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Tag Archives: Central Banks

Yeah…But

Yeah… Barry Bonds, a Major League Baseball (MLB) player, put up some amazing stats in his career. What sets him apart from other players is that he got better in the later years of his career, a time when most players see their production rapidly decline. Before the age of 30, Bonds hit a home run every 5.9% of the time he was at bat. After his 30th birthday, that rate almost doubled to over 10%. From age 36 to 39, he hit an astounding .351, well above his lifetime .298 batting average....

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August TIC: Trying To Get Collateral Out of the Shadows

The second most frustrating aspect of trying to analyze global shadow money is how the term “shadow” really applies in this case. It’s not really because banks are being sneaky, desperately maintaining their cover for any number of illicit activities they are regularly accused of undertaking. The money stays in the shadows for the simple reason central bankers don’t know their jobs; even after a somehow Global Financial Crisis in 2008, they don’t realize the full scope of what goes on...

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September Monthly

Three forces are shaping the investment climate.  The US-China trade conflict escalates at the start of September as both will raise tariffs on each other's goods and are threatening another round in mid-December (US 25% tariffs on $250 of Chinese imports will increase to 30% on October 1).  Some third parties may benefit from the re-casting of supply chains, but the first impact is understood to weaken growth impulses.  That is aggravating the slowdown already evident in several large...

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Are Central Banks Ready To Break Their Codependency?

Breaking our radio silence as we couldn’t help ourselves after reading former NY Fed President William Dudley’s piece imploring the Fed to stop enabling Trump’s  trade war. It sounds like central bankers are starting to realize they are, and have been, enabling the bad behavior of the politicos, who do not have the backbone to make the politically tough choices to fix their economies through the difficult but necessary structural reforms.  The central banks have been the only game in...

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July Monthly

June was a cruel month for the US dollar. It fell against all the world’s currencies as investors became convinced that the Federal Reserve would soon embark on an aggressive easing course that will see 75 basis points of rate cuts this year.  Most of the major central banks have an easing bias, but it is the greenback that has seen its interest rate support weaken.  However, at this juncture, it is difficult to envision investors pricing in even more cuts, suggesting that June may...

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QE – Then, Now, & Why It May Not Work

Since the beginning of the year, the market has rallied sharply. That rally has been fueled by commentary from both the Trump Administration and the Federal Reserve of the removal of obstacles which plagued stocks in 2018. The chart below is an abbreviated, and a bit sarcastic, version of events. While the resolution of the trade war is certainly beneficial to the economy, as it removes an additional tax on consumers, the biggest support for the market has been the assumption the Fed...

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The Fed Doesn’t Target The Market?

Earlier this month, I penned an article asking if we “really shouldn’t worry about the Fed’s balance sheet?” The question arose from a specific statement made by previous New York Federal Reserve President Bill Dudley: “Financial types have long had a preoccupation: What will the Federal Reserve do with all the fixed income securities it purchased to help the U.S. economy recover from the last recession? The Fed’s efforts to shrink its holdings have been blamed for various ills, including...

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The Fed Conundrum – Data Or Markets?

Following the Fed’s last meeting, we published for our RIA PRO subscribers (use code PRO30 for a 30-day free trial) a simple question: “What does the Fed know?” Of course, this meeting followed the stock market plunge at the end of 2018 where their tone that turned from “hawkish” to “dovish” in the span of just a few weeks. Seemingly, despite the previous commentary about concerns over rising inflationary pressures, it was pressure from Wall Street and the White House that quickly “realigned”...

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Recession Risks Are Likely Higher Than You Think

It is often said that one should never discuss religion or politics as you are going to wind up offending someone. In the financial world it is mentioning the “R” word. The reason, of course, is that it is the onset of a recession that typically ends the “bull market” party. As the legendary Bob Farrell once stated: “Bull markets are more fun than bear markets.” Yet, recessions are part of a normal and healthy economy that purges the excesses built up during the first half of the cycle....

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