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Tag Archives: QE

No Shock, A Bigger Theatrical Budget

You have to understand, none of this is about money or even bonds. It is all intended for one thing and one thing only: expectations. This has been the fulfillment of Paul Krugman’s long-ago criticism. The way out is to shock the system, he said. It doesn’t even matter, by this theory, what you do. So long as it is outside of every market expectation, that’s the only goal. Japan, who was the target of Dr. Krugman’s reproach, and after having consulted with the former Economist (he’s now just...

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Superforecasting A Bear Market

There’s an ongoing debate about whether or not the U.S. is approaching a recession. As an investor, this question is of utmost importance. It is precisely at these times when fortunes can be made and lost. There’s no shortage of pundits with strong opinions in both the affirmative and negative camps armed with plausible narratives and supporting data sets. How to decide which side to take? Applying some proven forecasting methods to historical data can help bring clarity to this question....

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10/8/19: Irish Debt Sustainability Miracle(s): ECB and MNCs

As a part of yesterday's discussion about the successes of Irish economic policies since the end of the Eurozone crisis, I posted on Twitter a chart showing two pivotal years in the context of changing fortunes of Irish Government debt sustainability. Here is the chart: The blue line is the difference between the general Government deficit and the primary Government deficit, which captures net cost of carrying Government debt, in percentages of GDP. In simple terms, ECB QE that started...

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A Short Stay At The Bear Trap Inn

As we suspected in last night’s post, A break of today’s low at 2945.23 cinches a beeline move to the 50-day, where algos will likely set their bear trap and try and bounce the market.  We expect a feeble bounce at best, which should be spanked. — GMM, August 1st Right on schedule, the 50-day breaks this morning, human emotions run amok, shorts pile in, and the Bear Trap Inn Algo comes in and puts the big hurt on short selling day traders.   If you have been watching the markets over...

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31/7/19: Fed rate cut won’t move the needle on ‘Losing Globally’ Trade Wars impacts

Dear investors, welcome to the Trump Trade Wars, where 'winning bigly' is really about 'losing globally': As the chart above, via FactSet, indicates, companies in the S&P500 with global trading exposures are carrying the hefty cost of the Trump wars. In 2Q 2019, expected earnings for those S&P500 firms with more than 50% revenues exposure to global (ex-US markets) are expected to fall a massive 13.6 percent. Revenue declines for these companies are forecast at 2.4%.This is hardly...

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The Fed’s Massive Debt for Equity Swap

“All assets are priced where they are today because of central banks. That’s modern finance — it’s not about psychology or flows anymore, it’s about what the central banks are going to do next.” – Mark Spitznagel Cause and Effect Rene Descartes, a 17th-century mathematician, asked the fundamental question of how causal power functions. He was interested in how things relate to each other in terms of causality and how the thought of an action gets translated into a physical action. The...

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16/7/19: Monetary Policy Paradigm: To Cut or To Cut, and Not to Not Cut

QE is back... almost. After a decade plus of failing to deliver on its core objectives, and having primed the massive bubble in risky assets, while pumping sky high wealth inequality through massive monetary transfers to the established Wall Street elites... all while denying that we are in an ongoing secular stagnation. So, courtesy of the unpredictable, erratic and highly uneven economic parameters performance of the last 12 months, we now have this: Because, for all the obvious...

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Investors Are Grossly Underestimating The Fed – RIA Pro UNLOCKED

 If you think the Fed may only lower rates by .50 or even .75, you may be grossly underestimating them.  The following article was posted for RIA Pro subscribers two weeks ago. For more research like this as well as daily commentary, investment ideas, portfolios, scanning and analysis tools, and our new 401K manager sign up today at RIA Pro and test drive our site for 30 days before being charged. Currently, the December 2019 Fed Funds futures contract implies that the Fed will reduce the...

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Shelton, The Fed, & The Realization Of A Liquidity Trap

Last week, President Trump nominated Judy Shelton to a board seat on the Federal Reserve. Shelton has been garnering a lot of “buzz” because of her outspoken and alternative stances, including “zero interest rates” and a “gold standard” for the U.S. dollar. But, Shelton is full of inconsistent and incongruous views on monetary policy. For instance, in 2017 she stated: “When governments manipulate exchange rates (by changing interest rates) to affect currency markets, they undermine the honest...

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How To Properly Address The Unusual Window Dressing

Unable to tackle effective monetary requirements, bank regulators around the world turned to “macroprudential” approaches in the wake of the Global Financial Crisis. It was mostly public relations, a way to assure the public that 2008 would never be repeated. A whole set of new rules was instituted which everyone was told would rein in the worst abuses. Among the more prominent of these was Basel 3’s leverage ratio. Of the banks that failed or nearly failed more than ten years ago, they did...

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