Thursday , October 21 2021
Home / Tag Archives: Monetary Policy

Tag Archives: Monetary Policy

What Are Bond Yields & Breakevens Telling Us?

#CKStrong    Carol K.’s ANC broke above 1200 today.  Absolute Neutrophil Count (ANC ) measures a type of white blood cell that kill and digest bacteria and fungi to help the body fight infections and heal wounds. At a time around Day 0 of her stem cell transplant, it was below 100, which is severe neutropenia and often fatal for cancer patients.   Her fight and grit coupled with the combination of the miracle of modern medicine, deep resources, and all of your support — prayers,...

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Weekly Market Pulse: Perception vs Reality

It was the best of times, it was the worst of times… Charles Dickens, A Tale of Two Cities   Some see the cup as half empty. Some see the cup as half full. I see the cup as too large. George Carlin   The quote from Dickens above is one that just about everyone knows even if they don’t know where it comes from or haven’t read the book. But, as the ellipsis at the end indicates, there is quite a bit more to the line than the part everyone remembers. It was the best...

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What’s Next?

As Q3 winds down and Q4 begins, the broad investment climate is being shaped by the turning of the monetary cycle.  Norway was the first, and New Zealand will be next.  It is not so much that these moves will force others to do the same. Instead, the Norges Bank and the RBNZ are simply ahead of the others.  Although there is speculation that the Bank of England can move before the end of the year, it seems a stretch.  The market feels increasingly confident that the Bank of Canada will raise...

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Go Early, Go Fast? Go Deflation

Go early and go fast. This was the message FOMC Governor Christopher Waller wanted to send to the CNBC audience watching his interview yesterday on that channel. He was referring to the possible taper of QE6. In Waller’s view, if the US economy lives up to its current hype in the form of two more blowout jobs numbers, those would confirm the Governor’s view inflationary potential is perhaps much higher than indicated by the Fed’s overall “transitory” stance.He doesn’t mean to say the...

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Tapering The Truth

Ceremony and ritual are not just important concepts for priming and keeping faith, they are absolute essentials. There’s a reason why cult leaders make themselves appear – at every instance – indispensable while at the same time keeping their masses busy with nonsense. Can’t ever permit thinking too much lest the house of cards crash downward at the first slight breeze of independent thought.So it is with these Rites of FOMC. From back before Greenspan the “Maestro”, we have...

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Alternative Visions of Inflation

Like many people, I’ve been thinking a bit about inflation lately. One source of confusion, it seems to me, is that underlying concept has shifted in a rather fundamental way, but the full implications of this shift haven’t been taken on board. I was talking with my Roosevelt colleague Lauren Melodia about inflation and alternative policies to manage it, which is a topic I hope Roosevelt will be engaging in more in the later part of this year. In the course of our conversation, it occurred...

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How to engineer inflation

Both the June CPI and PPI came in hot and well ahead of expectations. There was the inevitable debate about the transitory nature of the price increases. Looking longer-term, however, the conventional models for explaining inflation have been unsatisfactory.  Notwithstanding the numerous failures by Japanese policymakers, consider the US as another example. Let’s begin with fiscal policy. It is said that deficit spending would lead to currency devaluation and inflation in the manner of...

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Do valuations matter anymore?

How expensive are US equities? Fed Governor Lael Brainard warned about “stretched valuations” in the preamble to the May 2021 Financial Stability Report:  Vulnerabilities associated with elevated risk appetite are rising. Valuations across a range of asset classes have continued to rise from levels that were already elevated late last year…The combination of stretched valuations with very high levels of corporate indebtedness bear watching because of the potential to amplify the effects...

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How Powell, the Un-Volcker, is remaking the Fed

Jerome Powell may turn out to be the Un-Volcker Fed Chair. Paul Volcker wrung all the inflation expectations out of the system and convinced everyone that the Fed is an inflation hawk. By contrast, Jerome Powell is attempting a mirror image policy of convincing everyone the Fed is an inflation dove. A considerable gulf has opened up between the Fed’s stated monetary policy path and the market’s expectations. Ed Yardeni recently conducted a LinkedIn poll of interest rate expectations....

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