The Greater the Stock Bubble, the Less Monetary Theory Holds

The actual total accumulated balance for margin debt in reported stock accounts fell in July from June’s record amount. But even with a decline in stock-related debt investors moved even further toward complacency, as declines in free credit and available cash more than outpaced the drop in margin. As a result, net worth has never .. read more

The Jackson Hole Snoozefest

The stock market rallied hard into Janet Yellen’s speech Friday at Jackson Hole, expecting some epiphany I suppose about the future course of monetary policy. What we got instead was Labor Market Dynamics And Monetary Policy, the purpose of which I can only suppose was to bore the market to death. Economics is not the .. read more

Gold, Bonds and Global Repositioning

There is a growing bid for safety in almost every corner of the globe at this moment, save for a few outliers. Even the 10-year JGP sits at 50 bps today despite the spike in consumer inflation engineered by the Bank of Japan’s QQE. Of course, with BoJ buying up almost everything in sight, that .. read more

They Used to Deny Bubbles Even Existed

Shorter version on secular stagnation and Jackson Hole equivocation on QE’s end: “We had to blow bubbles because that’s the only way to get the economy to grow, and now we have to start thinking about the inevitable consequences of that.” As does the bond market. There is nothing yet, however, to break the rationalization .. read more

The Anniversary: No Going Back

It is hard to believe that this past weekend marked the seventh anniversary of the paradigm shift in global financial function. Everything that has occurred in the years since can be traced to those days in August 2007 when money markets broke down for the first time. Even the current, though measured, move away from .. read more


Stocks managed to finish the week on a positive note after a volatile ride that seemed to be based mostly on the changing geopolitical situation. Stocks fell with the imposition of retaliatory sanctions from Russia and rose as Putin seemed to back off at the end of the week. Thrown into the mix was an .. read more

Margin Debt Returns

Margin debt again escalated in June, putting some emphasis back into the smaller caps and their high beta compatriots. After surpassing the dot-com bubble’s previous levels for both nominal margin usage and negative investor net worth in February, some caution was re-admitted if only briefly. There wasn’t much discernable impact on the broader market indices, .. read more

Predicting The Future Is Hard

“Conditions for a hard economic landing — like slack in the labor market and weak balance sheets — are still largely absent.” If the case for U.S. stocks is built on global growth and lower interest rates, other factors, too, suggest that the market is heading higher. For one, Washington is determined to avert a financial .. read more