 then-Fed Governor Ben Bernanke travelled [...]
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