201505.25
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The Pretense Of Knowledge

If man is not to do more harm than good in his efforts to improve the social order, he will have to learn that in this, as in all other fields where essential complexity of an organized kind prevails, he cannot acquire the full knowledge which would make mastery of the events possible. He will…

201505.25
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Japanese Banks

Japanese bank stocks surged over 50% from December 2012 through the first half of 2013. Since, they have been in what one might call a consolidation phase. The initial surge coincided with expectations of the effects of Abenomics. The consolidation was a 1.5 – 2 year wait and see period, somewhat of a battle between believers…

201505.22 0

Yellen Puts The ‘Dollar’ Back On Suicide Watch

Volatility in UST trading declined a bit in the past few days, as treasury yields became far more settled intraday. While that breaks the exact duplication Monday and Tuesday this week traced from Monday and Tuesday last week, the past two weeks overall remain remarkably similar. And for all the noise, the ups and downs…

201505.17
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10 Year Expected Returns and the Taylor Rule

After 3 decades of disinflation and 15 years of very aggressive monetary policy, asset prices are high. Returns are expected to be below average for the next decade. Given the hyper-aggressive monetary policy of the last 6 years, the historically low yields on bonds means multi-asset class portfolios will be hampered by low returns on…

201505.11
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Reflation Or Economic Zombie Trading

With the “dollar” off the ledger as far as a menacing factor, perceptions have begun to shift toward different if still-confused rhetoric. Figuring out fixed income isn’t always straightforward to begin with, but as the “unexpected” flirtation with deflation over the past few months threw a huge wrench into the economic boom supposedly forming the…

201505.10
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Greatly Exaggerated

The reports of my death are greatly exaggerated. Mark Twain Over the last few years I’ve read a plethora of articles about this supposedly hated bull market in stocks. It is said that this is the most hated bull market in history and while I’d argue with that a bit, it isn’t far off the…

201505.06 0

Janet Yellen, A Bear Late and a ‘Dollar’ Short

For policymakers a sense of timing doesn’t appear to be among the highest qualities demanded. That certainly applies to almost every economic proclamation that has come out of any central bank globally, as they both fail to ever see forming recession and always proclaim recoveries that don’t happen to exist. It’s not just a matter…

201505.03
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A Considerable Transitory Period

Transitory: 1. tending to pass away; not persistent 2. of brief duration Transitory is the term the FOMC used to describe the factors that held back the US economy in the 1st quarter. With the GDP report coming earlier in the day the FOMC had no choice but to acknowledge the slowdown but as many seem…

201505.03
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Monitoring Markets

A look at relative value for the 2 major asset classes. Historic valuation measures indicate more risk currently in bonds than stocks. Momentum favors equities over bonds. The macro economic backdrop is likely to be more favorable for equities than bonds. The macro economic backdrop suggests that one should look for yield by taking on more credit…

201504.26
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Down The Rabbit Hole

When logic and proportion have fallen sloppy dead And the white knight is talking backwards And the red queen’s off with her head… Grace Slick, White Rabbit ‘Twas brilling, and the slithy toves Did gyre and gimble in the wabe: All mimsy were the borogoves, And the mome raths ougrabe Lewis Carrol, Jabberwocky For those…