Posts filed under “Federal Reserve”

Yield Curve Says Probable Recession

John Mauldin notes:

"The yield curve became more inverted this week, with the negative differential between the 3-month and the 10-year at -49 basis points and a -76 basis point differential between the 10-year and the Feds fund rate. According to a Fed paper, that level of an inversion suggests there is now an over 40% probability of recession next year. This same model only predicted a 50% chance of recession in 2000, and as the paper authors acknowledge, the model probably understates risk in recent decades."

The yield curve and interest-rate data looks like this:

Yield_curve_mauldin

So the question for those who believe markets are future discounting mechanisms: Which market are you going to believe: Stocks or Bonds?

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Source:
Honey, I Created A Bubble
John Mauldin
Investor Insight, November 10, 2006
http://www.frontlinethoughts.com/article.asp?id=mwo111006

Category: Economy, Federal Reserve, Inflation, Investing, Markets

Fed Official Says Bad Data Helped Fuel Rate Cuts, Housing Speculation

Category: Data Analysis, Economy, Federal Reserve, Inflation

Why 2006 won’t be like 1995

Category: Economy, Federal Reserve, Inflation

When Does the Fed Cut With the Dow at or near Record Highs?

Category: Economy, Federal Reserve, Markets

The Return of Goldilocks?

Category: Economy, Federal Reserve, Markets

Blog Spotlight: The Mess That Greenspan Made

Today we start a new series:  Blog Spotlight.

We put together a short list of excellent but somewhat overlooked blog that deserves a greater audience. Expect to see a post from a different featured blogger here every Tuesday and Thursday evening, around 7pm.

First up in our Blogger Spotlight:  Tim Iacono and The Mess That Greenspan Made. Tim is a software engineer in his mid-forties, living in Southern California. He calls his blog is a "vain attempt to stave off a mid-life crisis, and here’s hoping that it’s going to work."

Tmtgm

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Today’s focus commentary is called Friends in High Places? and it address the controversey we discussed last week.

 

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Friends in High Places?

Life is always much more fun when there’s a good
conspiracy theory to kick around. When the New York Times starts kicking it
around too, then it can really be
enjoyable.

Such is the case with the recent plunge
in the price paid for gasoline by formerly dour consumers leading up to an
election where the party in power is clearly having difficulty wooing the
electorate. It just so happens that the newly appointed Treasury Secretary used
to run the investment bank that controls the world’s most important commodity
index, which seven weeks ago cut the weighting of unleaded gasoline by nearly 75
percent, causing all commodity investments based on this index to sell their
unleaded gasoline futures.

For the same number of buyers, a glut of
sellers means lower prices, and voila! Prices at the pump drop precipitously,
consumer confidence rebounds, and the electorate develops a new spring in their
step.

Or at least, that’s what some would have you believe. . .

Read More

Category: Blog Spotlight, Commodities, Corporate Management, Federal Reserve, Finance, Politics

Paul Volcker at Bloomberg HQ

Category: Economy, Federal Reserve, Inflation

Quote of the Day

Category: Federal Reserve

As we wait for the Fed Announcement…

Category: Federal Reserve, Inflation

The Technical Dilemma

Category: Federal Reserve, Investing, Markets, Technical Analysis