• Central Bank Meeting Confirms Need for Further Tightening
    Central Bank Meeting Confirms Need for Further Tightening
    September 2, 2018 | By Daniel Lacalle
    If we analyze the consensus expectations of analysts and investment banks at the end of 2017, the conclusion was unanimous: buy Europe and emerging markets against the United States, amid weakening dollar estimates in 2018. It has been exactly the opposite. We’ve already warned a few times about the risk of such a biased consensus […]
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  • What If Chairman Powell Is Wrong About Interest Rates?
    What If Chairman Powell Is Wrong About Interest Rates?
    July 26, 2018 | By Christopher Whalen
    President Donald Trump caused a bit of a stir last week when he suggested that rising interest rates are cause for concern. Pundits fretted about “Fed independence,” a concept rendered completely meaningless in the age of quantitative easing. We agree with the president that Federal Reserve Board Chairman Jerome Powell is “a good man,” yet […]
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  • The Rules of the Bond Game
    The Rules of the Bond Game
    July 22, 2018 | By Victor Sperandeo
    American hard money advocate, economist, and publisher Franz Pick once called government bonds “Guaranteed Certificates of Confiscation.” In making that statement, he assumed the government would eventually inflate the debt away and thus confiscate the buyers’ purchasing power. Yet here we are, with U.S. Treasury Bonds holding steady despite seven rate hikes by the U.S. […]
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  • Tax Cuts Could Create a Boom, Say Economists
    Tax Cuts Could Create a Boom, Say Economists
    February 3, 2018 | By Emel Akan
    The U.S. economy may have a blockbuster start to the year, thanks to tax reform. According to some economists, the tax reform could spark higher consumer spending and capital investments. U.S. gross domestic product (GDP) is expected to surge to 4.0 percent in the first quarter, according to the latest forecast from the Atlanta Federal […]
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  • Are Central Banks Nationalizing the Economy?
    Are Central Banks Nationalizing the Economy?
    February 1, 2018 | By Daniel Lacalle
    In rough numbers and at the end of 2017, leading central banks now own a fifth of their governments’ total debt. The figures are staggering. Without recession or crisis, major central banks have been purchasing more than $200 billion a month in government and private debt, led by the European Central Bank (ECB) and the Bank […]
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  • US Fed in Transition Doesn’t Rock the Boat
    US Fed in Transition Doesn’t Rock the Boat
    January 31, 2018 | By Rahul Vaidyanath
    The U.S. Federal Reserve left its key policy rate range unchanged at 1.25 percent to 1.50 percent, as was widely expected on Jan. 31.
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  • US Bonds Selloff Could Impact Debt-Ridden Canada
    US Bonds Selloff Could Impact Debt-Ridden Canada
    January 25, 2018 | By Rahul Vaidyanath
    While U.S. stock markets soar to record highs after the passing of the Trump administration’s Tax Cuts and Jobs Act, bonds face a rough ride.
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  • The Fed’s Boom and Bust
    The Fed’s Boom and Bust
    January 20, 2018 | By Joshua Philipp and Valentin Schmid
    Politicians created the U.S. Federal Reserve system in response to the 1907 Knickerbocker Crisis, when stocks fell 50 percent over a three-week period and the financial system froze up. This new centralized system, with the Fed as the lender of last resort, was supposed to end the boom and bust cycles for good. More than […]
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  • The Yellen Put
    The Yellen Put
    December 16, 2017 | By Christopher Whalen
    The term “Greenspan put” was coined after the stock market crash of 1987 and the later bailout of LongTerm Capital Management (LTCM) in 1998. The Federal Reserve (Fed), under chair Alan Greenspan, lowered interest rates when the financial system was in trouble, and life continued. The paltry 0.25 percent hike in the Federal Funds Rate […]
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  • Inflation, the Hidden Tax
    Inflation, the Hidden Tax
    November 16, 2017 | By Valentin Schmid
    The Federal Reserve (Fed) targets 2 percent inflation and full employment. While this sounds benign, it is part of an inefficient and unfair economic system that leads to waste, and to boom and bust cycles. The famous goal of 2 to 3 percent inflation targeted by the Fed is supposed to be a sign of […]
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  • Janet Yellen’s Legacy
    Janet Yellen’s Legacy
    November 16, 2017 | By Enrico Colombatto
    Janet Yellen will be replaced by Jerome Powell as head of the Federal Reserve (Fed) when her first and only term ends in February 2018. Nonetheless, many believe she has done a good job as Fed chair. She inherited a very loose monetary stance from her predecessor, Ben Bernanke, and started to apply the brakes […]
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  • The Fed’s ‘Normalization’
    The Fed’s ‘Normalization’
    October 10, 2017 | By Daniel Lacalle
    The saying goes that the biggest trick the devil ever pulled was convincing the world he does not exist. In the case of monetary policy, the “devil” has convinced us there is no inflation, and there is no risk in the current monetary policy. Many independent analysts, however, say that the first argument—the absence of […]
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  • Hurricanes’ Impact Could Make US Fed More Hawkish
    Hurricanes’ Impact Could Make US Fed More Hawkish
    September 20, 2017 | By Rahul Vaidyanath
    The devastation caused by hurricanes Harvey and Irma and now Maria will make the U.S. Federal Reserve’s job of conducting monetary policy trickier.
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  • Inflation Not Cooperating With Fed
    Inflation Not Cooperating With Fed
    July 26, 2017 | By Rahul Vaidyanath
    Doubts about the U.S. Federal Reserve raising rates for a third time in 2017 are building
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  • The Mephisto Polka
    The Mephisto Polka
    July 20, 2017 | By Sean Corrigan
    In her recent set-piece testimony before Congress, Janet Yellen made clear that she is determined to repeat the sort of ‘gradualism’ in raising rates that proved so disastrous after the Tech bust. In other words, that she will not so much boil the frog slowly as to encourage him to go out and make a further […]
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  • Why Bank of Canada, US Fed Should Adopt Lower Inflation Targets
    Why Bank of Canada, US Fed Should Adopt Lower Inflation Targets
    June 28, 2017 | By Rahul Vaidyanath
    With the Bank of Canada and Fed chomping at the bit to raise rates while inflation sputters, many question what the inflation target should be and if a policy error is being made.
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  • Fed Raises Key Rate, Unveils Plan to Reduce Bond Holdings
    Fed Raises Key Rate, Unveils Plan to Reduce Bond Holdings
    June 14, 2017 | By The Associated Press
    WASHINGTON—The U.S. Federal Reserve raised its key interest rate for the third time in six months, providing its latest vote of confidence in a slow-growing but durable economy. The Fed also announced plans to start gradually paring its bond holdings later this year, which could cause long-term rates to rise. The increase in the Fed’s […]
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  • Protectionism Would Slow Pace of US Fed Rate Hikes, Say Economists
    Protectionism Would Slow Pace of US Fed Rate Hikes, Say Economists
    May 3, 2017 | By Rahul Vaidyanath
    It’s likely still early days as far as the U.S. Federal Reserve is concerned for protectionism being a threat to economic growth.
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  • US Fed Chair Yellen: ‘We Have Plenty of Time to See What Happens’
    US Fed Chair Yellen: ‘We Have Plenty of Time to See What Happens’
    March 15, 2017 | By Rahul Vaidyanath
    The U.S. Federal Reserve raised its key policy rate by 0.25 percent on March 15, however it remains in wait-and-see mode regarding the impact of the Trump administration’s fiscal policy.
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  • Fed Acknowledges ‘Animal Spirits’
    Fed Acknowledges ‘Animal Spirits’
    February 1, 2017 | By Rahul Vaidyanath
    The Federal Reserve, along with everybody else, is playing the waiting game—waiting to see what the Trump administration and Congress can actually get accomplished.
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  • Fed Projections Less Meaningful Given Trump Policy Uncertainty
    Fed Projections Less Meaningful Given Trump Policy Uncertainty
    December 14, 2016 | By Rahul Vaidyanath
    With the Fed unanimously raising rates for the second time in a decade on Dec. 14, its economic projections and future rate hikes carry less weight than usual.
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  • Central Banks Are Close to Centralizing Everything
    Central Banks Are Close to Centralizing Everything
    September 26, 2016 | By Valentin Schmid
    Traders and investors hardly focus on company profits, yields, or economic data anymore. Instead, the market reacts purely on central banks. Will the Fed raise interest rates? Will the Bank of Japan (BoJ) buy more stocks? Will the European Central Bank (ECB) buy more corporate bonds? “Nobody has visibility; private sector signals have died. The […]
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  • Weak Business Investment, Lower Neutral Rate Impacting Each Other
    Weak Business Investment, Lower Neutral Rate Impacting Each Other
    September 22, 2016 | By Rahul Vaidyanath
    Describing business investment as “soft” has become a fixture of Federal Reserve statements for over a year now. A long period of reduced capital spending decreases economic potential and depresses interest rates, which hurts savers and encourages potentially excessive risk taking. The Fed held its key rate unchanged at 0.25 to 0.50 percent on Wednesday, […]
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  • Fed Plays It Safe Ahead of November Election
    Fed Plays It Safe Ahead of November Election
    September 21, 2016 | By Valentin Schmid
    News Analysis No, politics had nothing to do with the Fed’s decision to skip raising interest rates at a meeting that concluded on Sept. 21. “We do not discuss politics at our meetings, and we do not take politics into account in our decisions. As I said, we’re generally pleased with the progress of the […]
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  • Marc Faber: Dow Could Reach 100,000
    Marc Faber: Dow Could Reach 100,000
    September 12, 2016 | By Valentin Schmid
    They call him Dr. Doom and for good reason. Dr. Marc Faber, author, investment adviser, and publisher of the Gloom, Boom & Doom report, usually emphasizes the risks in the financial system and never minces his words. However, his views are more nuanced than most people think, and his advice for investors is more pragmatic […]
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  • The Fed’s Inflation Problem
    The Fed’s Inflation Problem
    July 27, 2016 | By Rahul Vaidyanath
    A pick-up in inflation is the single most important improvement the Fed needs to raise interest rates.
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  • Fed Proves It’s Market Dependent
    Fed Proves It’s Market Dependent
    July 27, 2016 | By Valentin Schmid
    The Federal Reserve (Fed) did not raise interest rates at a meeting on July 27, despite solid economic data.  “The labor market strengthened and … economic activity has been expanding at a moderate rate … Payrolls and other labor market indicators point to some increase [and] household spending has been growing strongly,” the Federal Open […]
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