Credit Writedowns

This is going to be a short thought piece. But the takeaway should be that the convergence to zero will continue unabated as the threat of inflation is muted given the combination of excess capacity, high private debt and unfavourable…

The Reserve Bank of New Zealand is now signalling rate cuts are possible, coming out of its last policy meeting. Its 10-yr bonds have the highest yield of all developed economy major Central Banks. Meanwhile the US Federal Reserve’s last…

I am going to leave my market-based analysis and enter the murky waters of the political economy. I don’t like the uncertainty of the political economy, given how it is based on the quixotic and unpredictable actions of individuals. But the…

Compared to the 1930s, this deflationary crisis has played out much slower and more benignly. That doesn’t mean it isn’t a crisis. It is one, as evidenced by the beggar-thy-neighbour tactics like negative rates and quantitative easing that…

In the wake of the turmoil surrounding the Swiss Franc, the Danish krone has become the subject of speculative attack. Unlike the Swiss, the Danes have a peg to the euro that is permanent and long-lasting. They also have a backstop via a…

I had been intending to write this post as a counterpoint to what I wrote yesterday about curve inversion. The Chief bullet point was going to be about the Fed’s not wanting to create curve inversion. But with the Swiss National Bank move,…

The Swiss National Bank’s announcement that it had decided to scrap its floor for the Swiss Franc against the euro is the biggest thing to hit the foreign exchange market since the UK and Sweden were booted out of ERM. This is a very big…

This is going to be a brief post on another of my potential ten surprises for 2015. The thesis here is that, with two year rates at 0.52%, all we need to invert the yield curve is a 50 basis point hike. While there is considerable…

We are still in a post-crisis environment, and enough people are still negative on equities, and interest rates are low enough, to provide plenty of purchasing power. We therefore expect it to be an ok period for equities over the next year…

Yanis Varoufakis had a long interview on RT’s Boom Bust yesterday going into detail behind his political candidacy and what he expects SYRIZA to do regarding the unsustainable debt burden that the Greek government now has. Overall, despite…