It is always a great pleasure to be able to discuss the global financial situation with Louis Gave and have Richard Bonugli moderate the discussion. There are several issues discussed in this hour podcast but I want to provide listeners with a key rule of Gave: While it may seem like forecasting it is anything but. It is merely adapting to a changing landscape as global investing is dynamic in nature while so many critical academic models are STATIC. It is up to those who invest in myriad number of relevant asset classes to be aware of the changing conditions in an effort to MINIMIZE losses from ill-conceived trades while seeking to find the greatest profits potential from being able to analyze the changing conditions.
Posts Tagged ‘BOE’
Notes From Underground: Talking With Louis Gave
January 29, 2023Notes From Underground: ‘Twas the Week Before Christmas
December 18, 2022Last week, the leaders of the world’s central banks were attempting to regain their souls. FEDERAL RESERVE Chair Jerome Powell told tales of woe as workers were suffering as inflation rose. Crush the evil inflation out of the system is the battle cry in an effort to recreate the melodrama of Andrew Mellon in 1931: liquidate, liquidate, liquidate in an effort to Calvinize the evil from the economy by crushing demand. Powell did note that housing had weakened SIGNIFICANTLY and financial conditions HAVE TIGHTENED CONSIDERABLY but will have to be patient because monetary policy acts with a lag.
Notes From Underground: The Week That Was
December 19, 2021This past week has been the most challenging to recap because at least 20 central banks released statements about their monetary forecasts and outlooks. The most significant banks that we were watching — the FED, SNB, BOE, ECB and BOJ — performed as expected as the FED, ECB and BOJ announced the expected outcomes.
The Bank of England raised its overnight lending rate by 15 basis points as they had already ended asset purchases so a minimal rate increase was all they had to give in order to slow the rise in headline inflation. The Powell FED took the most DOVISH route possible in an effort to placate the Biden White House and its effort to stem the narrative of headline inflation and election outcomes. We at NOTES FROM UNDERGROUND had contemplated a complete end to QE but Powell (in his efforts to do something) merely doubled the pace of tapering laying the outcome to a finality in March rather than June. This is only important if the FED maintains its “forward guidance” of no rate hikes until the U.S. central bank’s BOND PURCHASES have concluded.
Notes From Underground: The Market Has Much to Consider
December 16, 2019Last week was filled with the culmination of many issues as we had the FED, ECB, trade agreement, UK election, impeachment hearings, and even an attempt at resolving the USMCA trade deal with Mexico and Canada.
Notes From Underground: The Hills Are Alive With … Sounds?
October 20, 2019There are so many sounds resonating in the global financial world it has been difficult to discern the impact of any particular tweet or headline. NOTES FROM UNDERGROUND hopes to cut through the babel to provide perspective, context and NUANCE. If we at NOTES cannot accomplish this then we’re just screaming into the chasm that is global macro finance. The impact of Chinese tariffs, Middle East maneuverings, QE programs — from the BOJ to the FEDERAL RESERVE (yes I know what the policy makers are saying — it’s not QE) to the ECB — need to be understood as they drive short-term moves but also have much longer consequences.
Notes From Underground: Bringing Europe to the Fore, Yet Again
August 20, 2019Whenever I have an appearance on CNBC with Rick Santelli, Europe proves itself as critical to U.S. monetary policy. The past five years have led to dialogue that questions the efficacy of ECB policy and the slight of hand moves by President Mario Draghi. As BUND yields drag all sovereign debt yields even lower, the central bank is struggling to find policies that will keep LOWER FOR LONGER going. It seems that the last play in the book is to provoke Jerome Powell to abandon any NORMALIZATION of interest rate policy regardless of the economic data reported by the U.S.
(Click on the image to watch me and Rick discuss Europe and monetary policy.)
Notes From Underground: The Jobs Report Was Not Data Dependent
March 10, 2019Wow! That was a serious miss by the forecasters on job growth as only 20,000 new jobs were added. The huge miss will prove to be an aberration but doesn’t matter at all. As I pointed out in Thursday’s blog — as well as on the PODCAST Peter Boockvar and I recorded with Richard Bonugli from FRA, the ECB’s pivot toward liquidity addition via cheap bank loans has forced the FED into a policy of “watchful waiting.” And Chairman Jerome Powell reiterated that stance in his speech Friday night as he stressed the need for caution in the search for normalization on rates and the balance sheet.
Notes From Underground: A Hard Brexit Is Going To Fall?
February 10, 2019The economic fallout from a “hard” Brexit has been debated in the media for the last few months. When I say “hard Brexit,” I mean that the U.K. leaves the European Union without any deal about trade rules, movement of people or any other binding treaty rules concerning the contemporary EU/U.K. relationship. I have refrained from forecasting outcomes because they are beyond the scope of economic analysis since it requires using models built of questionable assumptions. The British have a long history of economic intercourse intertwined with the lines of commerce from its empire.
Notes From Underground: The Umpire Strikes Back
December 19, 2018The Fed chairman is situated as the key arbiter of the economy and rules via its DUAL MANDATE. Given that it has a research staff of at least 500 economists the FED positions itself as ALL KNOWING, which is certainly okay as long as it accepts the consequences and lays aside the use of counterfactuals when its policies may turn out to be very misguided.
Notes From Underground: More Perspective In the Time Of Reflection
September 12, 2018First, to all of those in the NOTES community who celebrate the Jewish New Year, I wish you a year of health, peace and prosperity. To those who celebrate other spiritual endeavors I offer you a wish for health, peace and prosperity. Now, to the markets. In the past month I have spent time putting issues we’ve been discussing for the last nine years into perspective. Lately, the airwaves are filled with the accolades laid upon the policy makers who SAVED CAPITALISM. Listening to Paulson, Geithner and Bernanke pontificate on how they acted to save the system is enough to send me into fits of rage as the culprits who failed to act to halt the housing bubble praise themselves for the “Courage To Act.”