Posts filed under “Markets”
Five years ago, Arthur Laffer — creator of the Laffer curve and a member of President Ronald Reagan’s Economic Policy Advisory Board from 1981-89 — wrote an op-ed article. It was a grab bag of his pet peeves: opposition to Federal Reserve policies in response to the financial crisis and concern about the “unfunded liabilities of federal programs,” including Social Security and Medicare. And, of course, he decried deficits, which in large part are the result of his thesis that tax cuts often increase revenue. As it turns out, for the most part, they don’t.
The article he penned on June 11, 2009? “Get Ready for Inflation and Higher Interest Rates.” “Alas,” he wrote “I doubt very much that the Fed will do what is necessary to guard against future inflation and higher interest rates.”
At the time, the yield on the 10-year Treasury was 3.86 percent, and we were in a crisis-driven deflationary environment of negative 1.4 percent inflation. Today, the 10-year yields 2.65 percent and inflation is running at less than 2 percent.
Inflation wasn’t the only thing Laffer whiffed on. Continues here
MTA New York Chapter Meeting June 23, 2014 Featuring Barry Ritholtz presented by Bloomberg L.P. The New York Chapter of the MTA invites you to our next chapter meeting on Monday, June 23, 2014. We are honored to have Barry Ritholtz, founder and chief investment officer of Ritholtz Wealth Management and author of Bailout Nation, present…Read More
Last year, we noted that there was a “Bubble in Bubble Calling.” News media bubble chatter was the rage, whether it was tech initial public offerings or stocks or bonds — all caused by “a global central bank QE bubble.” Here we are two quarters later, with the central bank reducing quantitative easing by scaling…Read More
click for ginormous version Source: The Telegraph Nice graphic from The Telegraph, showing relative valuations around the world, using P/E ratios, CAPE, and Price to Book. To be named “cheap”, markets had to be trading below their own historic valuation across all three measures. As the map to the left shows, only a handful…Read More
The ECB’s reduction of both its main refi rate and deposit rate was anticipated, though some had expected a larger cut than the 10bps announced in respect of both rates. Importantly, Mr Draghi stated that the reduced rates were now at the lower rate bound ie no further rate cuts should be expected. In addition,…Read More
Succinct Summation of Week’s Events: Positives: 1) ECB backs up Mario Draghi’s words with action and European and US markets celebrate (Asian markets mixed). Forgotten though is that the ECB balance sheet has shrunk by 1T euros over the past two years of which 500b euros of LTRO money has been paid back over the…Read More
Source: Bespoke Investment Group How expensive are stocks? Its a question that seems to beget many different answers. Too often, the response reflects the responder’s investment posture. If they are long equities, they typically respond by saying “Not very.” If they are short, or in cash or in other risk assets, the answer is…Read More
In the beginning of this year, we looked at some of the trading errors commonly made by gold investors during this cycle. At the time, gold had fallen 38 percent from its 2011 peak. Yesterday, spot gold traded at less than $1,242 before closing slightly higher. Gold is hitting new multiyear lows relative to the…Read More
Whilst US Q1 GDP was revised sharply lower to an annualised rate of -1.0%, down from the initial reading of +0.1%, Q2 GDP should rebound strongly to around +3.5%. The inventory contraction in Q1 should reverse in Q2 and the better weather will also help. Furthermore, growth in consumption was revised higher to 3.2%, from…Read More