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 […]
Read more...On the one hand, it’s a relief that the stock markets in the US stabilized today, although the Dow recovering only a bit more than 1/10 of its prior day tumble is hardly a rousing vote of confidence. On the other hand, we have to scratch our heads as to how even this wee bit […]
Read more...Oooh, if you read DealBreaker.com, it was really miserable to be a trader in the middle of the carnage yesterday. But it’s hard to muster too much sympathy when you recall that the average pay at Goldman last year was just over $620,000. The real test of how serious this really is isn’t simply how […]
Read more...It is singularly odd (one might even say out of line) for a former Fed chairman to intrude on the turf of the current Fed chief. So why is Greenspan making predictions about the US economy, ones that seem to be at odds (at least in tone) with Bernanke’s? You may recall that the week […]
Read more...This post from Seeking Alpha makes a persuasive case based on the commodity price outlook that inflation will get worse and the Fed may have to increase rates. When you contrast this with some of our earlier posts, such as ones on the distress in the housing market, the meltdown in the subprime sector, and […]
Read more...An excellent column by Martin Wolf in the Financial Times, where he is the lead economics editor. Starting with principles put forward by Ben Bernanke in his recent speech on income inequality, Wolf concludes that America cannot do without some form of a welfare state, specifically improved training, education, and universal health care. The section […]
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