Posts Tagged ‘Greenspan Put’

Notes From Underground: Is The Greenspan Put KAPUT?

April 19, 2018

I am borrowing this phrase from a Bloomberg Radio interview Thursday in which bond reporter Alexandra Harris (my daughter) used these phrase to discuss the speech today delivered by FOMC Governor Lael Brainard titled, “Safeguarding Financial Resilience Through the Cycle.” Alex noted that the tone of Brainard’s speech was spattered with references to the concept of LEAN or CLEAN. The binary analysis of monetary policy analyzed by BIS Chief Economist William White, led to White criticizing Chair Greenspan in a speech at Jackson Hole in 2003.

The recent flattening of the yield curves in the U.S. has precipitated discussion that the FED is moving too fast in raising rates with the market action predicting an impending recession. The discussion has been centered around recent FED speeches utilizing the White use of countercyclical capital buffers (CCyB) to slow the increase of leverage in the financial by having banks build up capital ratios to insure increasing financial vulnerabilities.

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Notes From Underground: The Tail That Wags the Dog

May 5, 2014

The global financial system is in a difficult state as the world’s central banks react to equity markets as a guide to economic policy. Ben Bernanke has to assume some responsibility for this because of his August 2010 Jackson Hole speech about the importance of PORTFOLIO BALANCE CHANNELS. In an effort to get the “animal spirits” of investors flowing Bernanke pushed for a second round of QE to make interest rates so low that investors, insurance companies and pension funds would choose to buy equities and high yield corporate debt, taking on more risk so as to arouse the capitalist’s desire for higher returns. Once this path is trod and the FED is the bartender rather than the designated driver, the question arises about when the system is healthy enough to sustain increased growth without a continued monetary infusion.

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Notes From Underground: Amazing Grace has appeared and it’s in Jackson Hole

August 24, 2010

Amazing Grace! How sweet the sound,
That saved a wretch like me.
I once was lost but now am found,
Was blind, but now I see.

The markets are reacting to a Wall Street Journal article by the new FED fair-haired minion, Jon Hilsenrath, and the great dissonance that took place at the last FOMC meeting. Our readers know that we have been very critical of the FED and its reliance on models that, on a good day, are so badly flawed. The pursuit of economic policies based on poor analysis has been a major problem and the markets are waking up to the fact that the FED is neither omniscent nor omnipotent. Today, the markets are responding to the fear that the FED is” lost in the ozone ” so risk is being taken off and the algorithm’s of the risk-off trade are in full motion.

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Notes From Underground: CNBC-Trader’s Buzz

August 16, 2010

Yra on CNBC

Watch me discuss FED policy–and flex my muscles–on CNBC.

Notes From Underground: The FED has created a ball of confusion

August 11, 2010

The FED set the markets into a state of confusion. Just after the release of the FOMC statement, the markets reacted. The DOLLAR sold off and the equity markets are bouncing and trying to get to “GRACELAND.Upon further review the markets have realized that more than offering up easy money as the solution, the fact that theĀ FED has made a 180 degree turn in four short months has the markets very nervous. Markets hate uncertainty and the FED‘s policy of maintaining the huge liquidity insteadĀ of removing the monetary stimulus is making them nervous.

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