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Tag Archives: Interest rates

MacroView: 2020 Market & Investment Outlook

On Tuesday, Michael Lebowitz and I held private events with our high net worth clients to review our investment strategy and outlook for the rest of the year. The purpose of these events was to provide clarity on portfolio allocation, weightings,  and the risks that could potentially lead to large losses of capital. As we noted in last weekend’s newsletter, we recently took profits in our various portfolio strategies to raise cash slightly, and reduce excess portfolio risk. Given our...

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MacroView: Has The Fed Trapped Itself?

“Don’t fight the Fed” That’s how I started out last week’s “Macroview.” “That is the current mantra of the market as we begin 2020, and it certainly seems to be the right call. Over the last few months, the Federal Reserve has continued its ‘QE-Not QE’ operations, which has dramatically expanded its balance sheet. Many argue, rightly, the current monetary interventions by the Fed are technically ‘Not QE’ because they are purchasing Treasury Bills rather than longer-term Treasury Notes....

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10/1/20: Eight centuries of global real interest rates

There is a smashingly good paper out from the Bank of England, titled "Eight centuries of global real interest rates, R-G, and the ‘suprasecular’ decline, 1311–2018", Staff Working Paper No. 845, by Paul Schmelzing.Using "archival, printed primary, and secondary sources, this paper reconstructs global real interest rates on an annual basis going back to the 14th century, covering 78% of advanced economy GDP over time."Key findings:"... across successive monetary and fiscal regimes, and a...

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Technically Speaking: Markets Dismiss Iran As The Fed “Put” Remains

You would think that with the U.S. taking out a top Iranian commander, threats of military action flying between the U.S. and Iran, not to mention the “Selective Service” website crashing over concerns of World War III, the markets would be in full “sell” mode. Surreal headline pic.twitter.com/lyItw6vD3n — Hipster (@Hipster_Trader) January 4, 2020 Due to the spread of misinformation, our website is experiencing high traffic volumes at this time. If you are attempting to register or verify...

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MacroView: Will The The Market Repeat The Start Of 2018?

“Don’t fight the Fed” That is the current mantra of the market as we begin 2020, and it certainly seems to be the right call. Over the last few months, the Federal Reserve has continued its “QE-Not QE” operations, which has dramatically expanded its balance sheet. Many argue, rightly, the current monetary interventions by the Fed are technically “Not QE” because they are purchasing Treasury Bills rather than longer-term Treasury Notes. However, “Mr. Market” doesn’t see it that way. As the old...

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Gold: How High Will It Go In 2020?

Gold broke out of a six year consolidation. Things look up in 2020. Gold Monthly Chart 2004-Present Gold Monthly Chart 2010-Present Smart Money Shorts I ignore short-term COT “smart money” warnings although I would prefer there to be fewer bulls. For discussion of “smart money“, please see Investigating Alleged Smart Money Positions in Gold. Pater Tenebrarum at the Acting Man blog pinged me with this idea: The only caveat remains the large net speculative long position, but...

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Hussman Agrees With Powell: It’s Not QE4

A debate over a sudden dramatic surge in Repos is raging. Is it or isn’t it QE4? Organic Growth On October 9, Powell discussed “Organic Growth” of its balance sheet. “Going forward, we’re going to be very closely monitoring market developments and assessing their implications for the appropriate level of reserves,” Powell said at a news conference. “And we’re going to be assessing the question of when it will appropriate to resume the organic growth of our balance sheet.” Not...

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The 2019 Tailwinds of Housing Describe the 2020 Headwinds of Economy

It’s all somewhat confusing, once acclimated to this new paradigm. The highest in years can still be nearer the lowest in history. Given that apparent contradiction, it seems as if only one of those perspectives can apply. Which one you focus on often depends upon which way you already lean. Toward the end of last year, mortgage interest rates had climbed up near 5% (average 30-year). It was the highest since early 2011, a surefire calamity for the housing market. And that market was under...

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The Public Knows, But Doesn’t Quite Realize, Another Crash Is Not The Worst Case

Back at the end of April, the FOMC and its dozens of staff members gathered around to talk policy as those people always do every six weeks or so. The agenda was quite full, with Jay Powell having had to switch from rate hikes to a Fed “pause” the few months before and none of them really sure why. Economic weakness had appeared “unexpectedly” (they never pay attention to the dollar) and along with it inflation rates began to stumble, too. Many participants viewed the recent dip in PCE...

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2020: The Futility Of Predictions & Understanding The Risk

“Predictions Are Difficult…Especially When They Are About The Future” – Niels Bohr We can’t predict the future. If we could, fortune tellers would win all of the lotteries. They don’t, we can’t, and we are not going to try to. However, we can analyze what has happened in the past, weed through the noise of the present, and discern the possible outcomes of the future. The biggest problem with Wall Street, both today and in the past, is the consistent disregard of the unexpected and random...

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