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Sober Look 181 posts 0 comments

Sober Look is a no-hype financial markets/macro blog that typically relies on data analysis, primary sources, and original materials. We keep it concise, to the point, with no self-promoting nonsense, and no long-winded opinions. If you are looking for Armageddon predictions or conspiracy theories, you will be thoroughly disappointed. Topics include financial markets, banking, asset management, risk management, derivatives, global economy, policy, and regulation, with the emphasis on finance education. Follow him on his blog or twitter.

Markets

Emerging Market underperformance is worsening

Sober Look Jun 20, 2013

Emerging markets underperformance that started in late 2011 is continuing. While part of the gap has been due to US equities generally outperforming global shares, we now have some 60% dispersion between emerging markets and the S&P500.

Economy

New warning signs for China’s economy

Sober Look Jun 20, 2013

One of the key risks of course is the size and health of the shadow banking system. Fitch in particular has been ringing some alarm bells with respect to China's private credit growth.

Economy

Chart of the day: Chronic American excess capacity

Sober Look Jun 18, 2013

The long-term trend in capacity utilization in the US shows a secular decline. After each major recession over the past 50 years, capacity utilization peaked at a lower level than after the previous recession. So far in the post-Great…

Economy

Chart of the day: Does this violate key principles of money creation?

Sober Look Jun 17, 2013

In spite of the divergence in the chart, the "loans create deposits" axiom still stands - deposits are still created through bank credit. Two key developments explain much of this divergence without violating these principles.

Economy

Fed’s securities purchases blunt the impact of convexity hedging

Sober Look Jun 14, 2013

Mortgage backed securities (MBS) have sold off sharply over the past month as fixed income markets face the new reality of rising rates. But unlike most other fixed income securities, MBS duration tends to increase with yield.

Markets

Money markets are not benefiting from rising interest rates

Sober Look Jun 13, 2013

Once again, savers are punished - they either have to take risk (such as rate or credit risk) or live with 5bp (or less). Money markets simply have not benefited from higher interest rates.

Markets

When will the rise in US mortgage rates hit consumer demand?

Sober Look Jun 11, 2013

As mortgage rates in the US reach the highs not seen since early 2012, many are asking the key question: would this rise in rates impact the housing market or consumer sentiment?

Markets

Australia: Market not buying RBA’s optimism

Sober Look Jun 6, 2013

Australia's central bank left rates on hold yesterday as was generally expected. The RBA continues to be quite hawkish as well as relatively optimistic on the nation's economy. Given the "cash rate" is at historical lows at 2.75%, the board…

Economy

Weak income growth should hold back US consumer spending

Sober Look Jun 4, 2013

While consumer spending is up on the previous year, the growth in spending has moderated to the lowest level in three years.

Economy

Zero rates mean Americans are giving up on Certificates of Deposits

Sober Look May 13, 2013

Retail savers in the US are abandoning certificates of deposits (CDs). The amount of CDs outstanding that are $100K or smaller has been on a sharp decline since the recession and is now at the lowest level since the Fed began keeping track…