US financial markets continue to be infected by elevated systemic risks from Europe. As the FOMC has noted for over a year now - "strains in global financial markets continue to pose significant downside risks to the economic outlook". Of course, we have our own...
Back on April 11th, when the spoo was only up 8 percent on the year, I penned the piece reprinted below [April 11th, Shhh!!! Don't Tell Anyone, Spanish Banks Have Problems] I really enjoyed writing this one. As I watch Spanish and Greek protests on the streets, and...
We have discussed the possibility of a lower IOER for some time now. Ever since the ECB went to a 0 deposit rate, and the Danish went to a -20bp deposit rate, the Fed's policy of a +25bps IOER has become increasingly suspect. The NYFED, and those associated with large...
Last Thursday we hosted John Taylor in NYC for the third installment of our Global Macro Speaker Series. John was asked 12 questions during the hour long session. The "abridged" answers to those questions are below. In the course of the discussion there was also a...
Below are a set of questions for John Taylor. These will frame the discussion tomorrow at our event in New York City. We have about 150 clients attending - it should be a lot of fun. The format will be the same as our previous events with Marty Feldstein, Ken Rogoff...
The 10yr Treasury yield is back to unchanged on the year. And the 30yr Treasury yield is now UP almost 20bps on the year. At the same time the Fed has introduced a $200b+ second round of operation twist, and an unlimited third round of quantitative easing. The Fed has...
Suppose the funds rate, throughout its 100 year history, averaged 10 percent. And further assume it had never been below 7 percent, even in the worst of economic times. In this make-believe world the Fed had many times eased to 7 percent as a recession hit, but after...
QE is NOT good for the long-end of the bond market. Rather than buying duration to front run the FED, with kneejerk precision, as was done initially after the QE1 and QE2 announcements, the market now fully understands that balance sheet expansion is inflationary....
I was nervous this morning. Would there be electricity? Would there be riots on the streets? Would the ATM work? Had the dike system started cracking? Would there be lines at every bank with angry men in viking hats, pig tails and swords demanding wads of Kroner? I...
Imagine that the state of California could not fund itself in the private capital markets. And as the state unemployment rate pushed north of 25 percent, basic government services ceased, pensions were slashed, house values plummeted and there was growing social...
Imagine that the state of California could not fund itself in the private capital markets. And as the state unemployment rate pushed north of 25 percent, basic government services ceased, pensions were slashed, house values plummeted and there was growing social unrest on the streets. California needed a massive fiscal adjustment to wean itself off […]
