Tag Archives: Interest rates

I know some people who are always bullish gold. I am not. In fact, I often think I can find higher returning assets. However, I have recently have turned bullish gold, and while in Toronto on business, I was invited to the set of Bloomberg to discuss my change of heart. Many of the reasons the gold bugs cite would seem to justify owning gold bullion not paper claims on gold, like gold mining companies or gold ETFs. The...

Central banks are prepared to take fresh measures to strengthen and extend the business cycle primarily because price pressures are below what their predecessors thought would be acceptable levels. Draghi, speaking for the ECB, the Federal Reserve, and the Bank of Japan ratcheted up their concerns, which, even without new initiatives, were sufficient to drive interest rates lower. Eurozone There is no real definition...

The European Central Bank’s meeting on 6 June is unlikely to result in major policy changes, but instead will focus on risk assessment and TLTRO-III. The press conference could set the stage for a policy response should downside risks materialise.Long story short, the ECB should continue to err on the side of caution, while preparing for dovish contingencies, which could range from the easy to the scary. The easy plan would follow if risks to the outlook remain firmly tilted to the downside....

In May 2018, the European Parliament found that it was incredibly popular. Commissioning what it calls the Eurobarameter survey, the EU’s governing body said that two-thirds of Europeans inside the bloc believed that membership had benefited their own countries. It was the highest showing since 1983. Voters in May 2019 don’t appear to have agreed with last year’s survey. For the first time since 1979, Social Democrats...

Investors have worked themselves into a lather. Equities crashed in Q4 last year amid on corporate earnings and concerns about growth. The Fed’s tightening decision in December was made unanimously. The above-trend growth, the preferred inflation measure was near target, unemployment was the lowest in a generation and real rates were historically low. There are myths in the market, like the Plunge Protection Committee,...

The combination of the dovish hold by the Federal Reserve and the eurozone’s miserable flash Purchasing Managers Index casts a pall over the economic outlook. Japan’s flash PMI remained stuck at February’s 48.9, while core inflation unexpectedly eased. Three months after the European Central Bank stopped buying bonds, the German 10-year Bund yield fell below zero for the first time since 2016. Japan’s 10-year yield is...

It infects every boardroom across the world. Big business requires decent forecasting, yet time and again it seems they are deprived of what they desperately need. Instead, even after this last decade, the world’s largest companies continue to be surprised by weakness that is far more prevalent than strength. It has been the one constant. Central bankers declare their policies successful, ignoring mountains of...

Swiss Franc The Euro has fallen by 0.25% at 1.1367 EUR/CHF and USD/CHF, February 13(see more posts on EUR/CHF and USD/CHF, ) Source: markets.ft.com - Click to enlarge FX Rates The Federal Reserve has long been clear on the sequence of events as it innovated the playbook during the Great Financial Crisis. There would be a considerable period between when the Fed would finish its credit easing operations that...

Men have long dreamed of optimal outcomes. There has to be a better way, a person will say every generation. Freedom is far too messy and unpredictable. Everybody hates the fat tails, unless and until they realize it is outlier outcomes that actually mark progress. The idea was born in the eighties that Economics had become sufficiently advanced that the business cycle was no longer a valid assumption. The mantra,...

A Return To Normalcy In the first two years after a newly elected President takes office he enacts a major tax cut that primarily benefits the wealthy and significantly raises tariffs on imports. His foreign policy is erratic but generally pulls the country back from foreign commitments. He also works to reduce immigration and roll back regulations enacted by his predecessor. This President is widely rumored to have...