201501.30
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Research Charts: ECB and Commodities

From strategic research partner MRB…with Alhambra’s added commentary. QE is primarily a signaling device to demonstrate policymakers’ commitment to fostering the recovery and sustaining a cohesive monetary union. The policy is implicitly designed to reduce the equity risk premium. We expect a gradual re-rating of euro area equities. A cheaper euro, itself associated with QE,…

201501.21
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Dread The New Anchor

I mentioned yesterday in looking at the behavior of gold that it seems as if the “dollar” has entered a bit of a pause in its wider destructive reality of late. Maybe that coincidence with the SNB’s dramatic alteration offers an explanation for it, with renewed focus on the European end of eurdollars, or that…

201501.19
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The Dangers Of Leverage

Leverage: the use of credit to enhance one’s speculative capacity Merriam-Webster Give me a lever long enough and a fulcrum on which to place it, and I shall move the world. Archimedes The Swiss National Bank – the Swiss equivalent of our Federal Reserve – didn’t exactly move the world last week but the fallout…

201501.11
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Signs Of Stress

2015 has started with a bang with the Dow trading in a roughly 700 point range through the first six trading days. The increase in volatility started in the 4th quarter and appears to have entered the new year with a new – higher – range. The source of the volatility appears to be angst…

201501.09
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Complex Interbank Math, Part 2

The complexity of balance sheet mechanics, as observed in the prior discussion, offers a greatly altered view of liquidity and the ancient concept of elasticity. These are not just theoretical assertions, as we have seen them in practice on more than one occasion. The behavior of “liquidity” starting in August 2007 was exactly along these…

201501.09
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Complex Interbank Math, Part 1

The face of economics as it currently stands is the central bank. We have been programmed to simply infer that status in almost everything (good) that happens in the economy. In many ways, there are traces of that in the first concepts of central banking, even going back to the reformation in the latter half…

201501.04
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Checking In With Mr. Market

Mr. Market is the fictional business partner Benjamin Graham invented in his classic value investing book, The Intelligent Investor. As Mr. Graham describes him, Mr. Market is the business partner of the investor, offering on a daily basis to buy your share in the business or alternatively to sell you his share. There are times…

201412.21
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Questions For 2015

Well, it’s that time of year again, when all the pundits offer their crystal ball views of the coming new year. I don’t usually participate in the prediction game and this year won’t be any different. Like everyone else I wonder what the future holds but I know I have no special ability to predict…

201412.16
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Supply Indeed

After months of hearing about how the fracking “miracle” is totally, fully and comprehensively responsible for the drop in oil prices there is finally penetrating reality. After the continued disruption in the Chinese economy as well as the close onset of recession in Europe, plus full-blown recession in Japan and Brazil, all that is left…

201412.14
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A Considerable Period

con·sid·er·able 1. Worth consideration; significant 2. Large in extent or degree Merriam-Webster It was six years ago this month that the Federal Reserve cut the Fed Funds rate to its current target range of 0 – 0.25%, essentially cutting the interbank lending rate to zero. The upper end of that range hasn’t been a problem,…