Obtuse: The Fed & Treasury View of Banking Issues
Despite ongoing silent runs on the Regional and Community Banks, it appears that both Fed Chair Powell and Treasury Secretary Yellen view the events of the recent past (SVB, Signature Bank, First Republic, Credit Suisse, and now Deutsche Bank) as one-off events and not symptomatic of stress in the world’s financial system. The dictionary defines […]
The New (Scary) Fed Steps Into New Territory
The pandemic’s second wave has appeared in Europe and now in the U.S. The Fed is more concerned about the economy and has taken the unprecedented step of telling Congress it will monetize whatever spending Congress desires. (Not your Father’s Fed!) The latest weekly unemployment data confirm the Fed’s worst fears: The Recovery has stalled! Overview No […]
The Recovery Stalls; Fed Pledges “Lower for Longer;” Equity Markets Pause
With the Fed pledging to keep rates low even when (or if) inflation rises above its 2% target, it is hard to see why long-term Treasury yields (and those of other quality issuers) won’t move toward yields of similar debt in the world’s other industrial economies (i.e., Europe and Japan). The economic lull is now […]
A Strange New World: Economic Slowdown, Liquidity Issues
The world’s slowdown continues. China’s growth rate is the slowest in years. Exports there are down as are imports, and pork prices (their protein staple) are up 40% due to swine flu. India, formerly the fastest growing economy in the world, had their manufacturing sector grow +0.6% (stagnation for them and the slowest growth since 2012), and auto […]
Reconciling a 1-percent economy with record market highs
The recovery from the Great Recession has been the most sluggish in post-WWII economic history. This is vividly displayed in the nation’s recent GDP report. The Commerce Department estimated that the economy grew at a snail’s pace over the last 3 quarters: 0.9% in Q4, 0.8% in Q1, and 1.2% in Q2. Yet, all of […]
Why Helicopter Money and Unconventional Monetary Policies Won’t Help the Economy
The equity markets continue to flirt with record highs while the yields on fixed income instruments are at or near all-time historic lows. Generally, those two market movements are not compatible. Everyone feels a high level of anxiety about the economic future. Ben Bernanke visited the Bank of Japan in early July to help them […]