201802.21
9
5

Independence, At Some Point

The Federal Reserve is ostensibly an independent agency of the government. Already it is beset by a contradiction. How can it be independent if it is otherwise an arm of the federal structure? It’s a problem beyond mere perception that officials have struggled to overcome since its inception. Between the Banking Act of 1935 that…

201802.13
7
4

A Boom Of Hysteria

It’s always been easy to lose perspective. In the modern social media age, maybe it has become even easier. Conventional wisdom rarely seems to get challenged anymore, particularly given the assignment of “what everybody knows.” Big Data is, for example, predicated on a very good theory, the wisdom of crowds. It hasn’t yet lived up…

201802.07
5
0

Global Asset Allocation Update:

There is no change to the risk budget this month. For the moderate risk investor the allocation to bonds is 50%, risk assets 45% and cash 5%. Despite the selloff of the last week I don’t believe any portfolio action is warranted. While the overbought condition has largely been corrected now, the S&P 500 is…

201801.31
2
6

(Chicken) Hawkish

You have to go back four years for some honesty. The FOMC in January 2014 could be more forthright simply because the committee’s members believed they wouldn’t ever have to explain themselves. They voted to taper QE at the end of 2013 with the expectation that the economy would perform as their econometric models laid…

201801.30
1
2

Yellen’s Final Cacophony

In late January 2012, the FOMC released an official statement confirming to the world what had long been expected. The official goal of monetary policy, or at least one of them, was to achieve price stability being clearly defined as 2% inflation (PCE Deflator). It was part of the ultimate transformation of Federal Reserve policy,…

201801.30
1
1

You Know What They Say About Appearances

It used to be a big deal, the kind of move that would itself move markets all over the world. Very quietly, JPY has been trading higher over recent weeks and has reached a level of appreciation we haven’t seen since those rocky days in early September. Only then, a rising yen (falling dollar) was…

201801.29
3
2

Globally Synchronized What?

In one of those rare turns, the term “globally synchronized growth” actually means what the words do. It is economic growth that for the first time in ten years has all the major economies of the world participating in it. It’s the kind of big idea that seems like a big thing we all should…

201801.23
5
3

Central Bank Transparency, Or Doing Deliberate Dollar Deals With The Devil

The advent of open and transparent central banks is a relatively new one. For most of their history, these quasi-government institutions operated in secret and they liked it that way. As late as October 1993, for example, Alan Greenspan was testifying before Congress intentionally trying to cloud the issue as to whether verbatim transcripts of…

201801.19 5

What About 2.62%?

There’s nothing especially special about 2.62%. It’s a level pretty much like any other, given significance by only one phrase: the highest since 2014. It sounds impressive, which is the point. But that only lasts until you remember the same thing was said not all that long ago. Back last March, the 10-year yield had…

201801.19
3
2

Nothing Goes In A Straight Line

A decade ago, the financial world was alive. I don’t mean alive in the same way much of humanity was at the fall of the Berlin Wall or on VE Day in 1945. Rather, people at that particular moment had their eyes pulled opened just a bit for the first time in a very long…