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Home / Tag Archives: Monetary Policy

Tag Archives: Monetary Policy

Statement Regarding Monetary Policy Implementation

Consistent with its January 2019 Statement Regarding Monetary Policy Implementation and Balance Sheet Normalization, the Committee reaffirms its intention to implement monetary policy in a regime in which an ample supply of reserves ensures that control over the level of the federal funds rate and other short-term interest rates is exercised primarily through the setting of the Federal Reserve's administered rates, and in which active...

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Minutes of the Federal Open Market Committee, September 17-18, 2019

The Federal Reserve Board and the Federal Open Market Committee on Wednesday released the attached minutes of the Committee meeting held on September 17-18, 2019. A summary of economic projections made by Federal Reserve Board members and Reserve Bank presidents for the meeting is also included as an addendum to these minutes. The minutes for each regularly scheduled meeting of the Committee ordinarily are made available three weeks...

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29/9/19: Divided ECB

Divided they stand... Source: https://www.bloomberg.com/news/articles/2019-09-29/lagarde-inherits-ecb-tinged-by-bitterness-of-draghi-stimulusThe ECB is more divided than ever on the 'new' direction of QE policies announced earlier this month, as its severely restricted 'political mandate' comes hard against the reality of VUCA environment the euro area is facing, with: Reduced forward growth forecasts (net positive uncertainty factor for QE) Anaemic inflation expectations (net positive...

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The Magical Monetary Policy Mystery Tour

Wow!  Just heard a so-called “banking expert” say that the Fed was reducing reserves on their balance sheet during quantitative tightening (QT), which has led to the current chaos in the overnight repo market.   Not entirely true. Asymmetric Libalibity Balance Sheet Accounting During QE the Fed purchased assets in the secondary markets, primarily Treasury notes and bonds, and mortgage-backed securities (MBS), by increasing their liabilities in the form of bank reserves.    During QT,...

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3 supply shocks that could derail the economy

As the market reacts the weekend attack on Saudi oil facilities, the level of anxiety is mounting. Forbes published an article on Sunday entitled “Attacks on Saudi Arabia are a recipe for $100 oil”. Bloomberg that this represents the biggest disruption to global oil supply since the Iraqi 1990 invasion of Kuwait. As visions of the 1974 Arab Oil Embargo and the ensuing recession dance in traders’ heads, this is a timely reminder that the FOMC is meeting this week. Should the supply...

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Is this the long awaited value investing revival?

Preface: Explaining our market timing modelsWe maintain several market timing models, each with differing time horizons. The “Ultimate Market Timing Model” is a long-term market timing model based on the research outlined in our post, Building the ultimate market timing model. This model tends to generate only a handful of signals each decade. The Trend Model is an asset allocation model which applies trend following principles based on the inputs of global stock and commodity price. This...

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The Obligatory Europe QE Review

If Mario Draghi wanted to wow them, this wasn’t it. Maybe he couldn’t, handcuffed already by what seems to have been significant dissent in the ranks. And not just the Germans this time. Widespread dissatisfaction with what is now an idea whose time may have finally arrived. There really isn’t anything to this QE business. But we already knew that. American officials knew it in June 2003 when the FOMC got together to savage the Bank of Japan for their lack of results. It was decided then that...

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Your Unofficial Europe QE Preview

The thing about R* is mostly that it doesn’t really make much sense when you stop and think about it; which you aren’t meant to do. It is a reaction to unanticipated reality, a world that has turned out very differently than it “should” have. Central bankers are our best and brightest, allegedly, they certainly feel that way about themselves, yet the evidence is clearly lacking. When Ben Bernanke wrote for the Washington Post in November 2010 announcing somehow the need for a second QE...

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Black Monday – Can It Happen Again?

The 1987 stock market crash, better known as Black Monday, was a statistical anomaly, often referred to as a Black Swan event. Unlike other market declines, investors seem to be under the false premise that the stock market in 1987 provided no warning of the impending crash. The unique characteristics of Black Monday, the magnitude and instantaneous nature of the drop, has relegated the event to the “could never happen again” compartment of investors’ memories. On Black Monday, October...

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What is Bill Dudley Thinking?

On August 27, 2019, Bill Dudley, former Chief Economist for Goldman Sachs and President of the Federal Reserve Bank of New York from 2009-2018, published a stunning editorial in Bloomberg (LINK). After reading the article numerous times, there are a few noteworthy observations worth discussing. Dudley’s Myopic View Before we dissect Bill Dudley’s opinions and try to understand his motivations, consider the article’s subtitle- “The central bank should refuse to play along with an...

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