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The Fed Is Irrelevant

September 1st, 2019 · Comments Off on The Fed Is Irrelevant

With the US 10-year yield well below the Fed Funds rate, there are good arguments for lower interest rates. On the other hand, with rates and unemployment already very low, and the economy still growing at 2%, the need isn’t urgent. Most importantly, rate cuts will do very little for the economy. Source: The Fed […]

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Tags: Monetary policy

A Looming Disconnect Between The Economy And Financial Markets

July 1st, 2019 · Comments Off on A Looming Disconnect Between The Economy And Financial Markets

The Fed is mostly focused on conditions in the real economy, loosening policy when growth slows and tightening when the economy grows too hot. It only takes on board financial market conditions when these become more extreme. However, because changes in Fed policy have a much more immediate and dramatic influence on financial markets, the […]

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Tags: Monetary policy

The Fed Hasn’t Blown Another Asset Bubble

April 27th, 2019 · Comments Off on The Fed Hasn’t Blown Another Asset Bubble

Investors feel whiplashed by the Fed, but while this is understandable, this isn’t necessarily justified as financial markets are a bit of a side show for the Fed. The Fed is also accused of having blown another asset bubble, but it is even debatable whether there is an asset bubble, let alone the Fed being […]

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Tags: Monetary policy · The Markets

The Fed’s America First Policy

January 2nd, 2019 · Comments Off on The Fed’s America First Policy

It is difficult to argue that monetary policy is too tight for the US economy, and financial data back that judgement up. However, the Fed often has a pronounced influence on credit conditions overseas, we doubt these are taken on board by Powell, seemingly pursuing an America First policy. Given the fact that the US […]

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Tags: Monetary policy

Fed Hysteria Out In Full Force Once Again

December 26th, 2018 · Comments Off on Fed Hysteria Out In Full Force Once Again

From the President downwards, much of the financial community is up in arms over the latest Fed policy change. While the Fed in general, or the particular policy changes and outlook are clearly not beyond criticism, we think that much of the criticism is misdirected and internally inconsistent. Bottom line is, bar crisis situations, the […]

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Tags: Monetary policy · The Markets

Bring On The Powell Put

November 27th, 2018 · Comments Off on Bring On The Powell Put

From the President down, with markets bleeding, market observers are clamoring for the Fed to lower rates – or at least not raise them further. There are some economists, like Martin Feldstein, who argue that the Fed should simply ignore this noise and keep on raising rates. The thought is that rates should be considerably […]

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Tags: Economic Policy

Will The Expansion End With A Fizzle Or A Bang?

July 29th, 2017 · Comments Off on Will The Expansion End With A Fizzle Or A Bang?

The Fed could very well raise rates because they fear the prospect of higher inflation and imploding asset bubbles bringing down the economy. So if they act, the economy goes out either with a fizzle or a bang. But, as it turns out, the risks of accelerating inflation is remote and an asset crash isn’t […]

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Tags: Monetary policy

Could The Fed End The Stock Rally?

July 12th, 2017 · Comments Off on Could The Fed End The Stock Rally?

The Fed could trigger a recession and a considerable stock market selloff if it tightens too much. We doubt there is much need for that given the fact that inflation is still very well behaved. In fact, in a world plagued by deflationary forces and high debt levels, a little inflation isn’t actually much of […]

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Tags: Monetary policy · The Markets

The Fed And The Dollar Rule The World

August 27th, 2016 · Comments Off on The Fed And The Dollar Rule The World

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Tags: currencies · Monetary policy