Tag Archive: Finance

We’re All Hedge Funds Now – Central Banks Become World’s Biggest Stock Speculators

2016-11-08

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2016-11-08

CBS
At first, the idea of central banks intervening in the equity markets was probably seen even by its fans as a temporary measure. But that’s not how government power grabs work. Control once acquired is hard for politicians and their bureaucrats to give up. Which means recent events are completely predictable.

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USD ready for a second leg higher – then what?

2016-10-17

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2016-10-17

One year ago we showed the following chart to explain the relative strong dollar that was on everyone’s mind at the time. With a second leg higher in the US dollar imminent, this particular chart will be more important than ever. Claims to dollars, such as demand and time deposits, or even more opaque money-like products created by the shadow banking system is just that, a claim or derivative on the final mean of payment, namely base money.

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The Road to Fascism in Just Two Charts

2016-09-19

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2016-09-19

Laws of politics have been turned upside down. The Intellectuals Yet Idiots can make no sense of it. The underdog who ‘tell it how it is’ appeal to people while established reasoning does not.

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Mission Creep – How the Fed will justify maintaining its excessive balance sheet

2016-08-30

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2016-08-30

FOMC have changed their normalizing strategy several times and we now see the contours of yet another shift. The Federal Reserve was supposed to reduce its elevated balance sheet before moving interest higher as it would be impossible to increase the fed funds rate in the old fashioned way when the market was saturated with trillions of dollars in excess reserves.

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Academic Skulduggery – How Ivory Tower Hubris Wrecks your Life

2016-05-23

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2016-05-23

In the 1970s economists started to incorporate rational expectations into their models and not long after the seminal Kydand & Prescott (1977) article named Rules Rather than Discretion: The Inconsistency of Optimal Plan was published. Their work has...

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Chinese Dragon: Breathing Credit Fumes

2016-04-24

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2016-04-24

Economic forecasting, no matter how complex the underlying model may be, is essentially about extrapolating historical trends. We showed last week how economic models completely fail to pick up on structural shifts using Japan as an example. On the other hand, if an economy doesn’t really change much, as in the case of Australia over the last thirty years, model “forecast” are generally quite accurate.

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OPEC’s Doha Dilemma: 3mb/d US lock in?

2016-03-29

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2016-03-29

Bawerk shows that more than 3 mb/d of American oil production was helped by US$55.5bn in credit facilities, by excessive debt. This production is now at risk and the debt may not be repaid. The big OPEC players are playing against US shale oil and some smaller OPEC members that have higher costs.

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Greenspan, the Sheepherder

2016-03-06

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2016-03-06

It is common knowledge by now that Federal Reserve Chairman Alan Greenspan oversaw, enabled and approved of, a major transition in the US economy. His infamous “Greenspan-put” in which his actions at the central bank would be driven, if not dictated,...

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How Italy will fail and drag down the European Project

2016-02-23

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2016-02-23

Italy is big enough to matter (it is the eight largest economy on the planet), but so uneventful that most does not pay any attention to what is going on there. We contend that Italy will, during the next year or two, be on everyone’s radar screen as it has the potential to derail the European project for real.

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What the Fed Did NOT do

2015-12-18

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2015-12-18

We will not spend much time discussing what the FOMC did as tons of ink have been spilled on that already. We will rather spend more time on what the FOMC did not do. A short recap will suffice; the FOMC did raise the interest rate band by 25 basis p...

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Unintended consequences of lift-off in a world of excess reserves

2015-11-28

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2015-11-28

Bar a disastrous NFP print this coming Friday the US Federal Reserve will change the target range for the Federal Reserve (Fed) Bank’s Funds rate from the current level of zero – 25bp to 25 – 50bp on December 16th.  The Fed will effectively raise the...

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