From strategic research partner MRB...with Alhambra's added commentary. QE is primarily a signaling device to demonstrate policymakers’ commitment to fostering the recovery and sustaining a cohesive monetary union. The policy is implicitly designed to reduce the equity risk premium. We expect a gradual re-rating of euro area equities. A cheaper euro, itself associated with QE, will also boost globally-oriented equity [...]
The Fed is simply making it up as it goes, with nary a concern about being questioned on what is really disingenuousness. That starts with oil prices as there have been a number of Fed officials rushing to embrace them as some kind of “stimulus” that nobody outside a monetary magician (redundant) could perform. Orthodox economics despises “deflation” to its [...]
Well, it's that time of year again, when all the pundits offer their crystal ball views of the coming new year. I don't usually participate in the prediction game and this year won't be any different. Like everyone else I wonder what the future holds but I know I have no special ability to predict how it might unfold. What [...]
Like economic accounts, corroboration is imperative in “market” signals as well. That is true not just because some of these indications are self-referential but because broad agreement across various segments precludes idiosyncratic explanations and factors. If everything, or nearly so, is moving in the same direction at the same time to the same magnitude you simply cannot ignore it. In [...]
Slip Slidin' Away Slip Slidin' Away You Know The Nearer Your Destination The More You're Slip Slidin' Away Paul Simon Well, now things are starting to get interesting. Contrary to most expectations, OPEC decided last week to maintain - or more accurately, continue ignoring - their current production target. OPEC members haven't been sticking to their quotas and after their [...]
This will be a shorter than normal commentary as I'm on my annual pilgrimage to Hilton Head Island to see old friends, talk about markets, politics and other subjects not suitable for a family friendly publication and to torture ourselves on the golf courses. As an aside, you are an evil man Pete Dye. I don't generally write while I'm [...]
The US Dollar index is up 8.6% since the beginning of July and it seems everyone is jumping on the King Dollar bandwagon. With Mario Draghi openly rooting for a weaker Euro and Abenomics pushing down the Yen the dollar has emerged, as it often does, as the safe haven for global investors. The rise could have some major implications, [...]
In addition to this morning’s “noisy” and suddenly more tame CPI report, there is a broad-based decline in commodity prices that is more than a little bit outside of “usual” volatility. It should be noted at the start that commodity prices are not always direct reflections of economic activity or expectations for future activity, as other factors intertwine and take [...]
After last week's Jackson Hole speech, expect to see Ben Bernanke sporting a sling the next time you see him. There is simply no way he could spend that long patting himself on the back and not suffer at least a sprain. The monetary yoga master asserted that the Fed's non traditional monetary policies were responsible for creating 2 million [...]
“It ain’t so much the things we don’t know that get us into trouble. It’s the things we know that just ain’t so.” Mark Twain I've been writing some more optimistic commentaries recently - or maybe just less pessimistic - and the response has been interesting to say the least. I don't remember so many people telling me how dumb [...]
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