The simple narrative about QE is drawn from what is believed a simple process. The central bank buys bonds and by doing so it is simply assumed to be an “extra” bid on bond prices; therefore interest rates fall in whatever issue is being targeted by QE. Even in the US, QE has had trouble with that simple relationship. Instead [...]
In April 2008, Nassim Taleb was becoming a household name criticizing the quant dominance in finance. Bear Stearns had just failed and the entire edifice of mathematical order was still breaking down, as the last bastions of credit default swap “supply”, the monoline insurers, were still rumored to be heading for insolvency (while the nightly news focused on whether that [...]
There is no doubt that the investment world, particularly bubble sectors of finance, need reminding how paper thin the layer of ease and order actually is. The calm created by central banks, and this applies to every jurisdiction with the possible exception of Switzerland (which took its very bad medicine in 2008), is only that. There has been nothing fixed, [...]
For a moment last week it seemed like 2010 all over again. The euro crisis has been officially declared dead and buried, but Portugal’s rumblings on top of Greece’s renewed and further financial insecurity certainly made it seem otherwise. Only certain markets seem to care, however, as investor attention no longer seems transfixed by European dysfunction the way it was [...]
The recession deepened in Europe, but that was not a surprise to anyone outside the economics profession. While Germany stays perched upon the precipice of another contraction (Q/Q), the rest of Europe was not so “fortunate”. While we can label these gyrations in GDP re-recession, double or triple dip, etc., the truth is that this is one continuous descent into [...]
From friend of Alhambra Brian Cronin: A question that comes up frequently in discussions about investments and the future course of the stock market is why the European debt crisis is so important and why investors should pay attention. The easy answer is that in the current state of financial affairs, everything is interconnected and nothing happens in isolation anymore. [...]
It is said that bull markets climb a wall of worry but if that were true, then Wall and Broad should look like downtown Pamplona in July with market bears gored, trampled, spindled, mutilated and wrapped around the buttonwood tree. The list of worries for investors seems to grow by the day with slowing Chinese growth center stage one day [...]
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