2013

The Federal Reserve delivered a one-two punch to market expectations today. First the FOMC minutes did not appear as hawkish as many expected. Several FOMC members wanted to see more job growth before pulling back on the throttle. Second,…

News links for 10 Jul 2013

We learned today that China's trade volume unexpectedly 3.1% year-on-year in June with both imports and exports down. This unexpectedly weak data point highlights the risk of growth deceleration in emerging markets generally and China…

The ECB has moved toward forward guidance but they have been careful not to press too far ahead, I suspect because they wanted to get Weidmann on board. Here are two recent comments on ECB policy and some of my own.

The ECB's forward guidance last week was begun with unanimous support including the German contingent. I think this is a very significant development in the European sovereign debt crisis because it moves the ECB that much closer to full…

News links for 8 Jul 2013

For India, oil prices currently stand at recent record highs (except possibly the oil India buys from Iran at a discount). Given that domestic petroleum is generally subsidized by the government, this spike is sure to put significant…

Interest rates will stay low for a long time - long as in years, not months. In the UK there is a risk that a weakening currency may lead to some modest increase in inflation but, generally speaking, inflation is not a problem, and all…

In the past two weeks, a lot has happened in Europe. I would say the general tenor of the news flow has been downbeat. Nevertheless, I am mostly positive on Europe. I don't see an imminent eurozone breakup, nor do I see a further dip into…

Banks appear not to have heard the old Wall Street saying, “A position is a trade that didn’t work out.” I suspect they are going to be long their REO for a more protracted period than they anticipate. Stay tuned.