On the fiscal cliff, Rothschild, and the Fed

Just as soon as much of the smoke of systemic risk had cleared and the market rallied during the summer months on the back of accommodative ECB and Fed policy action, it has since resorted to a heightened state of uncertainty and alarm in recent weeks. Investors now worry about the effectiveness of the Fed’s … Continue reading

Clear skies not yet ahead – implication and outlook of Greek election

                                                                                                                      Source: HALC The June 17th election in Greece turned out pretty much as expected. All eyes now turn to its implications and the several concomitant steps that follow. Many are calling it a non-result since the people voted (with only a disillusioned 60% participation) in similar fashion to the first election in May (despite … Continue reading

The Market Bears come out to play

It’s spring time again. As nature has intended it, the bears are coming out of hibernation to forage for food after a long winter of inactivity. Such is also the case on Wall Street. The roughly +30% rally in the market from October 2011 lows to April 2, 2012 put the bears into their seasonal … Continue reading

Mechanism for US Economic Growth

  Economic prosperity begins and ends with Growth and its catalyst, Confidence   Fiscal Coordination – The debt-ceiling melodrama revealed the fierce partisanship between Republicans and Democrats on a national stage. It then and rightly so triggered the debt downgrade of the S&P, which bred fear, panic, and a loss of confidence in Washington’s ability … Continue reading

After Jackson Hole – 4Q 2011 Market Outlook

The financial world eagerly awaited Ben Bernanke’s annual speech from Jackson Hole, Wyoming on Friday morning August 26th, 2011. Market analysts and economists focused on trying to predict what panacea the Federal Reserve Chairman would offer to an ailing economy struggling to grow with unusually decade-high unemployment, low consumer demand, and depressed prices. Of the … Continue reading

Capitulation Creates Opportunity

We’ll be among the first to see yesterday’s market action as an outright capitulation and a near term buying opportunity (Lazslo Birinyi, Barton Biggs are included in the bull market camp). Once the dust settles and fears are allayed, the markets will recover much of their losses (S&P is down -5% ytd) and retrace to … Continue reading

Remember MV=PQ…?

We recently came across a blog post claiming evidence to a wildly speculative time in the equity markets. The expansion of the US monetary base from roughly $800b in 2008 to $2.4t today (tripling in 3 years since the crisis) is a signal, according to this post, that the FED is caught between a rock … Continue reading

“The Ketchup Declaration” 10 years on…

We’ve made the point before that the Fed’s quantitative easing strategy is essentially its last and only weapon (after lowering yields to basement levels) in its monetary arsenal to inflate the economy out of the Great Recession.  The POMO programs not only provided insolvent banks with adequate capital to stay afloat and keep the credit … Continue reading

Outlook 2011: Part II

The greatest threat to a higher-trending stock market is the wrath of the Bond Vigilantes.  And as Roubini came out and stated in his Bloomberg interview from Davos, a reprisal of the markets from the Bond Vigilantes would spell disaster, a “train wreck” type of destruction. “We’re not doing much about the budget deficit,” said … Continue reading

Here’s Why You Should Be Scared Of Deflation

Here’s Why You Should Be Scared Of Deflation US Economics Editor of The Economist, Greg Ip, provides a solid analysis of the risks of deflation and the effectiveness of monetary policy in today’s current economic environment. In short, monetary policy becomes ineffective in times of deflation as the cost of borrowing becomes positive again despite … Continue reading


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