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Markets
Economic and market themes: 2014-12-17 Flight to safe assets presents opportunities
I am going to concentrate on the news flow today and what it tells us about where this financial crisis is headed. Given the last mini-crisis we had in emerging markets was overcome relatively quickly, the present crisis doesn’t have to…
Tail risk zero bound dynamics are driven by credit risk, not interest rates
This is my third post on tail risk now. I think the continued and broadening market volatility we have seen across asset classes in the last few months is a sign of increased tail risk and i wanted to put some parameters around how to think…
Candidates for tail risk in 2015
Having just given you a mental model for thinking about tail risk, the natural next analysis is where the tail risk might be. Here are a few candidates.
A mental model for thinking about tail risk
Earlier today, yields for 10-year bonds in Greece shot up 200 basis points as investors contemplate the risk associated with a potential government transition. European Commission head Jean-Claude Juncker has waded into the domestic…
Comments on jobs in the U.S., buy-to-let in the U.K., and rules-based monetary policy
No one story sticks out for me today. So I thought I would make a few comments on the stories making the rounds today in the Internet. Let’s start in the U.S.
The dangers of a strong dollar and divergent monetary policy
This fall, oil prices have tumbled so quickly that the effect on inflation, monetary policy and the economy is likely to be dramatic. As yet, however, we don’t know what those effects are likely to be, in part because the economics…
Crisis watch: European travails, $50 oil, and Russian capital flight
The European situation is still flirting with recession, if we look at the latest PMI data. I think the drop in oil prices will give the Europeans an unmitigated boost but the longer-term situation is still dire given the policy framework…
A Brave New World
By Niels Jensen
The Absolute Return Letter, December 2014
“The deepest sin against the human mind is to believe things without evidence.”
Aldous Huxley
In the the last two Absolute Return Letters I have argued why one should expect…
The oil glut, Black Friday retail and falling yields
With Black Friday behind us, it’s a pretty good time to do a check of market currents and what they mean. And despite my generally optimistic view of the US near-term economic landscape, a lot of what I am seeing now points to continued…
Saudi market grab wreaking havoc on deepwater capex and high yield energy bonds
A month ago, I wrote a piece on zero rates, resource misallocation, and shale oil that warned of the potential negative impact that low oil prices could have on the funding for shale drillers and the potential contagion this drying up in…