A little over 3 and half years ago I was holed up inside an office on the third floor of the Marriner S Eccles building on 20th and Constitution Ave in DC. As many readers know, I chose to leave the private sector in 2009 after spending 16 years on the street. At the Federal […]
In an interview with Der Speigel last weekend, Mario Monti said – “It is because of the risk of a euro collapse that the difference between Italy’s interest rates and those of Germany are so great. In this way, the high interest rates that Italy is now having to pay are subsidizing the low ones […]
All aboard the Bernaghi Express – next stop risk asset paradise! The second iteration of “The Committee to Save the World” nailed it last week. The Fed is “closely monitoring” the situation and stands ready to provide “accommodation”. These are code words for imminent action. It will take some very strong US data, and a […]
First the easy one, US jobs. While payrolls was better than expected at 165k, the pop up in both the headline rate and the U6 rate are going to keep an “accommodative” Fed very much in play for September. This is probably the PERFECT number for risk assets. The data confirm the economy is NOT […]
While there was talk of BTP/Bono spread caps, LTROs, QE, SMP, rate cuts, forward language changes and central banking miracles of all kind before today, the markets got very little in terms of tangible central bank action from either the Fed or the ECB. That said, the statements were extraordinarily strong, and nowadays, words are […]
The bears are back on red alert because the Spanish and Italian debt markets are apparently going to destroy global risk asset markets, capitalism and modern civilization – AGAIN. But while the Spanish 2yr was busy skyrocketing 132bps last week, the Irish 2yr rallied 50bps, the spoo rallied 0.5 percent, the DAX rallied 1 percent, […]
There is a famous Time magazine cover from 1998, with a picture featuring 3 of the leading “regulators” at the time – Bob Rubin, Larry Summers and Alan Greenspan. The caption on the cover reads – “The committee to save the world”. Of course, in retrospect, these were the men who made “Too Big To […]
….Gimme an “R”. Yes it’s true, during the Q&A Ben put the IOER back on the table. Many pundits had written the IOER off as a policy tool after the minutes from September 2011 suggested officials were too scared of zero rates. According to Fed and financial industry folklore, the big bad zero rate wolf […]
Last week was very interesting and very tiring. I started off Monday in Dallas at a dinner with a very lively Texan crowd, and a guest appearance by an ex-ECB governing council member. Mixing Texan-style EMU bearishness with southern Mediterranean central bankers was almost as fun as mixing Alan Meltzer and Ken Rogoff. There was […]
The following passage from the minutes of the September 2011 FOMC meeting has become market gospel on why the Fed will not lower the IOER – “Participants discussed whether to reduce the IOR rate, weighing potential benefits and costs. A number of participants judged that a reduction would result in at least marginally lower money […]