bubbles

Three From Xi (bonus 4th for CNY)

By |2020-10-28T16:35:01-04:00October 28th, 2020|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Physical cash vs. bank reserves. Quality growth vs. quantity. Xi Jinping vs. everyone not onboard with Xi Jinping. All three contests are actually very simple and straightforward – once you let go of the strong economy, money printing Federal Reserve nonsense. As to the last of the trio, Emperor Xi has been awfully keen this year to redo government flags.Communists [...]

Currency Risk That Isn’t About Exchange Values (Eurodollar University)

By |2017-08-28T17:28:03-04:00August 28th, 2017|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

This week the Bureau of Economic Analysis will release updated estimates for Q2 GDP as well as Personal Consumption Expenditures (PCE) and Personal Incomes for July. Accompanying those latter two accounts is the currently preferred inflation standard for the US economy. The PCE Deflator finally hit 2% and in two consecutive months, after revisions, earlier this year. The inability of [...]

Big Changes In Central Bank Theory Pressing Changes in Operations

By |2014-11-10T12:38:29-05:00November 10th, 2014|Economy, Federal Reserve/Monetary Policy, Markets|

The important point about doctrinaire ideology is its utmost rigidity. For the longest time that was relevant to the operations of central banks, as they practiced what might have been the most modern version of a new religion. From the end of the gold standard in the 1960’s (1971 was simply the last step in the process) until only recently [...]

Less Than Burgers

By |2014-10-21T15:28:55-04:00October 21st, 2014|Economy, Federal Reserve/Monetary Policy, Markets|

With all of the credit market fireworks that leaked into stocks, the pace of economic reassurance from “authorities” has been rather steady and a bit more emphatic. Despite the attempts at managing perceptions, there has been very little actual success in persuading. In many ways this is like the unfolding ebola drama in that there is a palpable disconnect between [...]

Yellen’s Preferred Approach to Bubbles, A Joy To Behold

By |2014-10-03T11:22:52-04:00October 3rd, 2014|Bonds, Economy, Federal Reserve/Monetary Policy, Markets, Stocks|

In looking at the “portfolio effect” of monetary policy, monetarists always see benefits without costs. The one exception in recent years has been Jeremy Stein of the FOMC, who is no longer a member. It was his statement in February 2013 about “reach for yield” that seems to have set off something odd in the policy apparatus. Some of that [...]

The Greater the Stock Bubble, the Less Monetary Theory Holds

By |2014-08-26T16:42:10-04:00August 26th, 2014|Economy, Federal Reserve/Monetary Policy, Markets, Stocks|

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 been lower as we have [...]

It Really Is Deflating

By |2014-08-13T16:50:09-04:00August 13th, 2014|Economy, Federal Reserve/Monetary Policy, Markets|

One more point on retail sales and consumer spending, as though the figures presented earlier are, I think, all pretty demonstrative of what is taking place in the economy, they can still be enhanced by taking account of additional factors. None of the data from retail sales or Gallup’s measures of economic advance are “deflated” or adjusted for changes in [...]

Downward Revisions Push Valuations Even Higher

By |2014-06-09T12:22:28-04:00June 9th, 2014|Economy, Federal Reserve/Monetary Policy, Markets, Real Estate, Stocks|

The quarterly update of the Flow of Funds Report (now called the Financial Accounts of the United States, but still Z1) means we can update a couple measures of stock market exuberance – Tobins Q and Market Value of Equities compared to GDP. The delay in preparing and releasing the data, however, means staleness since the latest estimates are for [...]

Bubbles and Skepticism Split By Earnings and Sales

By |2014-06-05T11:29:59-04:00June 5th, 2014|Bonds, Economy, Federal Reserve/Monetary Policy, Markets, Stocks|

Nearly all (97.5%) of the S&P 500 companies have reported for the first quarter. EPS for the index companies stumbled rather spectacularly, though weather is being blamed for nearly all of it. Back on January 23, index EPS in Q1 was expected at around $29.40 (as reported). As of the latest update, EPS is only at $24.79, a 15% miss [...]

Bonds’ Eye View Of Stock Exuberance

By |2014-05-15T16:45:09-04:00May 15th, 2014|Bonds, Economy, Federal Reserve/Monetary Policy, Markets, Stocks|

This is probably unusual in that posts intended as a discussion about the stock market typically feature stock prices or market indices. Rather, I intend to use here only bond market prices and indications and still make interpretations about stock market risk. My colleague Joe Calhoun has pegged stock investors as threading the needle – looking for data that is [...]

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