Compared to other Fed presidents, Timothy Geithner is straightforward and more than usually willing to talk about bad things. So when he gives a speech that is comparatively upbeat, as he did earlier this week (“Credit Markets Innovations and Their Implications“) it should be reassuring. So why did this speech bother me? It wasn’t as […]
Read more...That’s Barry Ritholtz’s take on the market’s reaction to the Federal Reserve’s Open Market’s Committee release this week, which staged a nice peppy rally because the report was seen as signalling a greater likelihood of an interest rate cut. Some more discerning observers read the report much less positively, and saw it pointing to stagflation. […]
Read more...On Thursday, both Democratic and Republican members of the Senate Banking Committee chewed out Roger Cole, the Federal Reserve’s director of supervision and regulation, for failing to intervene in the rapid rise of the issuance of mortgages to customers who were clearly likely to default, and now are, losing their homes and their investment in […]
Read more...An excellent article Thursday in the Financial Times, “In the new liquidity factories, buyers must still beware,” by Mohamed El-Erian, the CEO of Harvard Management Company. He explains that a great deal of the liquidity in the markets is created not by the monetary authorities, but by the participants themselves, and works through a simple […]
Read more...Cactus at Angry Bear has been on this trail for a while now (his latest is “The Fed, Presidential Elections, and Coincidence – Part 8“), and the Fed’s behavior has been consistent with what you’d expect if they were trying to influence Presidential elections. The entire post is very much worth reading, as are the […]
Read more...That’s how a couple of Fedwatchers interpreted the latest FOMC report, including Tim Iacono at Seeking Alpha in “FOMC Statement Changes Scream Stagflation.” The report also says the housing “adjustment” ain’t over. FYI, we thought staflation was coming (see here) From Iacono: The Federal Reserve Open Market Committee meeting concluded just a short time ago […]
Read more...I have lunch from time to time with the inventor of an important class of financial product who currently runs a rather large hedge fund (assets well over $1 billion). He also started out as a Fed economist. It’s important as a trader to have a point of view, but not to get one’s ego […]
Read more...A good article at Bloomberg, “Bernanke, Greenspan Disagree on Impact of Corporate-Profit Peak,” takes a stab at explaining why, personal issues aside, why the current and former Fed chairman are saying different things about the outlook for the economy. In a nutshell, “It’s the profit margins, stupid.” Corporate profit margins have hit a level unequalled […]
Read more...A fine post on Seeking Alpha, “What Good is the Carry Trade?” by Tim Iacono, takes a stab at the impact of the alleged unwinding of the carry trade (we have though it played a fairly big role in the upheaval of the last week plus, but no one can tell for certain) and the […]
Read more...Mark Thoma on Economist’s View, sums up his view in his headline, “Kenneth Rogoff: German Leaders Are Right About Hedge Fund Transparency and Regulation“. Rogoff takes issue with Paulson’s dismissal of the idea of making hedge funds more accountable. It’s odd that Paulson even thinks he had a vote on this issue, since the Treasury […]
Read more...Curiouser and curiouser. Greenspan uses the “R” word in Hong Kong, and the Chinese stock market goes down 9% the next day. Now the sequence of the two events might have been pure coincidence (the main cause for the Chinese sell off was the announcement that the powers that be were going to tighten margin […]
Read more...So much for our belief in the independence of the Fed. Cactus at Angry Bear has done a series of analyses on money supply growth in the months preceding an election, his latest being, “The Fed, Presidential Elections, and Coincidence – Part 5.” When the Fed chair is of the same party as the incumbent, […]
Read more...Here it is, Sunday evening. The Asian markets are opening down. I don’t know about you, but I am already tired of the events of last week. They don’t appear to be ending anytime soon, despite the attempts at reassurance by various people in positions of authority. And no, I didn’t take a beating. It’s […]
Read more...Paul Krugman, in his Friday New York Times op-ed piece, “The Big Meltdown,” gives his vision of how this week’s market events will play out. Per the title, his take is apocalyptic. Frankly, although it’s a plausible scenario, this isn’t Krugman’s best work. He is a very good political economist, but investment strategy isn’t his […]
Read more...Just a couple of posts ago, we complained about Bernanke talking up the stock market. While that may indeed have been what he was doing (and we don’t approve of that), he may also have been trying to slow action in the credit markets, and that is a legitimate use of his power of the […]
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