Bloomberg tells us: The Federal Reserve’s decision to buy Treasuries and keep interest rates low will support “risk assets” without bringing down unemployment, said Anthony Crescenzi at Pacific Investment Management Co. “Low volatility tends to be good for the interest-rate climate,” said Crescenzi, who is based in Newport Beach, California at Pimco, manager of the […]
Read more...Some Fedwatchers were proven incorrect when the Fed inched towards a renewal of QE today by stepping up to buy Treasuries to offset shrinkage of its balance sheet due to principal runoff on the MBS it bought last year. The staff apparently favors renewed QE, due to the signs of faltering economic activity; the Board, […]
Read more...By Jack Sparrow, who writes at Mercenary Trader The employment picture constitutes yet another headwind and a significant one to the already-faltering U.S. recovery. It will undermine future spending, company earnings and profitability. Indeed, the poorer the employment picture, the greater the likelihood that households will become more cautious and that the corporate sector will […]
Read more...By Max Bruche. Assistant Professor of Economics, CEMFI and Gerard Llobet i Codina, Associate Professor of Economics, CEMFI. Originally posted at VoxEU Bank bailouts have been controversial from the outset, with some commentators saying that they reward banks for making risky loans. This column investigates the idea of an asset buyback in which a special […]
Read more...While the preparation of economic data is always a fraught business, one hopes that errors are more or less symmetrical, particularly in data series that (as is the case for some important metrics in the US, like GDP), are released on an initial basis (almost without exception the only one Mr. Market notices) and tidied […]
Read more...An article by Gillian Tett in the Financial Times, “Trading volumes retreat with investor trust,” contends that the notably low trading activity of late is a sign of deeper changes in financial markets: The most pernicious issue hanging over the system right now is a loss of confidence – not merely in the idea that the […]
Read more...This post first appeared on July 11, 2007 Readers of this blog know that I have been concerned about the state of the credit markets for some time. We’ve had (until the last month or so), rampant liquidity feeding asset bubbles in virtually every asset class except the dollar and the yen, tight risk spreads […]
Read more...This post appeared originally on July 27, 2007 Warning: this post is only for those with sound constitutions. Tim Lee, head of a financial economics consultancy, tells us in a Financial Times article what a carry trade unwind will look like (answer: very nasty) and what it would take to prevent it (the Japanese have […]
Read more...I recall a presentation on China at the Asia Society on the eve of the financial crisis, in which an economist commented on China’s extremely low interest rate on deposits (less than 1%) versus its markedly higher inflation rate, and commented that that was a recipe for hyperinflation. Well, that hasn’t been and is unlikely […]
Read more...Even though St. Louis Fed President Jim Bullard created a bit of frisson last week by discussing deflation, and Treasury yields are awfully reminiscent of Japan, investors and consumers have been so conditioned to be on the watch for inflation (particularly increases in food and fuel prices), that the suck of deflation on much bigger […]
Read more...Reader Scott provides yet another example of the disconnect between the cautiously optimistic stock market and those on the economic front lines. A Wells Fargo/Gallup survey of 604 small business owners conducted in early July showed a plunge in already negative readings to new lows. This gloomy outlook matters because small businesses were the biggest […]
Read more...According to Pimco’s global strategic adviser Richard Clarida and CEO Mohamed El-Erian, the new normal is not normal, and that has profound implications for investors. Some of the conclusions may sound a tad self-serving, in that Pimco is a bond shop, and fat tails implies more risk (or more accurately, higher odds of more extreme […]
Read more...In case you’ve been paying attention to market action rather than economic news, some key data releases for July have been less than cheery. For instance, consumer confidence has taken a nosedive, the US trade deficit unexpectedly worsened (meaning one of the few key sources of good news, the export sector, has hit an air […]
Read more...It wasn’t all that long ago that the media and banking industry commentators would worry about the coming train wreck in commercial real estate. But peculiarly, that topic has more or less receded from view. It appears the public has only so much interest in banking stories, and the frenzied coverage of financial services non-reform […]
Read more...Complementing today’s piece on the Chinese property bubble, a cross-post from VoxEU, with some graphical depictions of how wild the bubble has become. The NYT article referenced in the piece is here – RS. By Yongheng Deng, Professor of Real Estate and Finance at the National University of Singapore, Joseph Gyourko, Professor of Real Estate, […]
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