Credibility is hard to gain. And once gone, it is very hard to regain. That is the challenge facing the US Federal Reserve today. The New York Times is just one of the mainstream media now starting to highlight the issue, as last week’s Fed meeting led to a further deferral of the promised rise […]
Chemicals and the Economy
German markets stumble as “Sell in May” theme continues
My 4 May post was titled “‘Sell in May and go away?’ as US, German bond yields jump“. Since then, US interest rates have continued to soar and the US stock market is starting to wobble, as I discussed last week. Now emerging markets are in the line of fire. $9.3bn was withdrawn last week – […]
US margin debt hits record highs, whilst interest rates jump
Everyone knows that the US Federal Reserve will “never” let stock markets fall. So it makes perfect sense for investors to borrow as much as they can, in order to chase the market higher. It therefore is no surprise to see that borrowing to fund purchases on the New York Stock Exchange has reached a […]
European interest rates go negative as Draghi boosts stock markets
Historians will not look kindly on Mario Draghi, head of the European Central Bank. They will ask what he thought he was doing, issuing an extra €1tn ($1.05tn) of debt from March 2015, when the Eurozone was already struggling under a dead-weight of government debt: In the big countries, Italy has $47k of debt per person; […]
Interest rate outlook more uncertain as Bill Gross leaves PIMCO
Last week’s departure of Bill Gross from his role as Chief Investment Officer at PIMCO is likely to prove a turning point for interest rates in the West, and probably around the world. Gross founded PIMCO (Pacific Investment Management Co) more than 40 years ago. During this time he built its assets under management to around $2tn. That is […]
Great Unwinding of policymaker stimulus creates interest rate risk
Interest rate risk is rising in the developed economies as the Great Unwinding of policymaker stimulus continues. Since the blog first highlighted this Unwinding last month: Oil prices have continued to tumble, with Brent now down over $15/bbl from its late-June peak The US$ has continued to rise from multi-year lows versus the yen, euro and pound And of course, […]
5 years of stimulus have only delayed move to the New Normal
Coincidentally the blog began its 6-monthly review of global financial market performance on 7 March 2009, as the US market hit its post-Crisis bottom. At this point, it was possible to hope that central banks would allow markets to resolve the issues that they themselves had created. After all, there would have been no subprime crash if the US Federal […]
US markets see Happy Days again
New Year optimism over the economic outlook is breaking out all over the USA. Weak employment numbers for December were ignored, as were weak data on housing markets. Whilst prices for benzene, the blog’s favourite sentiment indicator, not only jumped to a record high but dragged European levels to an all-time record as well. Happy Days are clearly […]
Most major financial markets have doubled since 2009 lows
The period since March 2009 has been a wonderful time for most investors in the major markets. As the blog’s 6-monthly update shows, almost every index has increased, and by large amounts: Russia has been the biggest winner, up 151%, due to its oil and gas export position The US is up 147%, as the […]
US Federal Reserve cuts growth forecast, again
5 years after the Crisis began, there still seems to be a worrying lack of accountability in the banking sector, even when things go wrong on an epic scale. Take JP Morgan Chase, for example: It lost $6.2bn in London last year, which its CEO Jamie Dimon initially called “a tempest in a teapot” It has now been […]
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