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forward guidance

Weekly Market Pulse: It’s Always Different This Time

By |2022-11-07T09:29:26-05:00November 6th, 2022|Alhambra Portfolios, Alhambra Research, Bonds, Commodities, Currencies, Economy, Federal Reserve/Monetary Policy, Markets, Real Estate, Stocks|

The FOMC met last week and did what everyone expected them to do - raised the Fed Funds rate by 0.75%. The bond and stock markets reacted not to this action but to the commentary provided by the committee in its statement and by Chairman Jerome Powell at his post meeting press conference. The former had a new phrase, a [...]

Weekly Market Pulse: Jerome Powell, Tough Guy

By |2022-09-26T11:50:30-04:00September 26th, 2022|Alhambra Portfolios, Alhambra Research, Bonds, Commodities, Currencies, Economy, Federal Reserve/Monetary Policy, Markets, Real Estate, Stocks|

Jerome Powell wants everyone to know that he's read Paul Volcker's autobiography, "Keeping At It". He has used this phrase repeatedly since Jackson Hole, apparently believing that he needs to channel Mr. Volcker's gruff demeanor in order to get markets to do what he thinks they should do. He and others on the FOMC were not pleased with the stock [...]

China, Australia, and The European Way Into Reverse Repo

By |2021-09-01T20:19:50-04:00September 1st, 2021|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

We are going to start here with Europe before heading to Australia and then getting to China – and then currency. Why the ECB? It is going through the same pangs of dissatisfaction as its cousin the Federal Reserve had last summer. Like the Fed in 2020, Europe’s central bank in 2021 has climbed to the end of its grand [...]

From QE to Eternity: The Backdoor Yield Caps

By |2020-06-03T18:14:49-04:00June 3rd, 2020|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

So, you’re convinced that low rates are powerful stimulus. You believe, like any good standing Economist, that reduced interest costs can only lead to more credit across-the-board. That with more credit will emerge more economic activity and, better, activity of the inflationary variety. A recovery, in other words. Ceteris paribus. What happens, however, if you also believe you’ve been responsible [...]

How We Got Here: The Mathematics of Ideology, Not Science

By |2017-04-10T18:53:20-04:00April 10th, 2017|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

You may or may not know much about forward guidance, but it has been of constant attention on the minds of policymakers. Further, policymakers themselves don’t seem to be able to define it, and because of it they can’t seem to solve the bond market puzzle. In orthodox economics, forward guidance is either “Delphic” or “Odyssean.” As usual, there is [...]

We Have Met The Enemy And He Is Us

By |2015-09-27T22:44:32-04:00September 27th, 2015|Bonds, Commodities, Currencies, Economy, Federal Reserve/Monetary Policy, Markets, Stocks|

If the consequences for the economy were less important one couldn't help but be amused by the predicament in which Janet Yellen finds herself today. She and her fellow Fed travelers have been "preparing" the market for a rate hike for nearly a year and now it is that very preparation that has kept them from hiking rates as planned. [...]

‘Rationality’ Behind the Currency Genocide

By |2015-04-22T10:41:10-04:00April 22nd, 2015|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

I believe the phrase that is attaining Paul Krugman all these invitations to “consult” on economic failure is one that he has used pretty consistently for years. He says “deflationary vortex” and for a long while it was ignored as studious monetarists were busy inflating away; except that none of them, from the Fed to BoJ to the ECB, even [...]

Rational Expectations or Bubbles

By |2015-03-10T11:40:30-04:00March 10th, 2015|Markets|

The FOMC has been talking, so we hear, about changing “forward guidance” to indicate a potential rate hike sooner rather than later. They had already changed the basis of “forward guidance” back in September which largely negated what forward guidance actually meant. The concept is only pliable in the manner in which monetary theory has to follow “rational expectations.” Whenever [...]

Logical Fallacy Under The Coming Neo-Keynes Orientation

By |2014-12-22T17:42:41-05:00December 22nd, 2014|Economy, Federal Reserve/Monetary Policy, Markets|

As distasteful as it can be, there will be, I believe, a necessary condition whereby closer examination of Paul Krugman’s writings and rantings is fruitful. The rise of Keynesian doctrine, more specifically the re-rise, seems to be more and more prevalent especially as the global economy careens out and away from all the trillions in monetarisms that have been perpetrated [...]

A Considerable Period

By |2014-12-14T17:52:06-05:00December 14th, 2014|Bonds, Commodities, Currencies, Economy, Federal Reserve/Monetary Policy, Markets, Stocks|

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, as the effective rate has [...]

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