On Friday I sat down with Richard Bonugli at the Financial Repression Authority and Doomberg to discuss the current situation in global energy and tried to peek into the future as to where Europe and the US are going to find the means to provide dependable and affordable energy to power economic growth. Enjoy the podcast and hopefully it will lead to more high levels of discussion on all things global macro.
Posts Tagged ‘portfolio balance channel’
Notes From Underground: Neutral
August 16, 2022Notes From Underground: Time It Was, What a Time It Was
August 27, 2019These Simon and Garfunkel lyrics could apply to the events of this past weekend, the bookends of Jackson Hole and the G-7 meeting. The meaning was best summed up i a Financial Times story that quoted St. Louis Fed President James Bullard, who said, “Something is going on ,and that’s causing I think a total rethink of central banking and all our cherished notions about what we think we’re doing. We just have to stop thinking that next year things are going to be normal.”
Notes From Underground: The FOMC, BOJ and German Elections Lead the Way to Quarter-End
September 18, 2017As the earth rock keeps spinning we continue to monitor global events that could make investors/traders dizzy. This week the FOMC is EXPECTED to announce that it will begin its quantitative tightening (QT) by revealing the date of its plan to shrink its balance sheet by a net $10 BILLION of assets a month ($6 billion of Treasuries, $4 billion of MBS) and increasing the amounts quarterly so the program results in little market disruption. Remember, Chair Yellen has said she believes that it will be “like watching paint dry.” The world’s equity markets — especially the U.S. — are reflecting little concern about the Fed withdrawing “small” amounts of liquidity.
Notes From Underground: Is There Something Bigger Bothering the Bond Markets?
May 13, 2015UPDATE: Congress has added a new mandate to the Fed’s responsibilities. Every Sunday during the NFL season the FED will have control of the official balls for all NFL games because the central bank has proved it will never let anything deflate.
Notes From Underground: Let’s Make Sense of Bernanke Making Cents
May 4, 2015Last Thursday, former Fed Chairman ” surprised” the investing public and announced he was adding a second quiver to his “bagged trophies” and taking on a consultancy with PIMCO to complement his other consultancy with Citadel. Mr. Bernanke claims he can work for investment funds because it does not conflict with his previous role as the key supervisor of too big to fail banks. The former chairman is an active blogger but I assume his blogging will cease when he becomes active with his new employers. Yet on April 30, Ben wrote a post on the WSJ’s Editorial Page Watch. The BLOG was criticizing the WSJ for its editorial, “The Slow-Growth Fed.” In the BLOG Bernanke takes the WSJ editorial board to task for criticizing the Bernanke Fed for overdoing QE and its failure to stimulate GDP. Bernanke takes cover by arguing that the WSJ has been wrong in its forecasting because it has argued on its op-ed pages that the FED’s QE policies were going to cause a “… breakout in inflation and a collapse in the dollar since 2006….”
Notes From Underground: More On Japan
November 3, 2014The question for global macro: Why did the Japanese decide to become more aggressive on quantitative easing at this moment? The YEN had been stable for most of the year, trading between 101 and 106 YEN to the DOLLAR and between 135 and 140 on the EUR/YEN for the previous four months. The Japanese seem to exert pressure after international meetings. The IMF and G7 and G20 ended in mid-October so either the Japanese wanted to avoid criticism about depreciating its currency or it received the GREEN LIGHT from the G7 members to get more aggressive on its QE efforts. Readers of NOTES FROM UNDERGROUND can revisit a blog post from October 15, 2012 when I noted that the G7 communique seemed to give the Japanese authorities a “wink” in its efforts to weaken an overvalued YEN. Let’s examine some other possibilities for renewed efforts by the BOJ to weaken the YEN and, of course, lift equity prices in a simultaneous move:
Notes From Underground: Yellen Dethrones Bernanke
October 20, 2014Last Friday, Chair Yellen delivered a speech at the Boston Fed’s Conference on Opportunity and Inequality. The present Fed Chair has frequently opined on the social and economic problems of income equality and I have been very critical of her wading into the waters of social and fiscal policy for many of the previous 80 years issues of wealth inequality have been dealt with through fiscal and social action. I don’t have a moral issue with Yellen’s outlook on wage inequality but I do not think it is the purview of the Federal Reserve Board to use its financial authority in placing the issue into the public domain. The FOMC has enough on its list of responsibilities without taking on the role of advocate for workers of America. Yellen’s dinner table and social engagements is a fine arena for her moral views but she dreads into very dangerous waters when using the political power of her office.
Notes From Underground: Mama, Don’t Let Your Children Grow Up To Be Global Macro Traders
September 4, 2014Well, NOTES FROM UNDERGROUND gets an A+ for analysis and an F or incomplete for EXECUTION. Caught off guard by Draghi’s timing, the market never provided a rally for the more cautious trader. The euro currency began its break 55 minutes before the official ECB rate announcement as Reuters ran a story revealing the governing board’s discussion of a supposed EU500 BILLION ABS program. A leak during the meeting should provide reason for the ECB to investigate its security breaches and find out who is making money from revealing important information ahead of the governing officials. It must be like Congress, where elected representatives are allowed to be insider traders.
Notes From Underground: The Outcome of Jackson Hole … It’s All Theoretical
August 27, 2013At Jackson Hole there was no Ben Bernanke so therefore no policy announcements as in August 2010 when the famous PORTFOLIO BALANCE CHANNEL (PBC) speech signalled a major shift in Fed policy. Last year was similar as the Fed Chairman used Jackson Hole to alert the market to another round of QE. The most senior Fed official was Janet Yellen and she served more as a panel moderator. This was no place to stake out Vice Chairman Yellen’s claim to the chairmanship. So the discussions of the week were as always, esoteric and academic. But the key take away: There were several papers delivered by acclaimed academics who disagreed with the FED‘s policy of large-scale asset purchases and quantitative easing. Therefore, the conclusion is that the FED‘s present policy is highly theoretical and not based on a SCIENTIFIC proof and the entire basis of QE is open to critical analysis. The talking heads want to believe that TAPERING has a certain outcome. By definition, theoretical outcomes are theoretical and based on probabilities.
Notes From Underground: Everybody Is Talking At Me, Can’t Hear a Word They’re Saying (Only the Echoes of the Bonds)
May 21, 2013This week has been loaded with FED OFFICIALS filling the airwaves with thoughts about ending QE or just tapering, with the markets left to discern how, when and how much. Today, the NY FED President presented a speech at the Japan Society in New York City, titled, “Lessons at the Zero Bound: The Japanese and U.S. Experience.” President Dudley compared and contrasted the mistakes made by the Japanese and U.S. monetary authorities and what they had been able to learn from each other. The speech was not critical about recent Japanese monetary moves, which infers that the FED is very comfortable with current BOJ policy. The NYFRB president does tell seem to support Chairman Bernanke in being a ’37er, meaning the FED cannot allow the mistakes made in 1937 by the U.S. Treasury and Federal Reserve Board to recur. This belief emphasizes that deflation is the most powerful variable that can disrupt the political economy.