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Predicting Europe’s endgame policy response
This morning I made the argument that the global economy is growing across the breadth of developed and developing economies. I still have a problem with Europe though as I believe the risk is to the downside. Basically, the policy response…
Understanding QE and the Fed’s predicament on tapering
At 2PM ET today, the Federal Reserve is releasing the latest FOMC statement. Market players do not expect the Fed to taper its large scale asset purchase program because recent economic data in the US have been weak. Given controversial…
Yellen’s rule-based approach to forward guidance is coming
I believe policy makers at the the Federal Reserve have soured on the marginal effectiveness of quantitative easing as a primary tool for monetary policy. As interest rate policy is still not effective with the policy rate at zero, forward…
Housing bubbles in Sweden and Germany and the over-reliance on monetary policy
The central banks in Sweden and Germany are concerned about overheating economies as the European sovereign debt crisis has led to a net inflow of investment into their housing sectors. If one looks at European economic policy, these…
US growth on track once the debt ceiling impasse is overcome
Summary: I expect the debt ceiling impasse to be overcome today as a result of a Senate-brokered deal. With this manufactured crisis out of the way, we can concentrate on earnings and on the economy. While US growth is on track, I expect…
Europe: Italy’s call for a stimulus – structural reform trade-off will happen
Backloaded austerity is the defining paradigm at work in Europe right now. Italian Prime Minister Enrico Letta has called for this paradigm to be bolstered by fiscal stimulus incentives as a quid pro quo for structural reform. I believe he…
Implications of the German elections for the economy and markets
Summary: The German elections were a resounding victory for German chancellor Angela Merkel. Nevertheless, she must still broker an agreement for a coalition government and this will change the politics of Germany and Europe. Below are my…
The Lame Duck President Obama and the Fed Nomination
US President Barack Obama is in his second term in office. And because he cannot run for office again, his decision-making is bound to be different this term than it was in the first term. We are now seeing that in Syria, regarding the NSA…
More on P/E ratios and whether this market is cheap
The P/E ratio is a statistic that, while all-encompassing, can be misleading in determining under- and overvaluation. Nonetheless regarding valuation it can be a useful guide in context.
On market vulnerability, profits, p/e ratios and the S&P500
My caution on U.S. markets is based not just on technical factors coming from the crisis in emerging markets and the longstanging lack of a market correction. I am also concerned that interest rates have started to rise against a backdrop…