Perhaps I’m in a jaded frame of mind. but today is one of those days where the news items don’t strike me as all that compelling. There are days where there really isn’t much new in the news (and juicy byplay is wanting as well). In the early 1990s, I was in Bali for six […]
Read more...Right now, we have an unusually apparent difference of opinion between the market and the Fed. Bernanke in his Congressional testimony last week said as clearly as a Fed chairman could that the Fed thought growth prospect for the economy were solid and was concerned about the risks of inflation and plans to keep rates […]
Read more...This comment, “A market correction is coming, this time for real,” comes from William Rhodes, senior vice-chairman of Citigroup, and chairman, president and chief executive of Citibank. Consistent with the headline, Rhodes takes a bearish view (in fact, he says he has been concerned about leverage and indiscriminate pricing of risk for some time, and […]
Read more...There is a terrific post by Barry Ritholtz at The Big Picture, “What is the Fed Really Thinking?” which was also picked up by Brad DeLong as an excellent example of Fed-watching. Barry pointed out last week that the latest FOMC report clearly indicated stagflation. He later noted that the market’s peppy response to the […]
Read more...Michael Panzner at Seeking Alpha has a great post, “Donald Lambro’s Dangerous Suprime Delusions,” which I found a pleasure to read because he takes on a deserving target, namely, a pathologically optimistic piece by Donald Lambro,”Subprime Shakeout Just a Rough Patch.” The piece is fun, in part because Lambro is such a deserving target, and […]
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...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...This story,”Carry trade returns,” comes from the Financial Times’ John Authers. For those new to the term, the “carry trade” in simple terms is when investors borrow in a currency with low interest rates (in this case, the yen) and use the proceeds to make investments in countries where the prevailing interest rates are high […]
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...We found Yale economist Robert Shiller’s article, “Fears, Not Facts, Drive Global Markets,” thanks to Economist’s View. As much as we agree with Shiller’s conclusion (as author of the book “Irrational Exuberance,” he is considered an expert), that the size and seeming suddenness of market declines can feed on themselves, we don’t agree with the […]
Read more...A couple of days ago, we took a dim view of an “alarmist” (and more important, inaccurate) analysis of alleged real estate losses at commercial banks. The reason we took issue with it was that is was wrong on several critical counts, and its conclusion was therefore off base. We use the word “alarmist” with […]
Read more...Many observers overlooked the fact that increases in bank reserve ratios in China and India, which reduce liquidity by curtailing how much banks can gear their equity (and banks are much more important financial players in those markets than in the US) plus a teeny interest rate increase in Japan set the stage for the […]
Read more...A short post on Seeking Alpha, “A Play on Subprime Woes and Homebuilders: TOL vs. KBH” that summarizes a Barron’s story on how the subprime saga is developing. It is consistent with what we’ve said in other posts, namely, by itself, the subprime problem isn’t big enough to damage the economy seriously. But the subprime […]
Read more...As readers may recall, Felix Salmon posted a very critical take, “Is there a looming crisis in the mortgage market?” on Gretchen Morgenson’s New York Times story, “Crisis Looms in Mortgages.” We parsed the two stories, drawing on other sources, in our “Reactions to New York Times Mortgage Market Story.” Since then, the markets took […]
Read more...One of today’s lessons is to have greater courage in my convictions. In a number of earlier posts (such as “The Rising Tide of Liquidity,” part 2 and part 3 of the same, “Where Has the (Perception of) Risk Gone“) I pointed to how toppy the markets have been, and how much capital has flowed […]
Read more...